Cost Per Lead (“CPL”) is an advertising pricing model, where the advertiser only pays when an interested customer signs up for the interested offer through a web form or phone call that can be tracked. No payment is made by the advertiser for visitors who only click or call on the offer and don’t sign up. A lead may include contact information, a sign up and some demographic information; unlike an acquisition it’s typically a non-cash conversion event. It may consist of as little as an email address, or many details, which determine the difficulty and cost of running such a program. CPL marketing enables advertisers to make consistent returns on the money spent advertising online. In a tough economy like we’re experiencing, it is not surprising that CPL advertising has grown explosively. It’s a popular inbound marketing technique among marketers.

Customer Lifetime Value (“LTV”) is the expected profit that you will realize from sales to a particular customer during their lifetime doing business with you. Roughly defined, LTV is the projected revenue that a customer will generate during their lifetime. Customer behavior changes over time and these gradual changes are known as the customer life cycle. It can be an absolute calculation over a customer’s life or relative calculation using a customer’s life cycle. For example, if a customer buys a product for two years and then doesn’t for at least one year then the life cycle of that customer is generally considered 2 years.

How does CPA relate to LTV?

LTV of a customer in theory represents how much they are worth, and therefore how much an advertiser should be willing to pay to form a relationship with them. It can then be used to evaluate the optimal CPA for that customer as well. If it costs $3 to acquire a new customer (CPA = $3) and that client’s lifetime value is $100 (LTV = $100), then the client is presumably profitable (at 3% of the total revenue they will produce) and acquisition of additional clients at that CPA is advisable.

How to calculate CPA and LTV?

If the average customer you acquire through advertising buys for 4 years, then stops for at least 1 year. We can define the life cycle and hence the life time of that customer as 4 years. If during that 4 years, the average customer makes 10 purchases and the profit per one unit purchased is $5 then the client’s lifetime value will be calculated as shown below that should work (note: the calculations used in this article are extremely basic for the purposes of explaining the overall concepts, and further analysis can and should be done to develop precise calculations. For the purposes of this article and for many smaller businesses that don’t have large databases of information, these basic calculations can server as a good guide) :

If that average customer then refers 5 other customers, the maximum cost of acquisition of a new customer should be 5 x $50 = $250 in order to break even. That would be the maximum you should be willing to pay to acquire a single customer. However, you want to maintain profitability, so further analysis should be done to determine what a reasonable CPA should be to provide you a specific profit margin.

Image courtesy of kaushik.net.

Calculating the LTV of a customer will help a business owner manage customer relationship as an asset, scrutinize the impact of marketing investments and their value. Hence, help him or her work towards optimizing allocation of resources for marketing in order to achieve the greatest return on investment.

Like many agencies, we typically don’t manage media buying (in particular PPC advertising) for clients with a $3k or lower monthly budget. What’s the reason for this? It’s actually quite simple. We offer transparent pricing where we base our monthly management fees on a percentage of the total advertising budget of the accounts we manage. Below $3k, where our fees drop below $500 per month, we don’t believe that we can commit the necessary resources to run effective campaigns. So what we consider to be the minimal, reasonable compensation for our work ends up representing an unreasonable percentage of the total advertising budget for the client, and we sometimes can’t reach a mutually beneficial agreement.

The problem

Many small business owners and managers contact me for advice in regard to this same issue. They are having trouble finding a reputable agency to work with their smaller budget and they aren’t sure where to turn. By the time I am talking to them, it seems they have already been burned by mass-marketing agencies like ReachLocal or Yodle, and have a dim view on the whole industry. They’re bombarded with endless noise, aggressive salespeople, and a plethora of product offerings that are hard to differentiate.

Ideally they want someone with the skills and experience to help them set up and manage their campaigns, but with limited resources, it usually makes more sense to find an out-of-the-box solution that they can implement themselves. Luckily, these folks do have a few good options to choose from, but there is another cost to consider: Time.

The solution

The question always comes down to: What’s your time worth? After careful consideration, if the business owner or manager decides it is worth their time to do it themselves, I present a few solid options (assuming they understand that search engine ads are a good place to start with their paid promotions).

1. Learn the basics. Here are some really useful websites to peruse for a solid understanding of search engine marketing, and some specific articles to get you started:
• Wikipedia article on search engine advertising
• Arguably the best beginners guide to learning SEO
• Google defines different options for keyword targeting
2. Get started with local ads. Once you have a basic understanding of keywords, ad copy and the way search engine ads work you’re ready to get started. Google has produced a simplified version of the AdWords program called AdWords Express specifically to help small, local businesses get started. It’s different than Google AdWords in the sense that it’s specifically tailored to local business that don’t have a lot of time to invest in PPC but see the value of advertising on Google. It’s really not a bad option, and the learning curve is much lower than the next option we’ll discuss, but also won’t produce the greatest results.
3. Go straight for the gold. The next option is to set up your own AdWords account from scratch. This will definitely take you more time and has a higher learning curve, but there is no great alternative to getting your hands dirty, so start digging. Click here for a great guide to get you started on AdWords.
4. Power users. If you’re feeling comfortable so far, then you’re probably ready for the next step up in control and features. AdWords Editor is a free software application produced by Google that virtually every agency uses to setup and manage search engine advertising campaigns. It’s a Microsoft Excel type interface that lets you efficiently set up hundreds of keywords and campaigns, and set other interesting parameters to complement your strategy. It’s amazingly useful, but requires a solid understanding of how search engine advertising platforms operate and all the different factors that determine the success of your campaigns. To top it off, you might want help optimizing your landing pages, and this other free tool from Google may come in handy.

So why hire an expert?

What we just touched on is the tip of the iceberg, really. With TurnClick for instance, we help our clients with more than just creating a strategy and building the campaigns, we also look at the other important tools we have to work with and try to optimize campaigns accordingly. Once you have the accounts up and running and driving traffic, the next thing to worry about is how well that traffic is converting into leads or purchases. This area of online marketing is called conversion optimization, and we use various tactics, some of which you can find on this SEOmoz article on ppc landing page optimization.

In addition to strategy, and landing page optimization, we also provide phone call tracking services so our clients can fully measure the return on investment from all their online marketing efforts, not just the ones that result in web form submissions.

If you have any questions, or anything to add, don’t hesitate to comment below.

What is affiliate marketing?

It’s basically a way to outsource your sales team. Affiliate marketing is a term used to describe a process that early online retailers like Amazon established to drive sales for the products on their e-commerce websites.  Now over 30% of online sales are a result of some affiliate partnership.  For centuries we’ve been practicing the art of revenue or profit sharing to motivate people to join our teams and help build and sell our products, it’s nothing new.

In today’s world, it’s an effective way to empower dozens, if not thousands, of people around the world with incentives to move your product online.  You may have heard the term performance marketing, which is pretty much the same thing.  Here’s how it works: The business (advertiser) is making a revenue sharing deal with a third party (publisher/affiliate) to sell their products to a consumer (customer).  There are really three key players involved, and the revenue sharing aspect of the partnership varies from deal to deal.  Some affiliates take all the risk and only get compensated when they produce revenue (pure performance-based compensation or Pay Per Sale).  Other times, depending on the leverage of each player, the terms can be quite different.  If you have a product in high demand you can offer less revenue in exchange for the sales you get, because it’s much easier for the affiliate to sell your product.  Make sense?

Keep in mind that affiliate offers aren’t always about selling a physical product.  An organization may simply want to generate leads through a contact form.  That’s fair game for affiliate marketers.  As long as there is a way to measure an action online and you are willing to pay someone to drive that action for you, you’ve got yourself an affiliate offer.

What are affiliate networks?

In addition to the advertiser, affiliate, and customer, there is usually a fourth stakeholder involved in each transaction, and it’s usually a large organization that brokers the deal for the advertiser and affiliate (affiliate network).  It’s a middleman between the company and the individual (more often hundreds of individuals) driving the sales. Affiliate networks range in size and focus, and I’ve included a short list of the better known options below for convenience.

To give you an example of how affiliate networks operate, take a look at Google AdWords.  Through their Content Network program specifically, Google is acting as an affiliate network, and essentially brokering the deal between affiliates/publishers (these are bloggers, news sites, and any website partnered with Google AdSense) and the advertiser.  Google pretty much invented that form of pay-per-click “affiliate” marketing that is now a major form of advertising for many small and global organizations.

So there are all types of affiliate deals out there, but here are a few of the more traditional, performance-based options for the risk-averse marketers that want to leverage an affiliate network:

AdKnowledge (recently purchased Hydra Group): AdKnowledge is one of the larger, well established affiliate networks on the block.  They offer email and game networks as part of their benefit to advertisers.

ClickBooth: ClickBooth is another large, well known affiliate “CPA” (Cost Per Acquisition, which is the same as Pay Per Sale) network. They have a far reaching network and claim to be #1 in the world.

ClickBank: ClickBank specializes in moving digital products more than physical ones, but they are also another heavy hitter on the block. I hear a lot of people talking about them and referring them.

Affiliate Traction: Affiliate Traction is one of the larger affiliate networks focused more on retail businesses as you’ll see from their client list. If you have a physical product your selling, like clothing and other apparel, you might reach out to them first given their expertise in that area.

HasOffers: HasOffers is a bit different.  They’re not your traditional affiliate network, rather they provide the platform that affiliate networks and individual advertisers can use to power their affiliate network.  They provide the backbone and software solutions that individual retailers and affiliate groups would use to manage the process of building an affiliate network and tracking sales, etc.

Agencies: There are a growing number of performance-based marketing agencies out there. TurnClick is one of those agencies.  Another of my favorites that I’ve personally worked with is a small outfit out of Boston called MD Connect.  They focus on the medical industry and offer pure performance marketing services for physicians and medical practices that are interested in creating new patient leads.

What are some risks associated with affiliate marketing?

It’s certainly not for everyone.  SPAM is arguably a result of a sub-set of affiliate marketers that are extremely aggressive.  When you outsource your sales to a third-party you inevitably lose control and transparency on how your products are sold.  An overly aggressive and not so ethical affiliate marketer might make claims about your product or service that aren’t true, just to drive traffic and sales. Most established networks are reputable and have some controls in place to minimize these risks, but if you operate in a litigious environment, you’ll want to pick your affiliate partners wisely or risk getting burned by your customers or an Attorney General.

Another risk factor is cannibalization of your own marketing efforts.  When you place incentives in the market for people to drive traffic to your website and sales for your product, they will use every means possible as long as it is profitable for them.  This means they’ll be buying the same keywords, blogging about the same things as you, and they’ll probably be better at it.  This means that you’re internal marketing can be undermined, and you end up with a situation where the affiliate now has more leverage by owning the channels your customers use. You are in some ways bank rolling your own competition.

You may be aware of, or unfortunately been sucked into, a free-trial continuity offer online.  That is likely the result of an affiliate marketer.  Some of these groups are really effective at driving sales for free-trials of a product (where the customer places a credit card on file for a free sample, then gets charged month over month for a product they don’t want).  The number of charge backs on credit cards associated with these types of programs is unbelievable, but it represents a lot of money for the affiliate and the companies willing to do this type of marketing.

Disclaimer: I’m not associated with any of the organizations mentioned in this article.  I believe affiliate marketing can be effective, and I’ve seen it work, but it requires patience and understanding.  If you think an affiliate offer makes sense for your business, I’d be happy to talk to you to help determine your best options, just drop me a line.

I hope this helps my friends out there that are curious about affiliate marketing and what it’s all about.  If you have any questions or want to add anything to this post (there is plenty more that can be said about affiliate marketing) please leave a comment below.

This isn’t often the case with small and medium-sized businesses. Usually, an owner or manager takes responsibility for hiring and outsourcing, and frequently, a formal mission statement hasn’t been constructed; what a company stands for must simply be absorbed through daily dealings and working in the same environment.

It’s critical that managers and owners realize that this lack of information has the potential to adversely affect their business. Every business, no matter what its size, needs to define its values and vision before hiring new staff, or making an outsourcing agreement with a service provider. Especially in today’s competitive environment, a business should ensure that what they stand for is understood and expressed by every employee and each contracted worker.

It should not take an inordinate amount of time to lay the groundwork for a business’s vision and values statement. Most managers and owners already know what their business stands for and what they hope to accomplish over the long-term. One or two meetings with key staff should be ample to draft an outline of a company mission statement. Putting the company’s vision and values down on paper in a rough draft will then allow managers or owners to review it, clarify it and make any necessary adjustments.

A clearly defined statement of a business’s strong values and vision for the future will make the hiring process easier. It will also help new employees understand who they are working for, and the company’s expectations in both day-to-day tasks, and in dealings with clients. Depending on the service provided, outsourcing can be more cost-effective for small and medium-sized businesses, and in the current economic environment, it is becoming more common. Sharing the company’s values and vision with contracted employees is key to ensure that their interactions with existing and potential customers are handled in a way that matches what a business stands for, and its goals.

The answer to this question is yes. It seems that small businesses do have to work harder than larger ones, to really see any benefits. Generally speaking with small businesses the more effort you put in the more you get in return. Meaning social media does work, but it requires extra patience and persistence to see results.

Why Large Businesses are More Successful in Social Media Pursuits

One of the main benefits of social media sites, aside from the exposure they provide, is the strong relationships that can be formed with customers. Building relationships with potential customers is key in social media marketing, but this takes time. Large companies have both the time and the resources to interact with people on social media sites. This is often not the case with small businesses, as they simply do not have the time or the resources to spend hours interacting and promoting online.

How Small Businesses can Benefit from Social Media

Although social media marketing is time-consuming, it is beneficial. Many small business owners have found that they got more exposure, increased their customer base, increased sales, reduced their marketing expenses, and formed stronger bonds with their customers when using social media sites.

Additionally, business owners found that social media sites were both an easy and inexpensive means of advertising. For businesses that own websites, social media can help to increase both traffic and search engine rankings. When using social media sites they also had more effective brand management, and more opportunities to generate partnerships with other businesses.

Although small businesses may not have the same amount of resources as larger companies, there are ways to get around this. The most effective method for combating a lack of resources is to assign either yourself or one of your employees the task of promoting your business on social media sites, for just three hours per week. Just by spending this small amount of time you will start to see more traffic coming to your site and hopefully more leads as a result.

To summarize, social media does work for small businesses, as long as they are willing to devote the necessary time it takes. If the right amount of time and interaction are involved, there is no reason that a small business can’t see as many benefits as a large one.

Having established its importance, let’s go over the 10 Commandments of Great Online Reputation:

1.) Find SEO software that tracks and monitors your online reputation for you. SEOmoz Pro is a wonderful web app that makes managing your online reputation easy. With weekly web crawls that notify you of any issues affecting your performance and rank tracking that monitors specific keywords you care about on the search engines used most by your audience, you can spend less time on the busy work and more time building your brand.

2.) Create a website that shows you run a first-rate business. It’s important to prove yourself as a reliable and trusted business and if your website is out of date this can seriously affect your reputation.

3.) Use social networking sites like Facebook, Twitter and YouTube to your advantage. All of these are great methods for building a strong reputation. If you can build a social media following you are more likely to turn up in the search engines.

4.) Make sure your business is appropriately characterized on local business listing websites. By creating an accurate profile on local listing sites customers are able to find the right information needed to follow through with purchases.

5.) Protect your reputation. Make sure that you handle customer complaints quickly so that you can regain the respect of an angered customer or client and in turn prevent them from spreading negative comments online.

6.) Research your audience. Knowing your target audience allows you to build your brand around them and makes it easier to monitor your online reputation.

7.) Google Alerts. Many times the first place someone goes when checking up on someone or something is Google. Setting up alerts can help you zone in on those keywords that will help you manage your reputation.

8.) Blogging. Here you can host your own blog on your website or host others that can put a positive spin on your brand. It allows people to see the person behind the brand.

9.) Be Patient. Nothing ever happens overnight. As with everything there are wins and losses and it takes time to push away the unfavorable websites that may turn up in a search. Over time the negatives will be less and less visible if you continue using these best practices.

10.) Have a detailed plan for dealing with a crisis. Once a crisis hits, you probably don’t have much time to spend trying to fix the problem so it is always a good idea to have a crisis plan established, even if you never have to follow through with it.

After implementing the ten commandments of gaining a great online reputation, rest assured that those negative comments will never sneak up on you again. Reputation is a crucial part of any business. In addition to building a brand or trying to make a name for yourself, what you do (or don’t do) in managing your online reputation can mean the success or failure of it all.

The ideal website should not only be professional, but it should also be friendly. It should also be in such a tone that it will encourage new patients to make appointments, and existing patients to keep returning. Following are five proven tactics that will help you grow your medical practices online.

1. Design a website that is easy to understand and easy to navigate. Since the main goal of the website is to turn visitors into patients, they need to find any information that they may need quickly and easily. The home-page should have clearly identifiable links to the various pages within the website that go into detail about the services that the medical professional offers. Each of these internal pages should have a link that will lead the visitor directly back to the home page or contact page.

2. Educate new and existing patients. Many times, people are hesitant to make medical appointments because of their uncertainty or lack of knowledge. A well-designed website can put these uncertainties to rest by providing useful, educational articles about the various aspects of the practice.

3. Website owners should always design their sites with search engines in mind. No website is effective if people cannot find it. The most common strategy website owners use, to gain traffic to their site, is search engine optimization, or SEO. In short, SEO is largely based on keyword association and links pointing to your website. The more keywords included in the site, and the more external sites linking to you, the better chance that you will receive high rankings on such search engines as Google and Bing. Since most people click on the top results of their search, keyword presentation and SEO are crucial.

4. Work hard towards gaining the trust of patients. Getting patients to trust the practice is vital for that practice to grow, since satisfied patients often refer their friends and family. One fantastic way of getting patients to trust the practice is to include a photo gallery of happy patients within the website. Another way is to include patient reviews and testimonials on the home page of the site. Reviews and testimonials from existing patients have a tremendous influence in turning visitors into patients. Friendly videos can also urge visitors to trust the practice. Include introductions of the staff and brief details of them. This information will make visitors feel “closer” to them and more comfortable with calling the office.

5. Create an option for visitors to make their own appointments online. Many people work all day, and have limited time for making appointments over the phone. An option for them to make their own appointments on the website will encourage them to visit the clinic or office. The medical staff can then verify the appointment by way of an email.

In conclusion, an ideal website will encourage new patients to visit the office, and existing patients to keep returning. Any medical professional can build a successful online presence by focusing their websites on the above-mentioned tips.

Here are five simple ways to establish your business’ Google presence…