When To Pay For Marketing
“The basic premise of marketing is that you’re required to pay for marketing in order to grow your business.”
The first thing you have to answer for yourself is how much 1 new customer is worth to you. If that customer brings you $1,000 this year, how much would you pay to get that new customer revenue?
You pay for marketing in terms of your:
- time (ex: spend 10hrs meeting new people this week)
- energy or comfort (ex: develop a plan; do something challenging)
- money (ex: you pay someone else to manage your marketing)
So, how much is that new customer worth to you? 10 hrs of time, 5hrs of intensive effort, or "X" amount of money?
You can keep 2 of these things, but can't have all 3. There's one thing you'll have to sacrifice to make marketing work for you. You have to spend time or money or energy to gain new customers and grow your business, period.
So pick the 2 things that you have to have and can't do without.
You have to pay for 1
If you want to grow your business, or have grown your business before, you payed for marketing in 1 of these ways (at least).
“You’re only required to pay if you want to grow your business. And you’re only required to pay in 1 way.”
Those are the rules. Choose one that you have to sacrifice: Time, Energy (Comfort), or Money.
Crunch the numbers
Figure out the value of a customer on average. Use yearly value to start (although, lifetime value is best, but harder to calculate).
If the value of an average customer this year is $500, how much time are you willing to spend to get that customer? You probably need to figure out how much an hour of your time is worth, first.
If the value of an average customer this year is $500, how much energy are you willing to sacrifice doing something that is mentally or physically draining to you, to get that customer? Hint: Use your energy to make your time more efficient, or your costs less expensive.
If the value of an average customer this year is $500, how much money are you willing to spend in order to get that new customer?
Tie time and energy back to a dollar value.
Important Questions To Ask:
If you spend more than the yearly value, are you certain it's more than the lifetime value?
How long until your investment turns into positive cash flow?
What this all sounds like is a marketing funnel. Read more about how to build your marketing funnel.
