If you want to grow from a $2 million business to a $5 million business, you have to spend a scary amount of money on marketing. Owners who embrace marketing build businesses while owners who fear marketing frequently build jobs for themselves.
The difference is glaring – your approach to marketing is the difference between choosing your customers and begging.
A marketing-driven business says “if you’re this specific type of person, we’re an awesome fit for you and we understand why you want to buy our product.”
A business that sees marketing as a necessary evil emits a different message: “Can I work for you? I need a job. I work hard. I work cheap. Can I please work for you?”
The customer who knows they paid you 20% more than the lowest bid and who is thrilled with the experience and end result is delighted that you advertised to them. They feel lucky to have heard about you. Except it’s not luck. It’s a combination of understanding your customer, followed by boring consistency – rinsing & repeating.
So simple that it’s anti-climactic, right? Except that simplicity is never simple to achieve – it takes commitment. Which brings me to a story…
Putting it into Practice
I recently took part in a marketing workshop for countertop fabricators. Working in groups, our task was to come up with a marketing budget for a fictitious fabrication firm.
To simplify matters, we were given our annual revenue goal and price point for jobs performed. Our goal of $5M in revenue, from performing $50k jobs, meant we needed to sell 100 jobs.
It was easy to agree that our target customer was fairly rare, but easy to identify. This customer has high wealth or high income (two very different things) and cares about the end result more than the price. This customer cares deeply about how things look and how they are treated throughout the process.
Without getting distracted with HOW you would attract this type of prospect, the critical question is HOW MUCH are you willing to spend to acquire this customer?
With virtually no debate, we agreed that spending $2,500 to acquire a $50,000 job was quite reasonable, representing 5% of job revenue.
Simple. Case closed. Start printing money $50k at a time. Except not.
It was at that moment when the monster of big numbers awoke. Doing the math – 100 jobs, $2,500 to acquire a job, that’s $250,000 spent on marketing annually. The feeling was visceral. That’s way too much. $100,000 felt more like the right number. All the planning, research, customer knowledge and commitment drained away at the mere sight of the big number beast.
And here’s what the trap sounds like…
Marketing-Fearful Thoughts
Thought: “We can probably acquire those same customers by spending $1,000.”
Reality: “No, you really can’t. Hope is not a business model.”
Thought: “We can if we’re really creative.”
Reality: “Creativity takes a lot of time and money in the form of salary. That’s just a trick to hide marketing expenses in another category called Overhead.”
Thought: “I’m afraid to spend that much because I don’t know if it will work.”
Reality: “Then you’d better create ways to know what works and what doesn’t.”
Thought: “If we spend that much we might have to lay people off and we definitely can’t afford the new CNC machine.”
Reality: “If you don’t embrace marketing, you will certainly lay people off. And nothing is more sad than a silent CNC machine.”
The Takeaway
The take away is rather tidy. Know who your customer is and who they are not. If you can’t say with confidence who is NOT your customer, repeat the process until you definitively can. Reach assumptions about how much you are willing to spend to acquire a customer. If you aren’t willing to defend those assumptions to the death, continue working on them until you reach that point. If you don’t, your commitment will waver when the big number appears. The budget will be cut. The fellowship will fail.
