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How to ensure that scaling a business is profitable
In the hope of attracting as many customers as possible, marketers increase the advertising budget. However, this does not mean that you can get twice as many consumers, in this case, the cost of attracting one customer is just increasing. This option of scaling the business is not effective and can lead to unprofitability. The optimal solution in this situation is to use as many tools for promotion as possible. At the same time, it is important to properly build a marketing strategy so that all actions constitute a unified system.
The main parameters to evaluate the effectiveness of certain activities are CAC and LTV. You can use the first parameter to find out how much money is needed to attract one client. LTV estimates the amount of profit the company receives from cooperation with a client. In this case, the value is calculated based on the entire time of interaction between the parties. Understanding these parameters allows you to analyze the development of the company.
It should be taken into account that in the process of scaling the business, the CAC parameter will most often increase. However, thanks to LTV, these costs will be offset by profits.
In addition to these indicators, other factors, such as profitability, the number of purchases, the number of leads, and others, affect a company’s profit. Ideally, an increase in each of the parameters should increase profits, but it is virtually impossible to ensure that all factors increase at the same time. The fact is that focusing on increasing one parameter, such as the number of leads, often leads to a decrease in another characteristic. Therefore, the scaling process should be approached holistically, and the first thing with which the work begins is optimizing traffic channels. In this case, various sites are involved and all their capabilities are studied. For example, contextual advertising through the service Google Ads allows the creation of well-thought-out advertising campaigns, including options for quick links, banners, and other extensions and tools. In addition, machine learning technologies are now available for promotion, which includes targeting and diverse functionality.
It is important to regularly analyze your promotion processes and progress. To do this, it is important to set the right goals and adjust the marketing strategy to them. Special attention should be paid to the e-commerce module.
The success of a promotion depends on correctly selecting the target audience, and determining its features, problems, and needs. This should take into account the geography, in some cases, you need to expand it, and in other cases, to narrow it. A/B testing is a good tool for detailed analysis of the target audience.
Scaling up a business is a gradual process, you should not expect great results at once. However, with the right implementation of a variety of marketing tools, you can achieve high efficiency for a long period.