Michael I discussed on Marketing Above All
List and know that if you've been investing two percent for example it's going to be very challenging for you to all sudden jump to eight percent or ten percent so I'm just encouraging you to bump up whatever you've been doing by a percent or two and then to continue to watch the effects but in this example for simple math purposes I will say that you're investing ten percent of your gross sales and marketing which is a great number so you'd be investing ten thousand dollars a month or thirty thousand dollars for the quarter so after the quarter finished you would basically look back and say all right so we were forecasting to do three hundred thousand dollars in sales were. Did we wind up if you wound up on the short end of the stick? And let's say you only did two hundred thousand dollars. You're then going to adjust your marketing budget. Down based on the performance on the flip side if you ended up doing better than you had forecasted and let's say you ended up doing half a million dollars instead of three hundred thousand. Then your marketing budget would go from thirty thousand dollars. A quarter all the way up to fifty thousand dollars for the next quarter so these budgets need to be a moving target so that you you don't back yourself into a very difficult corner now. There's other variables at play for example. If you've got season -ality you're going to need to continue to play with those numbers and if you have a gigantic month for example so there's ways to kind of play with that but the whole goal as you start to establish a routine you start to have it where your marketing compounds to your continuing to execute month after month after month and you're getting your brand out there and you're trying new tactics and you're continuing to execute tactics that are working on a regular basis and what you can do. Is You WANNA start to nail down that secret or that magical number and I will tell you that this magical number takes a little bit of work but once you get to that number it can be game over and a good way. So you're aiming to figure out how much is it costing you to a choir? A new customer so five investing thirty thousand dollars a quarter going back to that example. Ten thousand dollars a month. I want to be able to quickly see how many leads and I'm using leads in a general term whether you're B to B B to c e Commerce driven retail and. It doesn't matter so how many people are raising their hands that they're interested in working with you. That's metric number one metric number two then is your conversion percentage how many of those end up converting into a customer. So if you invest ten thousand dollars simple math. Let's say you end up getting ten new customers. See your cost per sale. Your cost to acquire. New Customer was a thousand dollars now depending on your business. That could be horrible number or an amazing number and what you're looking to do is continue to then improve those numbers. You're looking to lower your cost per lead. You're looking to improve your conversions which then drives down your cost per sale and if that thousand number is a great number what you WanNa start to do then is really remove the limits so while a percentage is great. If you say Michael I just WanNa grow. Well what happens if you're to invest twenty thousand dollars for that particular month? Would you end up getting twenty new customers? Can you still maintain that thousand dollar number and what you're aiming to start to figure out is kind of the sweet spot of hominy new customers. Can you acquire so the name of the game is whomever is willing to invest the most to acquire a new customer wins that number? Is the secret sauce number. What can you afford to invest to acquire that new customer in where a lot of businesses have narrow minded thinking is they forget about another key metric that metric is lifetime value of a customer? So you might only get. Let's say it does cost you that thousand dollars and you may say well. Jeez Michael I invested at thousand but the the initial sale was only two hundred dollars. So I'm out eight hundred well. How many times are they going to purchase and repurchase how many people are they going to potentially refer to you and your business? The lifetime value of that customer could be ten thousand dollars so a dentist. Just managing your cash flow your numbers to see again. How much can you afford to invest to acquire those customers to continue to grab all of that lifetime value revenue in the near future? So if you were to say Michael. Am I investing enough? The answer is usually no and the trends that I'm seeing now is that there are.