How Much Should I Spend on Marketing?

Nothing.

Let me expand on that answer...

You Should Never Spend Money on Marketing because the term "spend" implies that your marketing is an expense or cost to which you cannot tie a positive return to your company. This might be because your marketing is ineffective or you can't measure the return or a combination of both.

No matter what the case, if you are "spending" money on marketing I suggest that you stop!

How Much Should I Invest in Marketing?

Ah, now this is a much better question for which I have two answers.

The Short Answer

As much as your cash flow will allow! Why? Because the only limit to the amount of money you can make with effective marketing that is yielding a measurable, positive ROI iis the amount of money that you invest.

Effective Marketing: The Magical Money Machine

What if you could get your hands on the plans for an easy to build magical money machine. Depending upon how well you build it, this machine will give you back $1.50 - $50.00 (or more!) for every $1 you put into it. Would you like those plans? Well I've already given the plans to you with this website. Effective, evolved marketing really is a magical money machine.

The Long Answer

A longer and more practical answer requires you to answer 4 questions.

1. What is your 3-year average customer lifetime value in revenue?

2. What is your average gross margin (after salesperson commissions)?

3. What is your close ratio on qualified prospects?

4. How many of these customers do you want?

Let's look at a typical specialty business example:

Custom Interior and Exterior Painting Business

3-year average customer lifetime value = $6,500

Average gross margin = 42%

Close ratio = 25%

Would like additional 40 customers a year.

This company can therefore invest up to:

$6,500 X 42% X 25% = $682.50 for each new qualified lead or $27,300 to get 40 new customers.

NOTE: This represents the theoretical MAXIMUM the company could invest because they would be consuming all gross profit after accounting for their marketing expense.

Clearly the company would need to invest less on marketing in order to generate a net profit on each marketing $ invested.

The fact of the matter is that by developing an evolved marketing approach based upon the Marketing Equation and the other principles I've shared with you this company could easily fill their pipeline for many years with an average qualified lead cost measured in dollars, not hundreds of dollars.

MarketingProfits4.0 Success Principle

Evolved, Effective Marketing is not an expense it is an investment. Remember this fact the next time you are about to "invest" money in something such as the stock market (roughly 0% return on the S&P 500 over the last 10 years) where you would be ecstatic if you could achieve a 12% ROI!

While I can't guarantee the success of your properly built and managed marketing process, returns in excess of 100% and more are common.

 

Get Your Free Report
"How to Never Waste Another Dime on Crappy Marketing"

Video Training Center

Evolution of Marketing Video

Marketing Equation Video

Lead Generation Marketing Video

Step 1 Marketing Equation Training

Marketing Equation Step 2 Video

Marketing Equation Step 3 Video

Marketing Equation Step 4

What Clients Say About Us...

"My marketing team was doing all the "right" things the experts told us we should be doing and we just weren't seeing the results that my board of directors wanted to see.  I had heard about Scott and his new approach to lead generation marketing and decided to give it a try instead of the canned solution proposed by our big name ad agency. Scott's turn-key approach went exactly as he said it would and produced results that exceeded everyone's expectations. It's like having a new person on my sales team!"

John Cudmore, Director  Sales & Marketing QCenter

"Scott Metcalfe is a wealth of information that we are using to grow our business in this trying economy. We have been in business for eight years and refuse to participate in a recession. December 2008 was our best month ever. Now is the time to excel at business. Scott will help you improve your knowledge to position yourself and your business for the upswing. I highly recommend using Scott Metcalfe"

Brenda Fredrick, President Beyond Blinds, Inc.

"Wolff Fitness has taken a quantum leap forward in the past year due to our work with Empire Consulting. The training we received has produced consistent and predictable growth in sales. I would recommend Empire Consulting to any company serious about growing revenue."

Richard Wolff, Owner Wolff-Fitness

"Leaders have endless optimism and a clear picture of what the future could hold. Scott's no nonsense approach to leading, marketing, and selling will help both individuals and companies drive performance in the rapidly changing and competitive marketplace of the future. Over the past two years I have been impressed with Scott's ability to quickly dissect both key business issues and opportunities to build a compelling plan for success."

Grady Lenski, Strategy and Commercial Operations Director Transitions Optical