Bookkeeping for Crafters

Lesson 30 of 33

Return on Investment (ROI) of "Free"

 

Bookkeeping for Crafters

Lesson 30 of 33

Return on Investment (ROI) of "Free"

 

Lesson Info

Return on Investment (ROI) of "Free"

The return on investment of free uh one of the good exposure and when is it not s o back in the earlier days of my business I got I don't know why this was a trend all of a sudden I think maybe it was because like the sampler had just come out to see me to remember this business the sampler it had something to do with oetzi was somehow tangentially related it was a monthly subscription that you paid for I don't remember what it was ten or twenty dollars a month and you would get a sampler once a month he would get a box of these like tiny little products by handmade artist he was usually you know, like a charm and a button and a hair bow and you know and like sometimes there were coupons or business cards or whatever in there um and in order to participate in the sampler um I think the artist had to pay the sampler toe have their products included and the idea was that if um you know like if I donated whatever it was I remember how many they needed of each thing but if I donated like t...

wo hundred I love you more than bacon buttons and paid them whatever the fee wass then two hundred people would open this box and they would look at the button and they would go the ha ha that's so funny um, look at my business card and be like, oh, if I love this, you know, I love this plush bacon I'm gonna go and buy that, and so this was a way for them to make money on both ends, right? They were an advertisement for businesses, and then they also sold this monthly subscription to consumers, so they were getting income on both sides of the equation, which is very smart, but it didn't last very long. Unfortunately, because the return on investment, uh, for most of the donating businesses was not very good because you had no control over who was getting your product. You hadn't you're not speaking to your market, there was no way to tell if the person who was going to open that box was a fan of meat or a fan of plush toys or wanted anything to do with what you have to sell. And I got similar enquiries at the same time again, I think, because the sampler just come out ofthe people like just random people contacted me wanting me to donate things to their gift bags for blah like just regular people having a wedding, wanting to collect things to give as like, you know, uh, what do you call those gifts that people favors, thank you. Wedding favors to give out to there to their guests and they would phrase it in this really great marketing pitch way remember I got an email from someone who's like I saw your products on that scene I thought they're really great and um I was wondering if you would be interested in donating one hundred of them to be part of you know, the wedding the gift bag favors whatever um at my upcoming wedding um it will get your work ah you will get exposure teo um hundreds of people from all kinds of like demographics and geographical locations it'll give you like really broad reach across a broad range of people and I'm like I don't want broad reach across a broad range of people I don't care if your grandma walks away you know with my business card in her hand that's not useful to me she probably doesn't even have an internet connection let alone like an interest in buying a plush ham I also don't want in the hands of your four year old cousin he doesn't have any money to spend with me like this is not useful to me um but then when I got approached by a magazine called meat paper magazine and they wanted to know are you interested in perhaps donating a few hundred of these buttons to be given away as part of the launch for like issue number three I said yes yes, I would I would be happy to donate you know one hundred buttons to you for the launch party of your meat themed magazine thes air exactly the people I want to reach they're a local like it was. This magazine is based here in san francisco. They were local they were already like, really interested in meat and at twenty five cents a pop donating one hundred buttons was a twenty five dollar marketing costs right? It cost me twenty five bucks in product to reach at least one hundred and then anyone who saw the button at the party or elsewhere um presumably you know, carnivores and meat lovers have other meat loving friends uh in exactly my target market to be able to reach them. You know, with something that had my website address on them like absolutely yes, that makes sense. The return on investment for that is huge that's that has great market potential. Um your wedding favor bag. Thanks, but no thanks. So when is a good exposure? And when is it not? Well, um you have to do a little bit of calculation here, but, uh, isn't your target market not just does it sound good and fancy cause I get approached all the time too, but the people who run those companies that give out the gift bags at the awards shows right um the people who like put together the freebies that all the stars get for the oscars and the emmys and whatever and I forget what they call them they're called like I don't know the emmys lounge or something snazzy um or there was a company that does uh these like party buses for rich people to the hamptons and they give out gift bags at the beginning of the bus ride and it's like you get your products in front of you know the rich and famous I don't care okay those people have tons of money to burn but are they really going to burn it on a plush ham probably not like there if I had a really high end product maybe that would make sense um but I don't so there are people who are sort of below my uh target income range a ce faras my target market then they're people who are just way above it and they're not part of my market either this is not like a you know price or above situation it's not just like everyone who can afford my product it's all the people who can't afford my product and would actually spend money on that um so when we're talking about products and like product donations and that sort of thing it's important to know like who it's going in front of how many do they need? Um you know which product is it um like the hamptons bust people I was like if you want to put a button and all of these bags like you know we could maybe do that um I could test it out see how it see how it goes if it's like fifty buttons it's only twelve bucks like maybe that's a good marketing outlet I don't know I'm willing to give it a shot nearly no we really want like uh you know, one of the hands or maybe we could do like two plush per bag and I was like no no no no no no that's way too expensive to like blow on a test um they're like well but you know, the stars they very often will like keep these products and then you know, they get photographed with them like it's not jewelry it's not a scarf they're not gonna be out wearing my ham around their neck when they go down the red carpet next like maybe they'll give it to their kids or their dog but like nobody's gonna see this just because it was part of the emmys lounge like they're gonna walk out of the emmys holding a stuffed ham that's not gonna happen? Um so it's really good to evaluate uh exactly what the proposed benefit is um and when we talk about uh sort of the service side of things like this is an even bigger problem um you really have to look at sort of a cost benefit analysis there to um I get approach from time to time about doing free work for um what do they call them like creative teams craft teams where craft supply companies are trying to build up uh basically people to do work for free this is something that's been talked about a lot on the internet recently in terms of uh the broader crafting community where um you know some kraft supplier maybe they make like scrapbooking supplies or glue or uh you know, die cutters or something um they put out a call to apply to be part of their creative team and in exchange for making you know x number of projects a year following their particular specifications taking really nice product photos and then also promoting those projects and the products they made them with on their own blog's and newsletters and social media channels what do you get for all that free product right? You get some glue you get some uh you know, paper punches um and maybe it's a lot of glue maybe it's a lot of paper maybe it's a lot of paper punchers but I can't feed my kid with glue and paper punchers right um you know if if you're the kind of person who again is like retired and you know you just want to have your materials paid for and um it's really helpful for you and you enjoy having a different project to do every month and having different instructions for that project that's something that you want to do is a hobby and you like being part of the first group of people to like test out a new product um okay, sure you could sign up for that I guess um but the people that they're always going to are the professional crafters right? The ones who already have audiences that can promote this stuff that people have already proven that they can make a beautiful products um and that's just not worth it right? Like those craft supply companies, those air for profit companies they're not working for free for anybody um and so I don't either um and and I don't frankly recommend it to anyone else either um if you're putting I mean you look at your hourly rate right if it's fifty seven dollars an hour eighty dollars an hour, whatever it is and you're putting all of that time into these projects it's like you're essentially being paid whatever it is ten dollars in glue for returning a no five hundred dollars thousand dollar project and they always promise you all this exposure well okay, but exposure to whom precisely, chances are that you know the manufacturer of the glue or the scrap of king supplies um their biggest audience the people reading their twitter feeds and their blog's our other crafters there, other scrap booker's there other people making the exact same things that you are making or at least similar? Um maybe you'll gain a few more social media fans from people who appreciate what you're doing from that community, our other scrap pickers going to buy your scrapbooking pages? Absolutely not. It's not going to happen. Um, so that's, why? I just, you know, people always say, well, it's for the exposure, we're huge company, we can give you exposure to thousands of people are they the right people? Are they going to help my bottom line or they're going to build my business or the other people exactly like me? I may make some new friends out of it, but, uh are not paying my bills at all right now, you just don't put a great question. Therefore after sander and lots of people voted on this thing, what do you think about the are aware of social media, where you've just answered that one without it? I think it's also it largely immeasurable, but go toad is asking, what do you think about giveaways? To get sign ups for email? This health turned that effectiveness be tracked? Uh, so I think I'm gonna take those two questions together because I would disagree that social media eyes largely immeasurable, um I think social media and newsletters and all of that other stuff is immensely measurable um all of that stuff comes with analytics uh if you use a program um if you use one of those social media sort of aggregator programs like a hoot suite or something um and sometimes you need to have like, a pro account with these things to get the analytics um you can absolutely see and even just through regular like twitter or facebook, you'll always be able to see how many views something got you'll always be able to see how many people liked it, how many people retweeted it, how many people responded to it favorited etcetera? Um you can always see you know, sort of the most popular things, but if you have a link to your shop ah in your newsletter in your social media post etcetera um if you have something set up an analytics program and I would highly recommend setting up an analytics program uhm google analytics you can use on any website it's totally free um it takes well depending on what you're using it with, it can take five minutes or you might have to get someone professional to pace the code into generates a little number for you when you sign up for it and then you either pace that um so pro pro uh platforms like etc and um I think maybe square space in big cartel you could just sort of drop it in and it will populate toe all the pages um if you're running your own website and you have more control over the back anyway have to copy and paste that code into every page yourself manually but then from that day forward you can visit google analytics and you can see everything about your online store you can see how many people visited it how many pages they looked at how long they stayed on each page um how many people came back that month or came back that year or came back that week um what are your most popular products what are people searching for when they got to those products um and then you can also see where your inbound traffic came from how many people visited that product page because they clicked on it from that tweet or they clicked on it from that newsletter that you wrote and then you can calculate exactly how many sales you made as a result of that tweet of that newsletter remember I talked about that word conversions you can see what your conversion rate is the percentage of people who buy uh compared to the number of people who saw that piece of marketing um and you can see well when I write newsletters this way or when I write a newsletter with this type of article in it um, that has a really good conversion that really leads people to buy. And then along with, like, your budget forecast, that sort of thing you need to look at. Why? Why do you think that, wass? Was it really topical and seasonal? Did you offer them a solution to something? Um, you know, was it just three days before christmas? And you offered them, um you showed them that they could buy from you and with the two day shipping, um, which, with being a newsletter subscriber, they got to get for half price, you know, would still get to their recipients house in time before the holiday. You know, was there something really topical in the news or happening in general in the world that you touched on in that newsletter article that really resonated with people? You know? So then you can start to see and rate and rank uh, what you're more effective and less effective marketing efforts are, and, um, you can start to see sort of trends and patterns and similarities there and become amore intelligent marker. But marketer from that, um, I hope that that answers that question. Was the second yeah did you ask about facebook was a second hand signal was what do you think about giveaways to get sign ups for email this and then how come that affected must be tracked? Okay, so giveaways to get email sign ups I will tell you a personal story about this too um I don't necessarily recommend giving something away to get somebody to sign up for your newsletter unless it's really a question of them um just not knowing how outstanding or appropriate your content is. Um if somebody's really interested in what you're making like I always had a newsletter sign up out on my craft fair tables if somebody's really interested in what you're making, they're going to sign up for it anyway. S o when I started incentivizing newsletter sign ups by giving away with those buttons for a newsletter, sign up tons of people put their email on the list in order to get the free button. Um, not only did that disincentivize purchasing anything from me because now they've got this little souvenir from my shop, so I'm not even gonna consider buying a plush toy because they've got the button they got it for free and they feel successful already they walked away with something great from my table um so it not only kept people from buying buttons that kept people from buying the plush too so that was not a great great idea um and then I noticed when I would look at those email list at the end of the day that there was a much higher percentage of emails on there that were things like um you know, uh josephine's junk mail at gmail dot com you know, like things that were very obviously people's spam accounts so like they put down an email and they they even took the time to put down a really mail address I got plenty of non really email addresses too um things that bounced um but they obviously weren't interested in reading the newsletter they didn't I care what I had to say they didn't want to find out about promotions or new product releases from me they just wanted a free button that one time um so I would say that my conversion from that effort was very, very, very low uh you have a much higher conversion from people who want to be on there in the first place so it's perfectly reasonable to put it out there um and to remind people about it but as faras incentivizing people to pay attention to you it's not going to deliver a ton of, uh, customers or fans that air become really loyal, right? Um I suppose if it's the sort of thing where you're just trying to get the link to your newsletter shared within the broader community, so that it reaches more people than you can. Personally, um, I suppose you could tie a sort of coupon, or give away to that. That might be, um, an incentive for other people to then share your link to their communities. But within your own set, I don't know that that really makes a ton of sense. It certainly didn't for me, um, so that's, where that were fall on that that scale.

Class Description

It is common to be intimidated by math and money, but managing your business’s finances doesn’t have to feel overwhelming. Bookkeeping for Crafters with Lauren Venell will give you the confidence and skills you need to start and maintain your own small business ledger.

Lauren is an artist and educator committed to making financial solvency accessible to independent entrepreneurs. In Bookkeeping for Crafters you’ll learn the basics of managing your money and how doing it yourself can reveal important opportunities for your business.

You’ll learn about managing different types of income and expense accounts and how to painlessly prepare for tax time. Lauren will make predicting fluctuations in your cash flow straightforward and easy while helping you develop a system that is right for you – even if you prefer pen and paper over spreadsheets.

If you are ready to change your relationship to money and manage a ledger that is customized to the way you do business – this is the class for you.

Be sure to check out Lauren's other course Bookkeeping for Etsy Sellers.

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