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The CRM database for the business tracks the activities of potential and actual customers, including their visits, promotions they take advantage of, referrals they make, and their transactions. The business's accounting software - QuickBooks - tracks the sales numbers and interfaces with the CRM. Membership consultants are responsible for updating the CRM database for the members they oversee.

12.1 Sales Forecast

Standard and premium membership fees are calculated based on their base value. Discounts or promotions applied are included in marketing expenses and not as direct costs. Membership fees carrying a very low ongoing cost. Registration has a higher cost due to start up activities, membership packet, ID cards, etc. which are provided. Other revenues are from personal training, the kid's room, and retail products, which carry a higher cost per unit sold.

An attrition rate of 2% per month will decrease leading up to the third year when we project an annual attrition rate of only 20%.

Sales Forecast

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Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Standard Monthly Membership Fees 35,928 46,707 60,718
Premium Monthly Membership Fees 46,692 60,700 78,910
Registration Fees 3,979 5,969 8,953
Other Revenues 17,964 17,964 23,353
Total Unit Sales 104,564 131,339 171,935
Unit Prices Year 1 Year 2 Year 3
Standard Monthly Membership Fees $20.00 $20.00 $20.00
Premium Monthly Membership Fees $25.00 $25.00 $25.00
Registration Fees $35.00 $35.00 $35.00
Other Revenues $30.00 $30.00 $30.00
Sales
Standard Monthly Membership Fees $718,562 $934,130 $1,214,370
Premium Monthly Membership Fees $1,167,306 $1,517,498 $1,972,748
Registration Fees $139,275 $208,912 $313,368
Other Revenues $538,921 $538,921 $700,598
Total Sales $2,564,065 $3,199,463 $4,201,084
Direct Unit Costs Year 1 Year 2 Year 3
Standard Monthly Membership Fees $0.20 $0.20 $0.20
Premium Monthly Membership Fees $0.25 $0.25 $0.25
Registration Fees $17.50 $17.50 $17.50
Other Revenues $18.00 $18.00 $18.00
Direct Cost of Sales
Standard Monthly Membership Fees $7,186 $9,341 $12,144
Premium Monthly Membership Fees $11,673 $15,175 $19,727
Registration Fees $69,637 $104,456 $156,684
Other Revenues $323,353 $323,353 $420,359
Subtotal Direct Cost of Sales $411,849 $452,325 $608,914

12.2 Marketing Expense Budget

Marketing expenses budgeted here do not include the additional costs delineated in the milestones chart detailing the costs associated with the new branding initiative. The ongoing marketing expenses will continue to drop as a percentage of sales as referral marketing increases in efficiency.

Marketing Expense Budget

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Marketing Expense Budget
Year 1 Year 2 Year 3
Advertising $24,000 $28,800 $34,560
Sales Promotions $12,000 $14,400 $17,280
Marketing Training $6,000 $7,200 $8,640
Quality Assurance $6,000 $7,200 $8,640
Referral Program $18,000 $21,600 $25,920
Corporate Promotion $6,000 $7,200 $8,640
Public Relations $12,000 $14,400 $17,280
Website and Facebook $6,000 $7,200 $8,640
------------ ------------ ------------
Total Sales and Marketing Expenses $90,000 $108,000 $129,600
Percent of Sales 3.51% 3.38% 3.08%

12.3 Key Marketing Metrics

A large number of leads must be generated due to a low conversion rate which is common for the business (many interested leads go to competitors or choose not to enroll after a free guest period). This conversion rate is expected to improve, however. Many customers do no more than pay their membership fee each month. Some will purchase personal training, use the kid's room, or other transactions in a given month. Referrals make up about half of new customer leads and this number is expected to grow to 65% of leads.

PR mentions will increase due to the new social initiative and hiring of a PR agent to send out press releases at least every other month about new programs, successes, and the importance of a social context to exercise. Testimonials are sought in customer surveys and 10% or more are expected to be positive, usable testimonials to choose from. Finally, the customer attrition rate will drop due to the effects of the loyalty program.

Key Marketing Metrics

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Key Marketing Metrics
Year 1 Year 2 Year 3
Revenue $2,564,065 $3,199,463 $4,201,084
Leads 19,896 23,876 29,845
Leads Converted 20.00% 25.00% 30.00%
Avg. Transactions/Customer 1.26 1.22 1.23
Avg. $/Customer $31 $30 $30
Referrals 9,948 14,326 19,399
PR Mentions 51 60 70
Testimonials 199 239 269
Annual Customer Attrition 24% 22% 20%

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