# Marketing Maths

## Marketing Maths

Marketing Essentials, Marketing Math Workbook
By McGraw-Hill
Marketing Essentials Marketing Math Workbook
by Lois Schneider Farese
Synopsis not available.
The Marketing Equation
Posted on September 4, 2011
Most business owners typically focus on either one or two aspects of their business: total revenue or net profit. The common mindset is increase one, and you’ll increase the other. But total revenue and net profit are results. The only way to change a result is to influence the components that make it. Think about it: you can’t bake a better pie with the same recipe – you have to change some or all of the ingredients.
There’s a better way to grow your business – it’s called The Marketing Equation. With this simple formula, I’ll show you how to change end results, such as net profit, by focusing on the variables that influence each one.
The only numbers you’ll ever need to know:
* Prospects X Conversion Rate = Customers
* Customers X Transactions X Average Sale = Total Revenue
* Total Revenue X Margin = Profit
It’s important to understand that results cannot be changed. Everything before an “equals” sign is a variable to improve upon; everything after an “equals” sign is a result. The only way to influence a result is improve upon the variables that make up the result.
So, if you’re a business only focusing on Margin, you’re missing out on several other ways to improve your bottom line.
Step 1: Prospects X Conversion Rate = Customers
Let’s start with the first variable, Prospects. Since this is technically a result, we can influence and increase Prospects by marketing directly to a select group of suspects (people who demographically match your typical customer). You’ll also save money on wasteful “image” advertising, which cannot be tracked and only serves to make your advertising sales representative more commissions.
Successfully implement a unique selling proposition (USP) – the reason why someone should buy from you – and you’ll...