When the economy took a turn for the worst in Q4 of last year, I was faced with determining how to best manage the agency during the turbulent times. Instead of only relying on a qualitative strategy to ensure the agency remained strong, my main objective was to develop a measurable formula for success—a formula that would define the incoming revenue Rise Interactive could expect.

I thought through the various components of revenue and developed the following formula:

Expected Revenue = Existing Revenue + Up-selling Opportunities + New Revenue

Each one of the components that make up revenue is derived from a few attributes:

Existing Revenue=Number of Existing Customers X Price per Customer X Retention rate

New Revenue=Number of Leads X Price per Customer X Conversation Rate

Up-selling Opportunities=Number of Opportunities X Conversation Rate X Price

The five components of these formulas are conversion rate, retention rate, price per customer, up-selling opportunities and the number of new leads.  In a down economy, each of these variables decreases due to macroeconomic factors.  Given this information, where should you focus your time to grow your revenue?  In my opinion, the only thing you can substantially improve during a down economy is the number of leads.  If you increase the number of new leads, you can reach your revenue goals provided that the leads grow enough to off-set the other declines.

To increase our leads, Rise developed and implemented a marketing plan in January of 2009.  Although each company will differ, it took Rise only six weeks to generate enough leads per month to put us on track for our annual revenue goal.

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This entry was posted on Tuesday, August 18th, 2009 at 12:40 pm and is filed under Internet Marketing Agency, Rise Interactive. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.