Budgeting: How Much is Too Much?
OK, I get it. Coming from a Marketing agency this is going to sound self serving and biased. But I’m still going to tell you to spend everything you can on Marketing. Not on your product, not on your equipment , but marketing. Wait, hear me out first and judge for yourself.
If I told you to give me fifty dollars and I’d give you a 100 back, would you do it? Of course you would. That’s money at a discount. And if for every dollar you spent on marketing, it made you two dollars back, would you do it? Of course! It would be like having a personal money printing press. But I’m guessing you’re not convinced yet. So let’s explore the subject in more detail. Here’s three possible scenarios:
- You’re reaching your Ideal Customer, it’s resonating and your increased revenue is outpacing your cost.
- You are not reaching your Ideal Customer and/or it’s not resonating and your expenses are outpacing your revenue.
- Something appears to be working or not working but you’re not sure where, what or why.
Questions is, how do you avoid scenario two and three?
Before we spend a dime on execution, it’s imperative we use market research and logic to come up with a compressive marketing strategy. With a well thought out plan we have a much greater chance of avoiding two and three altogether. Before we execute, we plan. We do not spray and pray. Spending time and money we cannot spare on marketing that may or may not work. Like a general going off to war, we start with a good plan and better our odds.
Next, we track our results and measure ROI to the best of our ability. Let’s say we’ve identified Joe as our Ideal Customer. How can we track Joe to know if the marketing strategy we executed brought us more revenue than expenses?
We track Joe Individually. We made a video specifically targeting Joe and people like Joe. The video works. It comes up on his LinkedIn feed, the title speaks to his interest, he watches it and he finds value. The end of the video ask Joe for his email address to receive more free content. He gives it. Later Joe clicks on our special offer in our newsletter and we make a sale. Through the whole process; from clicking the video, to giving us his email, to buying our product or service, we have successfully tracked Joe.
We track Joe’s Demographic. Let’s say Joe is a Hispanic male who live in Austin. We run a marketing campaign aimed at Joe. All of sudden the phones are lighting up. We’re getting increased revenue sales from Hispanic males calling from Austin. Working backwards from the data, we have successfully tracked Joe.
We ask Joe. It’s as simple as that. Joe buys our product online, calls or comes in. And we ask, “Hey Joe, how did you he hear about us.” He tells us. Once again, we’ve tracked Joe.
At this point we’ve created a great market strategy, executed and tracked the results as best we can and we are still getting mixed results. What’s next? We experiment and adjust. Joe is watching our video but not giving us his email. Can we entice him with something better? Joe is giving us his email but he’s not buying. Can we make Joe a better offer or was our timing just bad? We’re missing Joe altogether. Do we try to reach him somewhere else with the video, change the title of the video or try a different medium altogether? One marketing campaign is bringing in revenue and the other is not. Let’s dump the one not working and double down on the one that is working. And so on.
Yes, I know. This all works great if we can track it. But despite our best efforts, we are unable track everything with complete accuracy. What do we do? When in doubt, we look at the big picture. We just spent $400K on marketing and our gross revenue went up a million. To meet the demand, we had to increase our infrastructure cost $100K. Result? Our marketing netted $500K and we grew our company. Was it worth it? Although we would like to track all the specifics, so we could fine tune and adjust, we are still making money at a discount and hopefully we can improve our tracking in the future.
I’ll admit it, it’s not as simple as owning a personal money printing press. And there are some risks. You could spend time, effort and money on a great plan, execute it flawlessly, track it meticulously and adjust it indefinitely and still end up only breaking even on your marketing investment. Or even worse, losing money. But if you do everything right, the odds of you making more money than you spend are grossly in your favor. And every time you spend money on marketing, you are learning more and more about your Ideal Customer and your chosen market place. Unlike gambling or the stock market, your odds just keeping getting better and better every time you step up to the table.