Do you find yourself constantly confused by the marketing advice out there? It can be hard to figure out what you need to focus on when you’re being told to do 10 different things at once. One of my clients asked me, “If there were only 3 things I need to know to make my marketing work, what would they be?” So I made this video.
Prefer to read rather than watch and listen? No problem – here’s everything I said in the video as text: What I want to talk about today is basically what are the three things that you need to know about your marketing to make it work in your business. Actually, I’m covering this topic because in today’s coaching session, one of my clients asked me this question saying, “There is so much stuff going around this whole marketing thing. Everybody talks about 10 different things. Tell me Shweta if there are only three things I need to know to make my marketing work, what would they be?” So let’s go.
The 3 Things You Need to Know About Your Marketing
The first thing you need to know in your business to make your marketing work is the lifetime value of your customer. The second thing you need to know is what is the acquisition cost of your customer? What does it cost you to acquire one customer? The third thing that you need to know is whether this acquisition cost is less than your lifetime value of the customer or not. So these are the three things – lifetime value, acquisition cost, and how is this equation stacking up?
1. Lifetime Value
Now just very quickly lifetime value of the customer again is based on three simple things. On average what is the risk retention of your business, how long does one customer stay in your business on an average? The second thing is on average, how much would this customer spend over this period of lifetime? The third thing is what is the margin that you make on that spend and therefore what is the gross profit you make on this particular spend? Then you can identify what is the lifetime value of your customer in your business.
2. Acquisition Costs
As far as acquisition cost is concerned it again is based on certain variables. The first thing is what is the marketing spend on a particular channel for which your are getting leads? The second thing you need to know is how many leads are you getting when you are spending that money in that particular channel? The third thing is based on your sales team’s conversion percentage, how many clients are you getting from those leads? So again, what is the spend? How many leads are you getting and how many are you converting, which is, how many people are actually buying from you? That determines the acquisition cost per customer.
3. Compare Acquisition Cost to Lifetime Value
When you compare these two figures, which is the lifetime value and the acquisition cost, while the acquisition is cost is less than the lifetime value of the customer you have actually created yourself an unlimited marketing budget and your marketing is actually working. If you don’t know these figures then very simply put you are playing a game in a blindfold manner and I’m not a big fan of that. It just leads to a massive waste of time, money and efforts. You start questioning whether marketing is a cost or an investment and I promise marketing is an investment, if you know how to go about it in the right way.
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