As a business that specializes in helping our clients get the most bang for their buck when it comes to marketing (we break that down here) – it shouldn’t be surprising that the question we hear most often from clients is a basic one.
How much should I be spending?
Our answer – it depends.
How much are your customers worth?
At a most basic level, your marketing spend should always be related to the value of your customers (or at least potential revenue).
While this might seem like a fairly intuitive thought, it’s amazing how many people at the outset don’t make the connection between marketing output and return – by no fault of their own. For too long, marketers have been offering pre-determined marketing packages (silver, gold, and platinum are for jewelry, not fo building your business) that have nothing to do with the historical performance or profitability of the businesses that they’re working with.
If your customers are worth a quarter million dollars per transaction, we’re going to be looking at a very different level of spend compared to a business that typically brings in $15,000 or $15 for that matter.
Our primary goal when we’re onboarding any client is to help them to start connecting some of these dots. Once we’ve done that, we can start to have a meaningful conversation about how we could (should we be their best option) tackle their needs.
Establishing a baseline for marketing spend
It’s been a process of trial and error to get there, but having worked with businesses of all shapes and sizes, we now know that any initial conversations we have with a client will be a lot more fruitful if they can come to the table armed with some background information.
To help get the ball rolling, we’ve put together a basic questionnaire we ask all new clients to look at ahead of our initial meeting.
The goal? To quickly get to the point outlined above – a fair and contextually appropriate estimate of what marketing spend should be based on historical and future revenue projections.
The ‘million-dollar’ questions – putting together your budget
Here’s a sample of some of the questions we ask, either in that questionnaire or in our first marketing conversation with a prospect. I’ve seen clients’ faces initially clouded with confusion at some of these questions, but at it’s core, these are the things that marketing should affect directly, and therefore the stick that we judge all success by.
- – What is your average customer value?
- – What’s your average conversion rate?
- – What’s your monthly transaction volume?
- – What types of marketing have you tried in the past? How has that affected your volume or value?
Once we’ve got to a point where we know what a client’s potential return is for their marketing output, that’s when we get to put on our strategy hats and have some fun. The tactics we suggest, will be heavily influenced (if not completely dictated by) financial projections that we feel confident putting our name to.
Honesty and transparency – our approach
In some cases, we’ll have an initial session with a client where we come to the conclusion that we are simply not a good fit for them. This can be due to their current stage in the life cycle of a business, goals, timeline, budget, or simply risk tolerance.
We’re not afraid to tell people that their budget, whatever it might be, is potentially better spent on tactics that are not in our wheelhouse.
At the end of the day, we want to see the best results for everyone. If that means turning down a client because we know at the end of their initial contract they’ll only be a year older and no better off for it, so be it. We want people to see us as something closer to a financial advisor instead of a marketing agency – whether we bill them as clients or not.
While we may not have silver, gold, and platinum packages, we do have a golden rule: if you can’t calculate a dollar return on marketing, you’re throwing your money away.