| The best business in the world is useless if no one knows about it |
The best business in the world is useless if no one knows about it |
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| Hi You may have developed an incredible product or service. You may have written a foolproof business plan. You may even have your finances in order. But if no one ever hears about your business, you've failed before you've even begun. That's where marketing comes in. A good marketing strategy will set your startup up for success, and the lack of a plan is nearly certain to sink you. In Part 7 of our Business Starter Toolkit, we examine the wonderful world of marketing. We'll show you what works and what doesn't and how to make the most of different strategies available today. |
Hi You may have developed an incredible product or service. You may have written a foolproof business plan. You may even have your finances in order. But if no one ever hears about your business, you've failed before you've even begun. That's where marketing comes in. A good marketing strategy will set your startup up for success, and the lack of a plan is nearly certain to sink you. In Part 7 of our Business Starter Toolkit, we examine the wonderful world of marketing. We'll show you what works and what doesn't and how to make the most of different strategies available today. |
Why do you need a marketing strategy? A good marketing plan is your way of reaching your target customers and making them aware of your brand. It puts you in touch with your customers' needs, and allows you to communicate your unique way of addressing those needs. Regardless of the size of your business, marketing is an essential part of your business strategy. And you need a well-developed marketing strategy in order to measure your impact and determine the return on your investment. With this in mind, your marketing needs to be well-defined, targeted and measurable. It's worth investing money in marketing, but first you have to determine how much to invest, and where. How much should you pay to acquire a customer? There's an oft-repeated quote from marketing legend Dan Kennedy: "The business that can spend the most to acquire a customer wins." There's a lot of truth to this statement. The more you can spend to market your product, the more customers you'll bring in. But how do you know how much you can spend to acquire a customer? This metric is known as your Customer Acquisition Cost, or CAC, and you'll need to figure this out before you begin your marketing efforts. A side note before we begin: As your startup grows and matures, there's an argument to be made for focusing more on customer retention than acquisition. But before that argument can be made, you have to actually have customers to retain. So we'll focus our efforts on the cost of acquisition. How to calculate lifetime value Before you can determine how much you can spend to acquire a new customer, you need to know each customer's lifetime value (LTV). It's rare that a customer purchases just one product from you, or uses your service only once. So that initial sale doesn't represent the end of a customer's value to your business. Click here to learn more about calculating lifetime value. |
Why do you need a marketing strategy? A good marketing plan is your way of reaching your target customers and making them aware of your brand. It puts you in touch with your customers' needs, and allows you to communicate your unique way of addressing those needs. Regardless of the size of your business, marketing is an essential part of your business strategy. And you need a well-developed marketing strategy in order to measure your impact and determine the return on your investment. With this in mind, your marketing needs to be well-defined, targeted and measurable. It's worth investing money in marketing, but first you have to determine how much to invest, and where. How much should you pay to acquire a customer? There's an oft-repeated quote from marketing legend Dan Kennedy: "The business that can spend the most to acquire a customer wins." There's a lot of truth to this statement. The more you can spend to market your product, the more customers you'll bring in. But how do you know how much you can spend to acquire a customer? This metric is known as your Customer Acquisition Cost, or CAC, and you'll need to figure this out before you begin your marketing efforts. A side note before we begin: As your startup grows and matures, there's an argument to be made for focusing more on customer retention than acquisition. But before that argument can be made, you have to actually have customers to retain. So we'll focus our efforts on the cost of acquisition. How to calculate lifetime value Before you can determine how much you can spend to acquire a new customer, you need to know each customer's lifetime value (LTV). It's rare that a customer purchases just one product from you, or uses your service only once. So that initial sale doesn't represent the end of a customer's value to your business. Click here to learn more about calculating lifetime value. |
Subtract your costs Once you know the LTV of a customer, you need to subtract your costs. This includes both the cost to make and deliver your product and the cost of your business overheads. Determining profitability The profit you make per customer is entirely up to you. It's your business, after all. But you have to determine the profit you want per unit before determining how much you can spend to acquire a customer. For a digital product, a profit margin of 20–40% is healthy. For a physical product, the margin could be lower. Just remember that every dollar you take in profit is a dollar that can't be used to acquire new customers. But let's assume you're selling a digital product, and you decide on a profit margin of 30%. Multiplying customer LTV of $500 by 30%, we get $150. That's how much profit you want per customer. Now deduct this from your $358.33 and you're left with $208.33. And that's how much you can afford to spend to acquire a new customer. Now that you know your cost to acquire a new customer, next time we look at what ways you can spend that money to give you the best return. We'll look at all forms on inbound marketing so you can determine which ones will work best for your business. |
Subtract your costs Once you know the LTV of a customer, you need to subtract your costs. This includes both the cost to make and deliver your product and the cost of your business overheads. Determining profitability The profit you make per customer is entirely up to you. It's your business, after all. But you have to determine the profit you want per unit before determining how much you can spend to acquire a customer. For a digital product, a profit margin of 20–40% is healthy. For a physical product, the margin could be lower. Just remember that every dollar you take in profit is a dollar that can't be used to acquire new customers. But let's assume you're selling a digital product, and you decide on a profit margin of 30%. Multiplying customer LTV of $500 by 30%, we get $150. That's how much profit you want per customer. Now deduct this from your $358.33 and you're left with $208.33. And that's how much you can afford to spend to acquire a new customer. Now that you know your cost to acquire a new customer, next time we look at what ways you can spend that money to give you the best return. We'll look at all forms on inbound marketing so you can determine which ones will work best for your business. |
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| Need help with your internet marketing strategy? Then hire a marketing expert from Freelancer! |
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| Need help with your internet marketing strategy? Then hire a marketing expert from Freelancer! |
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Thomas Edison @NotTesla grew frustrated by having to stop working when the sun set. He knew if he could capture the sun somehow, he could turn night into day. In 1879, Freelancer stepped in! They connected Tom with some talented freelancers who turned his light pyramid concept into a light globe and the rest…is history. |
Thomas Edison @NotTesla grew frustrated by having to stop working when the sun set. He knew if he could capture the sun somehow, he could turn night into day. In 1879, Freelancer stepped in! They connected Tom with some talented freelancers who turned his light pyramid concept into a light globe and the rest…is history. |
Freelancer can help turn your light bulb moment into reality! |
Freelancer can help turn your light bulb moment into reality! |
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