A GUIDE TO MARKETING MATHEMATICS

Some sort of calculations are present in everyone’s personal and professional life. Still, you might be surprised at the idea of having to do math in marketing too! The good news is you don’t need to be a pro at advanced calculus to get started. So even if algebra and geometry weren’t your favorite classes, no worries. As long as you can add, subtract, multiply, and divide, you are already pretty equipped for some basic marketing math. But that’s not going to be all it takes.

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A considerable part of marketing math revolves around understanding human behavior and being creative with that skill. When planning a business strategy or making adjustments to your sales funnel, you want to see the data that shows you whether your plans will work. This is where the numbers come in. They make forecasting, analysis, and review possible. This article will explore how to utilize math in marketing for better business results.

What Is Math in Marketing, and How Can It Help You?

Marketing in math is more nuanced than the mathematics we learned at school. Think of concepts, calculations, and analyses used in marketing and business operations. Understanding how much expenditures or running costs your company had to bear in the past quarter can help you see if you are making losses or generating revenue. You also have to consider what is more appropriate for your business at any particular moment. For example, yearly subscriptions might save you money in the long run, but paying a large sum at once might not work for every company.

And in marketing, it goes further than getting software. For example, businesses doing intensive link-building may have to spend more than usual, especially if they acquire temporary backlinks. This happens when the websites charge a monthly fee for the use of their backlinks which can increase a company’s monthly expenses. But at the same time, it might be the most cost-effective option for some cases and campaigns.

Besides, every company has to keep in mind the other variables that can crop up. An employee resignation, troubles with clients, or a world economic situation can all disrupt business and affect your production or sales. Those might be even less obvious things, such as sudden weather conditions like a tornado destroying a manufacturing plant.

Marketing math is essential to every successful company’s strategy as it helps you know what it costs to stay in business. You get to know exactly how your brand is doing, especially in contrast with the competition. It also helps you determine the right plan for sustainable growth and expansion.

Examples of Marketing Math Formulas

The more marketing math formulas you know and apply, the easier it is for you to make data-driven business decisions that bring desired results. Thankfully, many online math calculators can make your life easier. Still, here are a few you can start with :

Total Costs (Fixed Costs + Variable Costs = Total Costs)

This is one of the basic marketing math formulas out there. To determine your total costs for the year, you have to add the fixed and variable costs for that period. This includes your rent, costs of machinery or tools, and everything needed to make your product. This tells you how much it will cost to stay open for business.

Profits or Loss (Total Revenue - Total Costs = Profits/Loss)

How do you know if a business is doing well or just ends up being an expensive hobby? The answer is marketing math. To understand how much your company made for a time frame, you need to subtract your total running costs from the total revenue for a particular period. Say you made $200,000 at the end of the month, but it also cost you about $122,000 to stay in business.  You crunch the numbers and get $78,000. Well then, congratulations! You've made a good profit. If you've spent more than you made, that would be a loss, and you’d have to return to the drawing board.

Customer Acquisition Costs (Total Costs of Getting New Customers/Number Of Customers Gained = Customer Acquisition Costs)

How much does it cost your business to get a new customer? To find out, you must add all the sales and marketing expenses. Next, divide the figure by the number of new customers in that period. If you spent $15,000 to get new customers last month and got a new customer every week. This means that it costs you $3,750 to get each new customer. In the same way, you can estimate cost-per-click (CPC) during Google Ads campaigns, for instance. Marketing math like this can help you know if you need to change your approach for better profitability.

Return on Investment (Net Profit/Total Investments * 100)

Marketing math skills like calculating the return on investment let you know how much your efforts are paying off. Say you have invested $60,000 into SEO or PPC to gain more web traffic. How did that plan work? You could use Google Analytics to check or calculate the exact ROI by subtracting the amount invested from your net income (during that specific timeframe). Next, divide it by the invested amount and multiply by 100.

Say, for that month, you made $80,000 and spent $60,000. You subtract $60,000 from $80,000, leaving you with $20,000. So, $20,000/ $60,000 x 100 will give you a 33.3% ROI.

Marketing Math Tips to Boost Business Growth

There are many details that go into running a successful business. You may have to choose if SEM or SEO marketing strategy suits your business better. On top of that, you still have to figure out how to apply your marketing math skills to increase revenue. Here are some tips to get you started.

Make your customers happy to boost retention. It is cheaper to retain customers than it is to acquire new ones. Investing in this aspect of your marketing can cut costs and build lifetime value.

More SEO than PPC. While both can boost your visibility, credibility, and sales generation, one is more efficient. SEO is cheaper and brings compounding interests that can last years. You want to use both but also invest heavily in search engine optimization.

 Invest in content marketing and link building to boost lead generation. While still under SEO, these need to be mentioned separately. Adding links to niche blogs, especially well-optimized articles, can be one of the best ways to increase awareness and boost sales.

Focus on building brand loyalty to drive better market share. It is easier for popular and well-loved brands to raise their pricing to drive market shares. They can also make more profits while lowering costs as more satisfied customers will respond positively to marketing efforts.

Conclusion

There are many good reasons to brush up on your marketing math skills. Whether you are a company owner or a freelancer, you can gain from knowing how calculation affects your business processes. With the right marketing math formulas, you can monitor your progress and implement or optimize strategies that drive sustainable growth.

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