What do business owners really need to know about how the Yellow Pages (YP) work today? For starters, YP is a marketing channel and like any marketing channel we must ask, “Is it cost effective?” Well, if you ask any Yellow Pages sales rep, they’ll say unequivocally “YES!”
Here’s the reality. YP is a channel that must be measured. One metric, which must be factored, is the Cost of Acquisition Per Channel. Once the acquisition data is in, a proper diagnosis can be made in terms of cost in relationship to profit. Every channel will offer a different cost benefit ratio and the metrics will reveal which ones to keep, consider keeping, or cut out altogether. At times it may not be about profitability, but presence. However, that is another discussion apart from this post.
In essence, you must test the channel and measure the results to determine whether or not the cost of using the channel is cost effective. If this is new to you, it is important to understand that the first metrics should help you determine the cost of acquisition. In other words, for every YP ad spend dollar, what is your cost per lead conversion? Secondly, what is the lead to sales conversion cost?
If you spend $100 to acquire 20 leads, your acquisition cost per lead is $5.00.
If your sales conversion rate is 10%, you will make 2 sales, your cost per sale is $50.00 x 2 = $100.00. At $100 per sale, you have just made $200 worth of sales. Assuming you have 50% margins, you just broke even.
Here’s the math:
$100.00 Ad Spend + $100.00 Cost of Sales = $200.00 Total Cost
$200.00 Total Sales – $200.00 Cost of Sales = $00.00 Break even
This might be good, if you have factored the Life Time Value (LTV) of a customer into the equation. In fact, you can even sell at a loss and still make money over the long term or LTV of your customers.
Assessing performance is something all businesses must be doing and having metrics in place is key for measuring performance and in determining what may be required to improve performance. After all, improved performance should equal improved profitability.
So what’s the big deal about using or not using YP as a marketing channel? The answer is: “That depends on a few different variables.” One major issue I have with YP is their current contract terms; 3 months; 6 months; 9 months and 12 months. You see, if I’m testing my metrics and I find out the conversion is not profitable I can’t cancel the contract. Have you ever tried to cancel a Yellow Pages contract? An absolute nightmare in some cases.
Personally, I like more control over my ad spend and this is one of the primary reasons YP would not be my first choice for testing a marketing channel.
You would be amazed at how many business owners I have spoken to that are frustrated with YP online and print directory contracts. Some of my clients have spent a few hundred dollars a month and other clients hundreds of thousands of dollars per year.
In my Yellow Pages Manifesto coming out in November 2013, I will go into great detail, using an actual case study, of exactly why you would not want to use YP as a marketing channel. My Yellow Pages Manifesto will also cover the hidden truth about YP that every business owner must know; how to set up fundamental metrics for your business; alternative marketing channels that are less expensive and can give you far greater results and – many more details and insights.
Many businesses spend advertising dollars like rolling dice, hoping to hit it big. One of the many drawbacks is the length of commitment required when using YP as a channel. Of course, the more competitive the market, the longer the commitment and the more you will pay.
There are things YP does not want you to know and I will share those things in my Yellow Pages Manifesto absolutely FREE!
Go ahead and Reserve Your FREE copy today!
The Video below does not have the best quality production, but certainly gets a few solid points across that business owners need to consider before they spend advertising dollars on YP.