What Should You Budget For Marketing?
It came up yet again the other day.
And no surprise. It’s one of the most common questions I get from prospects and clients…
How much should I spend on marketing?
My flip answer to that question is “Whatever lets you sleep at night.”
And that’s partly true, but the question deserves a better answer than that so here’s mine…
The most important number to consider when deciding what to spend on your marketing is the Lifetime Customer Value (LCV).
In other words, what is a customer worth to you over the course of their relationship with your company?
That’s a key number to understand.
Once you know that number, that’ll tell you what you can afford to spend to go out and market your business to get new customers.
For my business, a consulting client that hires me on a monthly retainer could be worth tens of thousands of dollars to me over the course of their relationship with my company.
Knowing that, I’ll gladly budget a good chunk of change to acquire a new customer whether it’s paying for “expensive” clicks in AdWords, sending out highly targeted, high quality direct mail pieces via FedEx to make sure they get read, or using other forms of paid marketing.
But that may not be the case for someone who sells a software product for $59. They may have to focus on less expensive forms of marketing (or, better yet, add some cross-sells and up-sells to the mix so that they increase the Lifetime Customer Value of their customers).
Calculating the LCV can be a challenge, but here’s a great infographic from KISSmetrics (sister company of Crazy Egg, for which I’m a regular contributor to their blog) to help you sort it all out.
It uses Starbucks as a Case Study and goes into the numbers you have to know in order to calculate Lifetime Customer Value.
This is a great exercise for any business to go through and will give you a much better clue as to what you should/could really budget for marketing.
How To Tell a Compelling Story in One Sentence
Ever check out onesentence.org?
It’s a great site where people tell (supposedly) true stories from their lives in just one sentence.
Here’s a sample story from the site’s list of all-time most popular stories…
When asked to name the one person absent from her life that she missed the most, she responded, “The person I hoped I’d be by this point in my life.”
There’s a lot packed into that one little sentence.
Marketing is all about stories. And not just the stories you tell about your company, your products and services.
Even more important are the stories your prospects and customers tell about themselves.
Do you know these stories?
If so, how can you tap into them and show how deeply you understand them, their challenges, problems, passions, fears, etc.?
If the above story is going through your ideal customers’ heads, how can you position your product or service as the one that’ll help transform them into the person that they hoped they’d be?
Answer that question with a compelling story of your own (and get it in front of one of your ideal prospects) and you’ve got yourself a new customer.
I’m not sure who said it first, but it’s true…“He who knows his customers best, wins.”
How well do you truly know your customers and the stories going on inside their heads?
Why Free Traffic Ain’t Free
There’s a myth out there that you can get “free” traffic on the Internet.
True, you may not have to technically pay for clicks you get from organic traffic on Google or for clicks/Likes/+1s/whatever from Social Media…
…But there’s a cost involved with those things.
Know what it is?
Your Time.
Trouble is, like most people, you probably don’t know how to accurately value your time. But I’m gonna share with you a great way to do that which has totally changed the way I think about my time.
Marketing legend Dan Kennedy has written a number of books under the “No B.S.” brand. And Dan truly is a no B.S. kind o’ guy.
In his book the “No B.S. Time Management for Entrepreneurs“, Dan talks about one of the keys to time management being to know what your time is worth.
Here’s the easiest way to calculate it…
Take your earnings for the year and divide it by 1760. That’ll give you a rough figure of what you make per hour. So if you make $100K per year, you make about $56.82 per hour.
But wait!
That’s actually not your real hourly earnings because most people don’t truly work every minute of every hour. In fact, the national average is that people only work 1/3 of a work hour.
Kinda scary, but that’s the average.
So, if you’re average and only work 1/3 of an hour, multiply the hourly earnings you calculated above ($56.82 in our example) and multiply that by 3 to figure out what your work time is really worth.
In our example, that brings us to $170.46.
What’s your number?
Put that up over your computer, engrave it on your smartphone or iPad (or at least in your memory) and look at it next time you plan to spend some time getting “free” traffic from SEO or social media.
Then think about these questions…
- Is that traffic your efforts may get you worth the cost?
- Is this the best use of your time and one that’s getting you closer to your goals?
- Are you getting an ROI for the time you’re putting in?
- How does the cost of your “free” traffic compare to paid search marketing?
Still think that traffic is free?
Learn to value your time… if you don’t, no one else will.
The Sherlock Holmes Secret To Unraveling This Marketing Mystery
Gotta say I was skeptical at first…but after 4 months, I’m really lovin’ my Kindle.
My new favorite hobby is taking a break from business books, downloading some of the Classics (that are available for free! ) and enjoying some quiet leisure reading time.
The latest Classic I’m reading is The Memoirs of Sherlock Holmes by Sir Arthur Conan Doyle.
And as is my blessing/curse from being so immersed in marketing, I can’t help but find marketing lessons even while reading the Classics.
Here’s one I found that was triggered by this quote from Dr. Watson describing Holmes’ case cracking skills…
“For in those cases in which Holmes has performed some tour de force of analytical reasoning, and has demonstrated the value of his peculiar methods of investigation, the facts themselves have often been so slight or so commonplace that I could not feel justified in laying them before the public.”
A big part of marketing is positioning your business uniquely in your market. Yet business owners struggle with that and, as a result, most marketing is “Me-too” marketing.
In “Me-too” marketing, your ads and messaging sound just like your competitors and, if you remove the logos and company names, you’d probably be unable to pick your ads out of a lineup.
So how do you stand out?
Well, I go back to Dr. Watson’s quote.
Often the facts or details of what can set you apart from the competition are “so slight or so commonplace” you miss them. They’re often things you take for granted because you’re too close to your business to see them.
Schlitz Beer is a famous example of what can happen when you highlight the “commonplace” in your marketing.
Schlitz was struggling…ranking 5th in the nation in sales. To try to get a boost they brought in legendary copywriter Claude Hopkins. During a tour of the factory Hopkins was struck by all the steps in the manufacturing process that went into making sure the beer was brewed as purely as possible.
Hopkins asked the people at Schlitz about the process and they explained they were just using the exact same process all the other brewers used.
But that didn’t matter to Hopkins. He knew that while the process was commonplace, none of the other manufacturers were telling the story of this process.
So Hopkins created an ad campaign detailing the story of Schlitz’s brewing process. This campaign resulted in Schlitz going from #5 in sales to tied with Anheuser Busch for #1 in the nation…in just 6 months!
You’re probably too close to your business to put your hand on the “slight or commonplace” stories, benefits or unique selling points that hold the key to unlocking a flow of steady prospects for your business.
Often all it takes is some key questions and observations from an outsider to figure out what this things are. And helping business owners find the slight or commonplace (yet oh so powerful) keys to unlocking your marketing challenges is exactly what our marketing consulting services are for.
BIG Marketing Lesson From the 2012 Presidential Election
In the lead up to the election there were two camps…and I’m not talking about the Democrats and the Republicans.
I’m talking about the numbers guys (quants) and everyone else.
The numbers guys (led by people like Nate Silver) had systems for pouring over all the data from polling, economics, etc. to arrive at their predictions about what would happen on Election night.
The rest (mainly the media and party loyalists) made their predictions based largely on bad (cherry-picked?) data and gut feelings.
As we all know by now, the quants pretty much nailed the Presidential election results.
In marketing too, having proven systems in place and good data to base your decisions on will beat going off of gut feelings and bad/cherry picked data every time.
This Guarantee Will Increase Your Business…Guaranteed!
This is a great example of a business in a competitive, yet boring, business doing something really awesome with their marketing.
It involves the use of a powerful tactic that many businesses don’t take advantage of (and those that do, don’t execute it nearly as well as this business does)…the guarantee.
If the business in the example below can have a guarantee as effective as this, any business can.
Pay close attention to what they’re doing here because I have no doubt it can easily double or triple the conversion rate for some of your businesses.
Before we get there, let’s back up a bit.
Why even talk about guarantees in the first place?
Well, for one, you want to make things as easy and risk free as possible for clients to do business with you. Offering a guarantee is a great way to reduce the risk.
And it’s a powerful way to stand out from the competition…if they’re done right.
And that’s a big “if” because often they’re not done effectively. Just having a 30 or 60 day money back guarantee is great…but it’s almost becoming the norm these days in many markets.
So how do you do guarantees the right way?
Let’s get back to that example I mentioned.
This is from a dentist’s office in Virginia.
Yes…a dentist.
No offense to any dentists reading this, but a dental practice is a boring business.
No one gets up in the morning, springs out of bed and shouts “Yipee! I get to go to the dentist today!”.
(Well, my wife used to have a dentist that looked like Mel Gibson – before he went crazy – so she rather enjoyed going to the dentist for a while…but most people don’t!)
Going to the dentist is just something you gotta do. And, in any decent size metro area, there are hundreds of dentists to choose from.
So, how can a dentist stand out from the crowd? Well, one way is to use a guarantee like this…
Let’s break this down and see what makes it so powerful…
First, it addresses, head-on, 3 of the main problems/fears people have when going to the dentist:
1. Going to the dentist is a very stressful thing for a lot of people. So, at this office, if you’re a general anesthesia or sedation patient “your comfort is guaranteed.”
2. People are really busy and don’t want to waste precious time waiting around a dentist’s office all day. They want to just get in and out of there as quickly as possible. So this office guarantees you won’t spend more than 15 minutes in the waiting room.
3. Patients want to make sure the work is done right the first time and they’re not going to have to pay to fix it if it isn’t. So the office offers a lifetime warranty for crowns, veneers, and onlays (as long as you do your part and come in for regular cleanings…which is another stroke of genius because it encourages people to stick with this dentist’s office for the long term).
Second, it’s unique. I’ve never seen another dentist doing something like this before. And it definitely makes this office stand out from the competition.
Third, it gives them credibility. It shows they understand the issues dental patients are concerned about and that they, too, care about those issues. It demonstrates that they’ve put a system in place that they’re so confident in, they’re willing to back it up with this guarantee.
And, lastly, it makes for a very compelling offer. If I’m looking for a dentist and come across something like this, it’s hard to pass up. I mean, none of the other dentists are backing up their promises with a strong guarantee so what’ve I got to lose here?
There’s competition everywhere these days. Your job in marketing is to eliminate it. And you do that by being unique…offering things your competition doesn’t…proving your credibility…understanding your customers better than they do.
Offering a strong, ballsy, well-structured guarantee that your competition isn’t willing or able to make is an incredibly powerful way to stand out from the competition.
Come up with a good one like this dentist’s office and you’ll see an immediate boost in your conversions…I guarantee it!
Great Marketing Lesson From the Back of a Van
This van from a local HVAC company pulled out in front of me the other day…
Last week I wrote about the “Howard Stern Effect” and why you don’t want to try to appeal to everyone…
…Because when you try to appeal to everyone, you end up not appealing to anyone.
This HVAC company could be chasing any customers they can get like all the other HVAC companies out there, but they’re not. With just 5 words, they’ve developed a Unique Selling Proposition that demonstrates how they’re different from the competition and one that clearly resonates with their target audience…
“We specialize in older homes”
On their website, they go into a little more detail about why they specialize in older homes…
“We specialize in older homes because we got our start working with boiler systems and retrofitted them with ductwork, central air conditioning and furnaces. “
That sentence helps establish their credibility and gives their prospects a reason why they have this specialty (giving a “reason why” to prospects is a very important marketing concept, by the way).
(Quick side note…in just the 30 seconds I was on their website I discovered that whoever did their SEO used at least one very shady (also knows as “Black Hat”) SEO strategy so I’m not going to link to the site. Using that strategy is probably hurting their search engine rankings.)
In any case, this is a great example of a Unique Selling Proposition that a lot of businesses would do well to follow. If you’re looking for a local HVAC company to do work in your older home, wouldn’t you give extra consideration to the company that specializes in older homes?
I sure would.
And I have proof that it works…
When this van pulled out in front of me, it came out of the driveway of…a very old home!
Using The Howard Stern Effect in Your Marketing
You either love him or you hate him. There’s no in between when it comes to Howard Stern.
And that’s just fine with Howard. He’s not out there trying to please everyone.
He knows very well that his style of entertainment rubs a lot of people the wrong way and a bunch of folks find him repulsive.
But he also knows that his controversial style creates a rabid, devoted fan base who’ve helped Howard rake in tens of millions of dollars over the years.
There’s a lesson there when it comes to marketing your business…you can’t please everyone.
I was having a conversation with a client the other day about complaints he’s received about some new videos on his website.
This client offers a service that both children and adults could benefit from. He happens to be very focused on helping kids and they account for 98{a950ddf0e7a23367a7e0f17377d3737fa8b8b1820bab9af7071f88951eb5d84e} of this business. And that’s just the way he wants it.
But he got some complaints that the videos on his site focused on kids which might alienate some adults who’d otherwise be interested in his services.
Both the client and I had the same reaction to that criticism…
…Who cares?
Alienate them! They’re not his target demographic and it’s much more important to focus on kids than to make the adults feel welcome too.
Too many businesses try to be all things to all people. They’re not willing to take a stand for fear of offending some segment of the population.
That’s a mistake.
Because in trying to please everyone, you dilute your marketing message to the point that it’s so bland and boring, it doesn’t resonate strongly with anyone.
Now I’m not suggesting your marketing should be vulgar and you should go out of your way to offend and alienate people.
Just don’t be afraid of alienating some people with highly targeted messaging that speaks to your ideal prospects.
Here’s a great example of a company that does that, The Dollar Shave Club.
Their video, featured on the home page of their site is clearly aimed at men. It’s not for kids. Many women (and some men too) may find the humor offensive. And, ya know what…that’s just fine.
Hey, the video has almost 7 million views on YouTube. Think it would have gotten there with a boring video featuring men, women and children of all ages touting what a great company they are, how wonderful their blades are and why you should buy them?
Not a chance!
Take a stand and don’t worry about being controversial…you want people to respond emotionally to your marketing messages.
When you do that, like Howard Stern, there’s gonna be people who are totally turned off by you. But, more importantly, there’s gonna be plenty of others – your ideal prospects – who’ll become rabid fans and can’t get enough of you.
You’re never gonna please everyone…and your marketing will be much more effective if you don’t try to.
Photo courtesy of B. Norton
2 Lessons From This “Trash” I Found on My Doorstep
Found this sitting on my doorstep last week.
Yep, the Yellowbook.
Gettin’ pretty thin these days, isn’t it?
Bet you think this is a post about how the yellow pages are dead and why they shouldn’t even bother sending them out any more because online marketing is clearly the only type of marketing that matters these days.
Well, if you think that, you’re wrong!
Yes, my first thought when I saw it outside was “That’s going right in the recycling bin because I’m never going to use it.”
Well, it did and I won’t.
BUT…
Not everyone who gets the Yellowbook will. Some people still do use the yellow pages to find local businesses.
So lesson #1 is this…
Just because something doesn’t float your boat, doesn’t mean it won’t appeal to others.
A lot of business owners make the mistake of basing their marketing around what they like and what resonates with them.
But that stuff doesn’t matter. The only thing that matters is what appeals to your prospects.
- If you do all your searching online but a decent percentage of your prospects still use the Yellow Pages, you’d better make sure they can find you when they look there.
- Just because you don’t click on the AdWords ads when you do a search on Google, doesn’t mean your prospects ignore those ads too.
You may think people want to hear all about how wonderful your services are, but it’s really how your services solve THEIR problems that they want to know about.
So study your customers…put yourself in their shoes…know where they hang out…understand how they find (and make decisions about) business like yours.
Then base your marketing around where they hang out, their emotions, desires, decision making processes, etc….not yours.
Lesson #2 is about zigging when others are zagging.
Primarily being an online marketing strategist, I’m a big fan of online marketing. Every day I see the huge impact it can have on business.
And because so many people are online and so many businesses are having success online, a lot of companies are shifting most, if not all, of their marketing dollars to the Internet.
Makes total sense.
But this shift has created some voids in traditional advertising media like the yellow pages.
Yes, the Yellowbook I got on my doorstep is pretty thin and a lot of people will throw it out like I did, but the advertisers who are in there have much less competition than they did 5 – 10 years ago.
The ones who are sticking with it are now a bigger fish in an evaporating pond.
In fact, one of my clients recently bought $10,000s of dollars of Yellow Pages ads across the country and, ya know what? They’re actually getting his phone to ring and producing an ROI.
No, just having a basic ad with your business name and phone number likely won’t do much for you. But if you have an ad in the Yellow Pages that offers some benefits for contacting you and has a strong call-to-action, you can make it work.
Direct mail is another form of advertising that a lot of companies have given up on in recent years. However, if you talk with a lot of marketers who still use direct mail, they’ll tell you that it’s working better than ever.
In fact, direct mail is a key part of the marketing mix for a lot of the big online information marketers out there. Like their approach to online marketing, they test out different strategies and see what works. And direct mail, done right, works.
There’s less “junk mail’ being sent out these days so direct mail pieces (that are well designed and executed, of course) that do land in someone’s mailbox have less competition and are less likely to be immediately tossed in the trash.
Just because I tossed the Yellowbook in the trash and most of you probably do the same, doesn’t mean there isn’t any value there.
Depending on the type of business you’re in, it just may represent a golden opportunity you can take advantage of.
How To Avoid Getting Ripped Off By German Billionaires
A client sent me this fascinating article from Inc.com.
It’s about a German billionaire who’s built an empire by ripping off Amazon.com, eBay, Zappos, Airbnb and other successful web businesses.
His company basically replicates the exact web design (layout, colors, copy, forms, everything) that took these companies years (and millions of dollars) to develop. He then launches these sites in foreign countries (for example, they copied the Amazon site design and opened Lazada, the Amazon of the Jakarta and Mizado, the Amazon of Istanbul.)
There were two main things that I kept thinking about while reading this article:
1. It’s one thing to copy a site design, it’s a whole nother ballgame to develop the business infrastructure necessary to pull something like this off. There’s a lot of hard work and strategy that has to go into figuring out which countries to open these sites in, database design, fulfillment, infrastructure, etc.
So, say what you will about the ethics involved with making a nearly identical copy of someone else’s copyrighted website…it still takes a lot of business savvy to pull something like this off on the scale of Amazon, eBay or Zappos.
2. The other thing I kept thinking about was an important lesson for small businesses.
The truth is, in this day and age, it’s pretty easy for a competitor to copy what you’re doing on your website (in fact, it recently happened to a client of mine).
What makes it even easier is that most websites do nothing that makes them stand out. Particularly when it comes to messaging.
If you were to look at most websites in any industry and remove the branding and company name…I bet you’d be hard pressed to distinguish one company from the next.
In fact, I bet most of the owners of these companies would be hard pressed to pick out the copy from their own website out of the lot!
And, not only does the messaging for competitive sites basically say the same things, but the content is often mind-numbingly boring.
All this gets to the cornerstone of what truly effective marketing is based on…being unique and standing out in the marketplace.
- People can’t steal your story or the story of how your business got started.
- They can’t steal your passion.
- They can’t steal your voice.
- They can’t steal your unparalleled customer service.
- They can’t steal your ethics and honesty.
All these things can go into making up your unique selling proposition (USP) and, if your USP is truly unique, ain’t nobody that can steal that from you.
So how do build a website and business that your competitors can’t copy?
- Put videos of you on your site demonstrating the value you provide, letting your personality come through and establishing your credibility.
- Put video or audio testimonials on your site that feature real customers singing your praises.
- Tell your story and/or your business’s story with passion and in detail.
- Offer a ballsy guarantees the competition don’t have the backbone to put out there.
- Highlight the awards you’ve won, recognition you’ve achieved, credentials you’ve earned.
The more you can differentiate you and your business from the competition in a way that’s truly valued by your prospects, the less likely they’ll be able to be able to ride your coattails to success….whether they’re a German billionaire or a competitor down the street.