How Much Should You Spend on Marketing? FROM THE PRACTICE CORNER
A question I get asked all the time is, “Mike, how much should I spend on marketing to attract a new tax resolution client?” The rule of thumb is that if you are doing paid marketing, such as direct mail, Google ads, or radio, 15%–20% of gross sales should be earmarked for your marketing budget. Just like oxygen is necessary to sustain human life, marketing is the lifeblood of any business, especially in the tax resolution business. For example, the cost to acquire a new tax resolution client is about $1,000. That’s 20% of $5,000, which is what you should budget for marketing to acquire each new client. If you want five new clients a month, clients who pay an average fee of $5,000, that’s $25,000 gross a month. You need to earmark or budget about $5,000 in marketing to attract five new tax resolution clients. If you want to do more than that, assume the investment is about $1,000 for each new client.
The higher the total case value, though, the lower the percentage is to acquire that client. When I had my practice, each new client was worth $8,700 to the firm. My acquisition costs were right around $1,000 to acquire that client. So, my marketing budget was 11.5% of the gross. Getting your fees right is one of the most important factors to running a successful tax resolution business, so be sure to price your cases high enough. It takes money to make money. You should view your marketing spend as an investment and not an expense. And most importantly, you should never delegate your marketing unless you fully comprehend and embrace it. Remember, the general rule of thumb is to invest about $1,000 in marketing to attract a new resolution client. When you understand the potential to create wealth and get rich while helping taxpayers solve a huge problem — and in many cases, save their financial lives — it makes sense to spend your time and money marketing to high-value clients instead of the cheap 1040 crowd.
“Just like oxygen is necessary to sustain human life, marketing is the lifeblood of any business, especially in the tax resolution business.”
–Michael Rozbruch
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