Budgets sound cheap. Budget travel, budget hotel, budget wedding.
Budgets also sound restricting. What’s the budget? Keep to the budget! Don’t go over the budget!!
But budgets are really about understanding how much your clients are worth, how much it costs to acquire and keep them, and how to make the most out of limited resources.
In this week’s episode, Rich Brooks shows you how to calculate your Customer Lifetime Value, determine your customer acquisition costs, and ways to make your marketing dollar go further.
Yeah, it’s me again.
I normally don’t do back to back solo episodes, but I had to reschedule a number of interviews lately as we’ve just been slammed with work at flyte, and the process of hiring a DOM has been all consuming at times.
I do have some great interviews lined up, including the always informative Michael Stelzner of Social Media Examiner and Social Media Marketing World, where I’ll be speaking again this year.
I’ll be presenting a Day One Workshop on How to Develop a Digital Marketing Plan. If you’re interested in checking out the conference, which takes place on March 20 – 22nd in beautiful San Diego, CA, you can go here.
This is the one event (outside of AOC) that I consider a MUST ATTEND each year. Over 100 speakers, over 100 sessions on every aspect of social media and digital marketing. Everything about this conference is geared towards marketing your business online, with a strong focus on social media and content creation.
Hey, to sweeten the pot: if you follow that link I shared—which is an affiliate link—I’ll throw in a free virtual pass to either AOC 2018 or 2019, your call. That’s an additional 15 or so hours of expert content and expert advice from the stage of the AOC.
Hope to see you in San Diego this coming March!
Shifting gears here, I’m putting on a new presentation this coming week for the Chamber of Commerce called Marketing on a Budget for 2019.
I have to admit: I wasn’t thrilled when they asked me to speak on this topic. Why? Well, “marketing on a budget” sounds cheap. Like you’re trying to find the least expensive way to do everything, and you’re looking for free software, free help, interns instead of employees, and consider GoDaddy to be a good hosting company.
Just last week I met with a woman who started a website on Yahoo because it was free. She figured a free Yahoo website would help her get found in the search engines. There was so much wrong with that sentence I wasn’t sure where to begin.
Lately, I’ve been really focused on aligning my content with my ideal customer. This topic didn’t sound like flyte’s ideal customer.
But then I got to thinking: of course, all of our clients have budgets! So do we. Hopefully, so do you. In fact, companies with marketing budgets are more likely to be in a position to spend money with a digital marketing agency!
What I needed to do is shift the conversation away from free alternatives to valuable choices. To educate the audience on how to develop and think about their marketing budget.
Since we’re near the year end as I record this, I figured in this episode I’d share some of what I plan on talking about next week. I hope you find it valuable as you look towards 2019 and beyond.
So, what does it mean to market on a budget? Well, although budget has connotations of cheapness, i.e., budget travel, in really it’s just about setting aside money for something specific. In this case, reaching more of your ideal customers and getting them into your sales funnel.
When you’re trying to figure out your budget, one important thing is to understand the customer lifetime value, or CLV.
The CLV is the net profit you’ll make off a customer while they work with you. If you’re in real estate, or weddings, you may only make one sale. But if you’re an accountant, or sell sandwiches, you’re likely going to be selling to the same customer multiple times if you do a good job.
So, let’s say you sell accounting services, and your average customer is worth 1K a year to you, and you net 500 dollars from that. In looking at your records, you might determine that your average customer stays with you for 20 years. So, 20 times 500 and you’re up to 10K in net profit for that average customer.
Another important thing to understand is your customer acquisition costs. Depending on your business, this can be quite complicated.
Let’s say you put on a free webinar and spend 500 in Facebook ads to get 100 attendees. Excluding your own time, and the cost of the software, you spent $5/attendee. That may seem like a lot, but if just one attendee became an accounting client, then you spent 500 to acquire a client that will be worth 10K in net profit.
That’s something you want to do all day long.
So, one way to approach developing a marketing budget is to understand your CLV, and your customer acquisition costs. That may not be a number you have readily available, so you may have to estimate that. Then, keep track of those cost going forward so you can continually improve your understanding of what it takes to bring on a new client.
Another thing to keep in mind is that it is much cheaper to keep a client than to get a new one. I recently came across an infographic (I know, not always the most trusted of resources), which pulled from a bunch of e-consultancy reports. Some of the stuff that stood out to me:
- The probability of selling to existing client: 60 – 70%; new client, 5 – 20%
- Existing clients are 50% more willing to try new products and spend 31% more vs. new clients, meaning you can upsell more easily to existing clients because of trust
- Increasing customer retention rates by just 5% increases profits by 25% – 95%, meaning less investment in sales and marketing for customer acquisition
So, talked about understanding your CLV, your customer acquisition costs, and the value of investing some of your marketing budget in customer retention due to increased value of those marketing $. Now, let’s talk about channels and content.
Keep in mind that as social channels become more congested, organic posts have less and less reach. Not saying don’t use them, just saying keep your expectations, and your investment, low.
There was a time where the money you spent in organic posts (i.e., your billable time), was probably less than in spending money in paid or sponsored posts, but for most of us, that has shifted. If you track all of your time as billable, it’s likely that it’s less expensive and more effective to put your money in ads. YMMV.
Because your time is valuable, pay close attention to which channels put you in front of your ideal customers. If they’re not on Twitter, there’s no point in tweeting. I might even argue that automating every post from Facebook or Instagram to Twitter to a nonexistent audience might be harmful to your brand, because if anyone responds to your post and you’re not their to respond back, it’s bad for your brand.
If you’re spending 30 minutes a day crafting the perfect photo and caption for Instagram, but you’re not driving traffic to your website, your store, and you’re not gaining followers or increasing engagement, consider stopping. 30 minutes a day is over 175 hours of time you could be spending elsewhere…on blogs, on podcasts, on platforms where your audience hangs out…on networking events in town where your customers gather!
Google and the social media channels are less about volume now and more about remarkable posts. 15 years ago, 300 word blog posts spat out daily was a recipe for success. No longer. Better to write one 2000+ word blog post once a month to increase your search engine visibility.
So, it’s tougher and more time consuming to create valuable content. So, how can you make the most of that content?
Answer: repurpose it. Recycle it.
Here are a couple of examples. I do a podcast episode where I interview an expert. It gets transcribed. Now it’s a blog post. I share that in an email. Now it’s a newsletter. I post the audio along with an image of the guest to YouTube. Now it’s a video. I embed that video with the transcript as a native article on LinkedIn. I share that with some key people on LinkedIn.
Oh, and the images you created for the blog post get shared on Instagram, Facebook, LinkedIn, Twitter, and Pinterest.
Here’s another. You write a listicle. That’s a blog post that’s a list.
- 10 Best Kettlebell exercise for pregnant women.
- 10 Most Beautiful Lakes in Maine (you’ll never believe #7!)
- 101 Ways to Save Money for College.
Once it’s published, open up PowerPoint, or if you care about what your presentations look like, Keynote, and create a slide deck where each item is a slide. Upload it to Slideshare. Embed it in a LinkedIn article. Present it to your local chamber.
Here’s another. Grab 5 or 10 related blog posts from you blog. Update them and put them into an ebook. Use the ebook as a lead magnet for your email newsletter. Send it out to some clients you haven’t heard from in a while. Sell it in the Kindle Store.
Let me share three places I absolutely DON’T want you to try and save money.
In conclusion, to make the most of your marketing budget:
- Understand your CLV
- Determine your customer acquisition costs
- Focus your marketing dollars on retention as well as acquisition
- Avoid wasting time on channels that don’t put you in front of your ideal customers
- Get the most out of your best content through recycling and repurposing
Rich Brooks is the President of flyte new media, a web design & digital marketing agency in Portland, Maine, and founder of the Agents of Change. He’s passionate about helping small businesses grow online and has put his 20+ years of experience into the book, The Lead Machine: The Small Business Guide to Digital Marketing.