Every Thursday, right on time for your coffee break, we will give you a quick dose of “marketing caffeine” to uplevel your marketing and in turn uplevel the results you are seeing at your business.
Wow, I can’t believe how fast this year went. Though I seem to say that every December anyways :) I hope this has been a fruitful year for you with more to come in 2019
The final issue of 2018 is ready for you. Issue #34 and a holiday greeting!
YOUR CUP OF THIS WEEK'S STRONGEST MARKETING TIP
What Should I Set Aside For Marketing In 2019?
There are a lot of questions I get asked, but this is the number one question I get asked by a long shot.
Unfortunately, there is no simple answer, but there are quite a few guidelines to help you plan.
A marketing budget is normally expressed as a percentage of gross sales. The general recommended range is in the 7-12% of sales (forecasted).
So, for example, if you are forecasting to hit $1,000,000 in sales this year, your marketing budget should be in the $70,000-$120,000/year range.
With that said, rarely do I find businesses investing that amount. Usually I see one of a few things:
Same amount from last year
Same amount from last year with a small increase (or decrease)
Whatever is left over
There are a few things to keep in mind when deciding what you can afford to invest. At the top level, two things that must be considered are the margins your business sees and the actual type of business.
If you run a manufacturing company and have very thin margins, 10% of your sales would not be realistic.
Here is how I suggest you approach your marketing budgets:
Step 1: Learn your numbers.
CPL (cost per lead)
CPA (cost per acquisition)
What is in your marketing budget?
What is your current budget?
Step 2: Get to know what I deem as the two most important numbers:
What is the lifetime value of a customer worth to you. The keyword being lifetime.
What is the MOST you are willing to invest to gain a new customer?
Before I give you the final part of the equation, those two numbers are critical to understand. Your marketing budget should focus on how much you are willing to invest to gain a new customer without any caps.
If you run a childcare center and a new child in your center is worth $1000/month and stays on average for 30 months over three years, they are worth $30,000. This also doesn’t factor in the referrals they will drive you.
So my question to you is simple: how much will you invest to get $30,000 of top line revenue? $1000? $2000? $3000?
That number should become your CPA target. CPA less than X. This should be the focus. If you stay under X you keep investing in marketing.
This is the perfect formula that works.
With that said, it’s not for everyone. For those who need to be held to a stricter budget, I suggest the 7-12%/month formula, and then adjusted quarterly based on your actual top line revenue.
So, for example, if your goal is $100,000/month and you commit to 10%, you would have $30,000 to invest for the quarter.
After the quarter is up, adjust based on actuals either up or down. This ensures you don’t put yourself in a bad spot if you don’t hit your goals, but also adjusts the other way as well to keep the positive momentum going.
At the end of the day, the business who can afford to invest the most to acquire a new customer, wins!
WHAT SHOULD BE ON YOUR READING MENU OVER THE WEEKEND
Michael Hyatt: Your Best Year Ever.
I have always been a big fan of Michael Hyatt. His content is always practical, action orientated and proven.
This book is solid and a great book to read at the end of the year. It is focused on goal setting to make you actually achieve your goals.
Most New Year’s resolutions fail or get abandoned quickly. This book helps prevent that especially when you are stuck.
Take a few hours and crush this book before the new year!
SHORT READ, JUST LIKE YOUR ESPRESSO CUP
Year-End Tax Prep: 12 Ways to Save Your Company Money and Reduce Your Tax Burden
One of the best year-end tax-saving moves with cash-basis accounting is to maximize your deductible expenses now—but you only have until the ball drops on December 31st.
A smart, sometimes overlooked way to do that is with annual software subscriptions. Not only is software you buy for your business deductible (consult your tax professional for full details), but when you purchase an annual plan you often save on the software cost itself–as much as 20% over the monthly cost. That's an easy way to lower your taxes and accelerate your business.
But the clock is ticking. Which software should you go all-in on? Start by identifying your business goals for 2019, then find the tools that fill those needs and offer the best annual savings.
POWERFUL TOOL TO MAKE YOUR MARKETING A PIECE OF CAKEKissMetrics
The tagline of this tool says it all:
Track, analyze and optimize your digital marketing performance. See what’s working and what’s not, across all campaigns, mobile and web. This tool will help you understand what people are doing on your website and products, and deliver behavior-based engagement every step of the way.
QUOTE OF THE WEEK
We're all working together; that's the secret.
– Sam Walton
NO JOKE FUN FACT
We had our best year ever and that is 100% thanks to you our readers, members, clients, customers and friends. For that we are grateful!
READ THIS POST AS AN INFOGRAPHIC
Did you miss some of the previous issues of Marketing Caffeine? Read them here: