How awesome is that impulse buy rush? Addictive. How quickly does buyer’s regret set in? Faster than we’d like.
Despite having an accounting background, I am susceptible to all the pretty things. The business cards, websites, professionally designed Facebook headers, Etsy address stamps and manicured Instagram pictures. It never ends. The best way to becoming a business failure statistic is to invest heavily in all of these with no clear objective or way to measure if the time and effort spent has been worth it.
To avoid this, I suggest taking half an hour to work through the following before focusing on something which doesn’t make sense for your business.
Work out what you’d like to achieve from the purchase or the time spent. Is it to build brand awareness or increase your client database? Or is it just because you like being surrounded by pretty? Be honest, as it will help you make sensible decisions further down the line.
To give an example, I’ll go through the process of buying a dress for a wedding I am going to attend. The aim, then, is to buy a dress for the wedding.
Linked to the aim, decide on what criteria you would like in return for your spend. Ever watched House Hunters? The potential buyers identify three or four things they want in the new house. After visiting each one, they put a tick or cross next to each. I tend to use a rating not just a pass or fail, but that is up to you.
In this example, because I don’t wear semi formal dresses often, I knew I wanted it to be adaptable for different seasons and to last for years to come. I also wanted it to suit me. Because the wedding was just before Christmas, I didn’t have a lot of money to spend. Therefore the criteria were:
- Be able to wear with a jacket or cardigan
- Classic style
- Under $100
Make sure you look at ALL of your options. If you are deciding on brand awareness raising, make sure you look at above the line advertising as well as social media and branded goods. Also make sure you compare different forms of the same media eg different social media platforms or different forms of advertising.
Assign the cost to each option. This might be an opportunity cost rather than a monetary one. For instance, you might spend one hour a day on Instagram, but spend $20 on a Facebook ad campaign. A simple way to convert them into the same units ($) is to multiply time spent by your rate your hour.
Analyse the results
Once you have considered the above, it’s time to put your options to the test. Rate each option against its ability to meet your Aim, as well as its performance against the Criteria. Total these up for each option.
Divide the total by the cost to give you an average rating per cost. The one with the highest rating per cost is the option you should spend the most amount of your time and effort on, or, in my example, the dress I should buy.
|DRESS||Blue dress||Red dress||Floral dress|
|Suitable for a wedding (Aim)||8||7||9|
|Trans seasonal (Criterium 1)||4||8||10|
|Flattering (Criterium 2)||4||7||9|
|Classic style (Criterium 3)||10||8||9|
|Under $100 (Criterium 4)||2||8||8|
|TOTAL SCORE (max 50, 10 each)||28||38||45|
|PRICE||$ 200.00||$ 79.00||$ 79.00|
|SCORE / $||$ 0.14||$ 0.48||$ 0.57|
From the above, you can see the dress that has the highest rank per dollar spent is the Floral Dress, which is therefore the one I should buy.
A word of warning. This does not mean you necessarily spend all your time on this option. If you are a service business, for instance, it is important to spend the majority of your working time on paid work. If you’ve been looking at social media, I am not suggesting you only spend time on the highest ranking platform.
Do tell – do you like the pretty things or are your more sensible with your spending?