Engagement is one of those mystery words that we all struggle with sometimes.

We are told, repeatedly, that we must have engagement with our prospects, our potential clients, our possible users.  It’s true, yes, but what does it really mean?  I did a quick search for the term “engagement + profitability” on Google and the results are all over the map.

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They range from Forbes telling us that “engagement is the single key to improving”, to Gallup producing an article about “employee engagement drives growth” – in a nutshell, all the search really proves is that there is no commonality to how we look at engagement and derive meaning from statistics surrounding engagement.

Different types of engagement for different types of enterprises.

The two most common business references to engagement are these:

  • Employee engagement scores high on the list, and while it’s good to have your employees vested in your company and its’ performance, it’s certainly not the only metric out there.
  • Engagement with prospects and how many touch points or actions you need with a prospect in order to convert them into paying customers.

While the first one – employee engagement – is a great topic, it’s not the one we are going to talk about today.  We’re going to break down how you can figure out what it costs you to get a prospect to interact with your business in a way that leads to positive actions and income generated.  Not very exciting, I know, but hey, if you’re not making enough money, you should be doing everything you can to rectify that situation while you still have the opportunity.

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At this point, if you’re making plenty of money and you don’t need to figure out how to make more, then close this page, go find something else to do, like maybe playing Solitaire or Freecell on your six year old Lenovo PC…  there is literally nothing more for you to see here.

How can you start your calculations?

I’d go with a piece of paper and a pencil, unless you’re the sporty type who loves to do spreadsheets for everything and doesn’t mind rearranging them 19 times before you’re happy with the layout.  Me?  I go with the paper and pencil, work out the list of what I need to factor, and then I build my spreadsheet.   That way I’m not rearranging it all 19 times in order to get to a working copy.

We’re going to need a few figures here.

  • Sales over a given period of time
  • Costs over that same period of time
  • List of all campaigns over the same period of time
  • List of all expenses over the same period of time.

Yes, this is really basic stuff and if you already have these calculations, again, feel free to go and take your kid to the park or watch GoT re-runs since the final season is going to start before you know it and it’s best that you get ready early.

A few more details would be nice…

If you’ve been running ad campaigns, you should have some stats and figures for how they have performed.  I realize that some of these dashboards take a PhD in codebreaking to understand but it’s likely that the basic overview will have what you need to make sense of it all.

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If you’re using a marketing funnel plan, and lord knows there about a billion different ones out there, the next question is have you tied up all your loose ends, inserted your pixels into your shopping carts and success pages and connected your email with your social and leveraged that against your inbound traffic reports…  (stop looking at me like that) My guess is that if you are still reading at this point the answer is a distinctly quiet “no”.  And that’s ok, for now.

Basic calculations are in order here, and the first thing you should write down is the total dollar figure of your sales.  Next is the total dollar figure of your cost of goods sold.  This is NOT your advertising, payroll, etc, this is just what you paid in order to purchase the item (or create it) that you sold to someone for money.

[Tweet “Subtract the cost of goods from the total purchase price, and what’s left is where we need to focus.”]

Again, super basic stuff, but I know there are plenty of people out there – especially the creatives, the makers, the folks with some really cool products that are produced on a small scale – that are so busy making stuff that they haven’t even started trying to figure out if they’re making any money doing this.

Let’s go back to your campaign stats.

If you spent $100, and you had 10 people click through on an ad, that means you’re spending $10 in UA (user acquisition) costs to acquire a prospect.  Not an actual customer yet, but just someone who might become a customer.  If you spent $0 on ads, but you put in 150 hours building collateral and posts and organic outreach materials to get 10 people to click through, then you are going to have to calculate what those 150 hours are worth – be reasonable and fake pay yourself a living wage in the math here.

[READ: Location based advertising is a THING now – BLOG ARTICLE]

If it’s not looking very pretty right now, don’t panic.  You just need to face the facts and see where your baseline is; you can’t get better at something if you don’t know how bad you were to start.  As much as it might sting your pride or make you cringe, it’s always better to know if you should keep at something or not.  Pokemon Go taking four years to hit (and hit it did) is not a good example that should inspire you to keep doing the same things for years without getting a return on your investment.  Unless you are crazy, in which case, keep on doing it.

Drill down in the numbers a bit more.

Of those 10 people that clicked through, how many of them purchased something?  You may only need one person if you are selling a high ticket product, or if you only have one of a particular item to sell (and it is priced high enough that you cover your costs), and you did sell that item.  Let’s say, for the sake of an example, that you are a quilter, and you sold a quilt for $1500.  Completely reasonable assumption, from what I know about quilts and how much they cost when they are nicely done and well made.

Also for the sake of the quilt example, let’s assume that you have a long arm machine and a regular machine and you did all the work yourself.  You purchased fabric at a reasonable price, and didn’t break the bank with thread and batting.  So you might be looking at $250-300 in cost of materials, outside of the labor to cut, sew, and quilt.

Right now it sounds like you are going to make a killing on this quilt – you’ve got less than 30% of the sale price in the cost, but it is early yet.  Of course if you only spent $100 marketing it, then you’re still looking pretty good, especially if you compare it to spending 100 hours of your time photographing, posting, promoting and finding a buyer.

Comparing apples to oranges is sometimes all there is to do.

Logical and common sense here would say that if you spend $100 to get interest from 10 people in your product or service, and 1 of those people ends up being your buyer, then you are looking at a BA (buyer acquisition cost) of $100.  Except for the part that you spent getting to where you put $100 into advertising – how did you get the images, who wrote the posts, who proofread your ad copy, and so on…

These items needs to be accounted for in your costs of engagement, and in your calculations when you determine what sort of money you made or lost in the final accounting.  What if you’re not making the kind of money you thought you were?  Then you can either raise your prices or find a way to more efficiently boost engagement without spending more time or money to do so.

Can you use mobile to build your quilt sales business?

Yes, actually, you can.  I know it sounds kind of strange, but at the end of the day if you can start your own collection of prospects that you own, you’ll find your engagement costs go down rapidly and you’ll spend less time trying to convince people you already interact with to buy from you.  By transitioning your marketing to a #MobileFirst philosophy, you won’t be dependent on Instagram or Pinterest or email to help you reconnect with people that have demonstrated interest; you’ll use those mediums to find and acquire new prospects that you can add to your mobile campaigns.

How would you go about doing this? First step is to figure out what you have that you can leverage already.  If you use Shopify, for instance, creating a one tap CTA for your storefront from your mobile ad campaign is a fabulous use of resources.  Linking your Instagram, Pinterest, Facebook, etc is also a basic of a well thought out campaign.  This means that every time you have something new to promote – whether its a quilt pattern or a finished quilt, you can use the mobile campaign as a hub for all of your other delivery platforms.

There are a ton of articles, how-tos, podcast episodes, and case studies on DominoResearch.com and MobileWalletMarketer.com that explain in great detail exactly how to get a mobile ad campaign up and running; basic campaigns are inexpensive and offer enough flexibility to be able to update your mobile audience often enough that their engagement levels are high at a price that gives you a month of advertising for about the cost of a day on Facebook or Instagram.

If you’re interested in finding out more about how you can get started, you can always drop me a line; if you need business development or other advice, I’m open to talking about consulting for you as well.  Just let me know.


Now is the time to figure out just how much engagement you can afford at your current costs, and what you need to do in order to spend more time getting new prospects while not losing the chance to convert your current ones.