BUSINESS HOW-TO NOT GROWING AS MUCH AS YOU WANT?
READTHIS! I have good news for you! You can have all the new customers your heart desires. Literally, limitless amounts of new customers. Want to know what the catch is? The number of customers you get is a direct reflection of the amount of money you’re willing to invest in ad spend. Duh, right? It seems simple, but most entrepreneurs still don’t get it. Let me share some examples and wisdom with you. Every business hits a point where it’s gotten all the low-hanging fruit the current marketing can provide in terms of new customers. When that point hits, you either have to increase ad spend or slowly die. Both options suck, but I’d take an increase in ad spend over a slow death any day. “IN MOST BRICK AND MORTAR BUSINESSES WITH GOOD RELATIONSHIP MARKETING IN PLACE, YOU NEED TO INVEST 5% OF TOPLINE REVENUE JUST TO MAINTAIN YOUR CUSTOMER BASE.” Let’s look at a big company like Netflix. In 2014, they were able to get a new customer for just $41. By the end of 2017, that number had ballooned to just over $100. They’re literally spending nine months of the $10.99 per month subscription fee to get a new customer. With a few tweaks to their marketing, they were able to spend $97 per new customer in quarter four of 2017. However, because they add millions of new customers each year, those dollars add up fast, as the cost is still more than double what it was just a few years back, despite having better media options to advertise Let me model this out.
into marketing, you will stall out, or worse, go into decline. This hurts the valuation of your company, effectively costing you far more than whatever risk you have when investing in marketing. But, how do we spend an ever-increasing amount of money? Check out my article on Page 4 for the answer to that question.
on, like Facebook, Snapchat, LinkedIn, low- competition direct mail, etc.
At The Newsletter Pro, on our lowest-priced plan, we also go negative for nine months to acquire that customer. Like Netflix, I know my average customer’s lifetime value, so I’m willing to take the risk, but we didn’t use to go negative. Years ago, we always broke even in the first 2–4 months. Sometimes, we were even profitable in month two, but that is not the norm today as we expand our marketing efforts to continue growing. Basically, we still get all the low-hanging fruit, but now we also get some of that juicy fruit at the top of the tree, and it requires a lot more effort and ad spend to access it. In most brick and mortar businesses with good relationship marketing in place, you need to invest 5% of topline revenue just to maintain your customer base. Typically, you’ll need to move that investment to 8–10% if you want solid growth. If you’re in startup mode, those numbers will all be off a bit, as you’ll need to invest much more in marketing to get off the ground.
–Shaun
P.S. Want our help with your marketing? Want to close more sales and make more money? Make sure you reach out to a Pro, and we will help you develop a road map to making more money, lowering churn, and turning more prospects into customers. Go to NewsletterPro.com/schedule or scan this QR code.
The moral of the story is simple: If you don’t invest significant and ever-increasing amounts of money
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