The Recession-Proof Business: Chapter 8
Make Marketing an Investment, Not an Expense
In the previous chapter, we discussed the importance of being able to win over customers one at a time. In this chapter, we’ll talk about how to get your unique, compelling, and credible promise in front of prospective customers.
One word of caution: There is really no point in spending any money on marketing, advertising, or sales until you have a unique, compelling, and credible promise to make prospects.
I work with a lot of business owners, all of whom either spend way too much or way too little on marketing. If you aren’t making a unique, compelling, and credible promise to the marketplace, spending even one dollar on marketing is way too much. There really is no point at all, as you’re just another one of many options available to customers.
On the flip side, if you’re making an incredibly unique, compelling, and credible promise to the market, then you’ve most likely underinvested in marketing.
This chapter will show you how to invest your money in marketing, instead of just spending your money on marketing. The difference between the two is accountability.
Accountable marketing means every marketing investment you make has a measurable and factual return on investment. Every other form of marketing is just guesswork and is an expense.
The logic of marketing that’s accountable is extraordinarily compelling.
Let me ask you: If you spent $100 on a newspaper advertisement and you made $500 from the sales generated by that advertisement, would you run the advertisement again? Of course you would. Anytime you can make a 500 percent return on investment from marketing (or anything), you repeat it.
Now let me ask you a slightly different question.
If you spent $100 on a newspaper advertisement and you have no idea whether you made any money from the advertisement, would you repeat the expense? Well, this is a tough question, because maybe you’re making money from that advertisement and maybe you’re not. It’s hard to say. The only correct answer is “I’m not sure.”
Now let’s increase the stakes.
Let’s say you’ve invested $100,000 in several marketing campaigns over the course of a year. If you’re using marketing that’s accountable, you’ll know exactly how much profit you’ve made from your investment in those campaigns. If you know that you’ve made $500,000 directly from those campaigns, would you keep the campaign going? Of course you would. The answer is as clear as night and day.
Now assume you’re spending $100,000 on a marketing campaign that isn’t accountable. You have no idea how much money you’ve made from it. Would you keep doing it? Again, the answer is not clear, but the penalty for making the wrong decision is steep.
Accountable Marketing Is a Hidden Advantage
When your marketing is accountable, it provides you with an enormous advantage in the marketplace. You have great clarity on what marketing activities are making you money and what activities are not.
When you’re investing $100 to make $300, $500, or even $1,000 using a particular marketing campaign, it’s a lot easier to justify increasing your investment 10-fold. Instead of investing $100 to make $500, you can now invest $1,000 to make $5,000. If investing $1,000 to make $5,000 works, you can invest $10,000 to make $50,000 and so on.
Let me share a personal example of how I had great success using this exact strategy.
How I Grew Sales of One Product Line from $500 per Month to $30,000 per Month in 90 Days
A few years ago, I was starting a new product line and my sales went from $500 a month to $30,000 a month in 90 days. Keep in mind that this was a product with no track record, no previous buyers, and no established reseller channel. It was a product line started literally from scratch. The speed of that growth surprised even me, but the process was actually quite simple.
When I first started that project, I was not sure what advertising options would work nor was I sure what unique, compelling, credible promise would work best. I started by running three very small advertisements – each with a different promise in it. Each ad probably cost me $100. Out of the three ads, one ad made me $150 while the other two ads each made me $25.
Out of the total investment, I spent $300 on marketing but only generated $200 in sales, so I lost $100 on the investment.
How did I turn a $100 loss into $30,000 in sales 88 days later?
I started first by modifying the one ad that worked the best – the ad that cost me $100 but generated $150 in revenue. I took the promise in that ad and experimented with changing it to make it unique, more compelling, and more credible. Based on the sales results, my prospects were “voting” on which promise they liked more. So I simply gave them more ads to vote on.
I really like the concept that money is really just a way for customers to vote on what they like. If something makes you money, it means customers like what you offer and are voting for you to continue doing it.
I ran another cycle of test ads. I took my best ad from the first cycle, the one where I spent $100 and made $150, then created a few additional variations. The best ad from the second cycle cost me $100 and I made $175.
During that 90-day period, I ran between 20 and 30 advertising cycles and ultimately found a winning promise that allowed me to make $200 in sales for every $100 I spent on marketing (this was for a very high-margin product). Once I had the winning promise right, I simply bought more ad space. Instead of investing just $300 a week in advertising, I slowly increased the investment to $1,000 a week. When my return on investment held at the new investment level, I went to $2,000 a week. Then I went to $3,000 a week and finally capped out at $3,500 a week in marketing investments. After 90 days I was investing about $15,000 a month in marketing to generate $30,000 a month in sales for a very high-margin product.
Here’s the key lesson from accountable marketing and why I think it’s flat-out crazy to do marketing any other way.
Accountable marketing allows you to start on a very small marketing budget yet scale up quickly when it works. In a recession, it’s a smart way to manage risk carefully – limiting downside losses while preserving upside potential.
It allows you to get feedback and “votes” from the marketplace on what promises prospects like the most. Once you find a winning promise, it’s very easy to buy more ads, buy bigger ads, or run your ads more often. Increasing the exposure of your ad is much easier than creating an ad with a winning promise inside it.
That’s why I will continually emphasize and remind you that you must work on winning over customers one at a time. The key is to make them a unique, compelling, and credible promise.
If you can’t win over one customer at a time, how in the world will you win over 100 customers at a time or 1,000 customers at a time? You won’t.
Keep it simple. Create your winning promise and win over customers one at a time. Once you’ve been able to accomplish that and only after you’ve accomplished that does it make sense to get your promise out there to more prospects.
What Is Accountable Marketing?
Accountable marketing is simply any form of marketing that asks the prospect to take an action that is measurable on your end. Here are several examples:
- An advertisement that invites the reader to call your office and ask for extension 101.
- A direct mail piece that asks the prospect to visit your store and bring in this 10 percent off coupon (the coupon has Coupon #102 printed on it).
- A fax broadcast to previous customers that asks them to fax your office to request “Free Consumer Guide – Report #103.”
- An email message to existing customers telling them to visit your website to pick up an electronic version of your free consumer guide at www.yoursite.com/report104.
You’ll notice that what all these accountable marketing examples have in common is some type of tracking mechanism – extension 101, coupon 102, etc. When each order is taken from customers, make note of which marketing investment generated the sale. If you made $500 from marketing investment #101, keep track of it. If marketing investment #102 (the coupon) generates $1,000, keep track of that too.
Once a week or once a month (depending on your business), tally the scores and see how each investment did. If investment #101 made you $400, keep doing it next month. If investment #102 lost you money, either try a different version of the promise or stop it entirely. Simply keep repeating the process by trimming your losers and expanding your winners.
The other less obvious benefit to using this kind of marketing is that it can grow your revenues very quickly without adding a lot of overhead, infrastructure, or staff.
Here’s an actual example of marketing that’s accountable. When I want to generate leads for my products and consulting services, I will run ads that look similar to this:
Free Special Report:
How to Take Your Business to the Next Level
To request this free report, call 800-333-3011, ext. 103, for a free, 24-hour recorded message for details. Call any time, day or night.
By the way, that’s a real working phone number that you’re welcome to call anytime. When you call, you’ll hear a recording of my voice (you didn’t think I’d answer that phone live, did you?) asking prospects to leave a mailing address where I can send them the free report. The free report then provides additional information on my products and services.
This is an example of an advertisement that’s accountable. When the prospect calls that particular extension, I know exactly which ad in which publication generated that prospect. That’s because every time I run the ad, I use a different extension so I can track the return on investment of my advertisements.
As a reader of this book, you’re encouraged to call my information request line 800-333-3011, ext. 103, to see how I set this up. When you call this toll-free number, you’ll not only hear my regular outgoing message, you’ll also hear a “behind the scenes” explanation of how I’m using this marketing tool and making it accountable.
I like marketing that’s accountable for several reasons. First, it eliminates a lot of risk from my marketing investments. Like the 800 number example above, it’s also lifestyle friendly. I can simply set up my marketing systems to ensure that they are accountable and will work for me 24 hours a day, 7 days a week while I spend time with my family.
Second, accountable marketing can enable you to grow a business very quickly without a lot of overhead. In my earlier example of growing one segment of my business from $500 to $30,000 in 90 days, I didn’t have to hire any sales reps, I didn’t have to lease a bigger office, I didn’t have to buy any delivery trucks, and I didn’t need a bigger warehouse. All I needed to do was increase my monthly advertising investment, which only took a few minutes, and add more capacity to my customer service operations.
In short, using marketing that’s accountable has been an effective strategy for me, and I would encourage you to use it. It’s well suited for businesses of any size – but is certainly mandatory for any business on a limited budget. At the same time, it allows you to grow your business very quickly once you find a winning promise to make to customers.