Most people you meet, you don’t remember. Forgettable people with no story and no reason to think of them. Or maybe you’re shoved into a generic box, “He’s the guy who does insurance” or “She’s some kind of doctor.”
Is that what you are to other people?
If you were more memorable and relevant, you’d get more opportunities. People like to buy from, and do deals with, people who are relevant to them.
When I ran a marketing agency for law firms, I was “the legal marketing guy who actually used to run a law firm” – useful positioning, because people knew when to think of me. If you ran a law firm, and wanted more clients, you’d want to hire someone who had been in your shoes and knew marketing.
There were other “legal marketing guys” – but the last piece distinguished me. It made the positioning more attractive.
After I sold that company I didn’t have a clear “elevator pitch”. I started several businesses, but I struggled with finding a concise way to communicate when to think of me.
I used psychological principles and research on memory to create a formula for an elevator pitch (more on that later).
What is the goal of having a personal pitch?
call out to exactly who you want to be connected to, and have them thinking “I need to talk to him”
when you talk to anyone who isn’t a target, have them be able to remember you and communicate your value to others.
You’re creating a mind virus.
My current positioning: “I help entrepreneurs avoid being stuck in a stagnant business and grow revenue using Scientific Entrepreneurship.” It calls out who I’m interested in talking with, their pain point, and gives a unique mechanism I use which gets them asking “Wait, what is Scientific Entrepreneurship?”
It also repels some people. If you aren’t the kind of person who thinks business can be distilled into a science, you’re probably not sufficiently left-brained to work with me.
For people like me, who own multiple disparate businesses, or want to attract multiple types of people, it’s harder. I had to widen the lens beyond any one of my businesses, finding a positioning that is wide enough to attract opportunities, but narrow enough to not be generic. I also chose from several different positioning – some might be just as accurate (I help people fix their business operations) but are less sexy than revenue so are less attractive.
You’ll change it over time. Create variations depending on who you’re talking to, based on reactions to trying one. It’s like trying on clothing. You try several outfits on, and see which suits you best.
The formula for writing your own and testing it is straightforward, but there’s some nuance. I’ll record a training and put it in CEO Workbench next week.
I spent five months making the perfect product I was convinced I had a winner nobody bought it here’s why
My marketing agency had increased prices by 4x in two years. This was good.
But we had a $1.5M pipeline of leads who would have bought at our old prices. With nothing to sell them.
So of course, entrepreneurial ADD kicks in, and I need to create something. Launchpad was born to get these (now too small) clients to where they could afford our new retainers.
It needed to be SO good that in 6 months of being in Launchpad the ROI would be enough to pay for our core marketing program. I’d create a whole new pipeline of leads.
Entrepreneurs do this all the time, whether it’s new a whole new brand, a new initiative, a new marketing campaign. We get an idea, and start building the thing.
And that’s why nobody bought Launchpad. My five months of work, it being an absolutely amazing product, those didn’t mean anything.
I hadn’t validated:
Did the market want it?
If they wanted it, would they buy it?
If they bought it, would they get the results I thought they could?
If they got the results, would they convert into higher-end clients?
It turns out, just like 10 year old boys and ninja swords, little clients weren’t interested in age-appropriate toys. They want all the strategy, hand-holding, and done-for-them work of a full service engagement.
They just aren’t willing to pay. Which is why small and shitty clients stay small and shitty (a rant for a different day).
The real point is that I hadn’t used Scientific Entrepreneurship to validate my hypothesis before investing significantly in making the thing.
How should I have done it?
Find a small test that validates the earliest link in the chain
Run that test
Adjust hypothesis
Test again
I could have gotten on the phone with 20 prospects and talked with them about if they wanted Launchpad and in a few hours, saved myself five months.
The easy thing to do is build it thinking you’re right. Because as entrepreneurs we’re awash in the excitement of possibility. But when we do build it, they probably won’t come.
Our ENEMY is uncertainty. We think that planning down to the last detail will eliminate uncertainty.
But we forget: No plan survives contact with the enemy.
So whether you’re launching a campaign, product, or company – do not build first.
Making it easy for customers to buy isn’t always a good idea. It’s not easy to buy a Ferrari, a Rolex Mariner, or any number of luxury goods. It’s quite easy to buy a commodity ball point pen on Amazon.
Why might we want to be a little more difficult to buy from?
Because we’d rather be in the position of choosing our customers rather than the other way around.
Ten years ago I made the mistake of taking on a client for my marketing firm who was a bad-fit client. We had a process that delivered reliable results, and every step of the way he fought our process. He wanted us to adapt to his way of marketing, rather than the other way around … and his way didn’t work (which is why he hired us).
We were too easy to buy from, because we let a bad client in the door. We did’t put up a proper application process, and vet them. We didn’t “work with them before working with them.”
The client lasted three weeks before we fired them. It would have been far better if we’d never taken them on in the first place.
Adding friction into the buying process means that we need to change how we market, though.
When we know that we’re going to take a smaller number of customers (and of course, charge more for delivering outstanding experiences), we’re intentionally not marketing to everyone. We’re marketing to customers who are looking for exceptional outcomes, and are willing to pay a premium for them.
Sometimes, we anti-market, explaining how we don’t work with everyone.
We give away a lot of free information, knowing full well that many of the people who get it won’t become customers.
We turn away revenue that we could close, because it’s not the right revenue.
This isn’t the right strategy for every business. The world needs commodities. But sometimes we don’t realize we have a choice where we play, and that we don’t need to play the same game everyone else is playing.
Everyone is looking for a magic pill. We want results without effort. We want to shortcut the process and just jump to the outcome – a thriving business, six pack abs, a stress-free relationship.
We waste time looking for magic bullets: watch another YouTube video, read an article, download another PDF, and get ourselves into someone’s marketing funnel.
When all along, the answer to getting what we want is right in front of us.
If we took the time we spent chasing rabbits, and spent it working steadily towards our goal, we’d be there.
But that feels hard. The unpleasant task of putting in the reps.
We could simply spend 1,000 hours on things we know get us to our goals. Instead we spend a lifetime of hours, on distractions.
Never realizing that even if we did find a magic strategy in our search, it wouldn’t work. Because we wouldn’t put in the reps on that, either.
Every time I kicked hard to get a gulp of air, I lost a little strength. The riptide pulled me out further. I sunk below the waves.
I was pulled out of the ocean in Hawaii, glad to be alive.
But then I returned home – to the office – and felt the same feeling.
Drowning. Firefighting. I couldn’t get ahead.
But this time, no lifeguard on a jet ski to pull me out of the riptide.
There was one big difference though. And that is that I had created the ocean of work that was drowning me. After all, I was the CEO. The choppy waters, the endless riptide pulling me was my own doing.
Since then I’ve talked to hundreds of entrepreneurs, and most feel the same.
Here’s how I work with clients and portfolio companies to build a raft, then a rowboat … and then, a battleship.
Step 1: Map The Business Functions
First, I zoom out and look at the business from a high level. Break it down into core functional areas like sales, fulfillment, marketing, HR, accounting … Make a comprehensive list of every function the your company, even if some of those roles are currently being done by the same person (i.e. the founder).
This exercise exposes just how intricate the business is and how vital it is to have standardized systems across each area. Like a clock, if one gear is off, the whole mechanism grinds to a halt.
Step 2: Define All The Tasks
Now I drill down into each function. Identify every repeatable task that role performs, whether it’s sending invoices, onboarding new hires, or creating social media content. Get granular. The more tactical we can be in defining each discrete step, the better the documentation will be.
Note how frequently each task recurs. Is it a daily task like customer service? Weekly? Monthly? This will help you prioritize which tasks are ripe for systemization first.
Step 3: Assign Owners
Next, I designate who is responsible for managing each task. Tasks can’t fall through the cracks if someone’s name is next to it.
This owner may be the entrepreneur initially, but the goal is to eventually delegate tasks so he’s not the bottleneck. As you systemize and document how each one is done, they get delegated.
Step 4: Document Processes
Now comes the documentation piece. For each task, I have the task owner map out how it’s done from start to finish. What are the exact steps? What inputs do they need to complete it? This is writing the owner’s manual for each task.
I like having them record themselves doing it and create a checklist from that.
Step 5: Streamline with Technology
Once everything is documented, I take a second pass to identify opportunities to leverage technology. Could any manual tasks be automated with software or AI?
Even simple changes like using templates or project management tools can be big levers.
Step 6: Centralize Knowledge
Finally, I collect everything in a master playbook that’s accessible to everyone. This living document becomes the single source of truth for how everything gets done in the business.
As we refine processes, swap owners, or incorporate new tech, the playbook evolves. But everyone is always working off the same updated protocols. No more misalignment.
Building your life raft is a process. You just need to stop thrashing for long enough to realize your predicament … And swim out of the riptide.
Want a cheat sheet to growing a thriving business? Get business training for free at the CEO Workbench.
I was pulling my hair out putting together on YET ANOTHER proposal.
I’d already spent HOURS on the phone and multiple back-and-forths. He seemed excited.
I sent the proposal, and –
Crickets. Ghosted again.
The next morning I stopped doing proposals and asked for a check before I did anything. If they wouldn’t do a paid discovery session, I told them to get lost.
Here’s why requiring prospects do a paid discovery with my agency changed everything:
1. I Attracted Higher Quality Clients
A paid discovery phase acts as a filtering mechanism. Only clients who value planning and are willing to invest in strategy will opt for discovery.
Shitty clients who don’t plan expect magic. Then they quit.
Clients that plan understand that marketing takes time and expertise.
Clients who balk at paying for discovery end up being the most difficult down the road. They have unrealistic expectations and are likely to churn quickly. Let them walk rather than wasting time reacting to their knee-jerk demands.
2. I Instilled a Planning Mindset Upfront
Discovery establishes a planning mindset from day one.
You set the expectation that marketing requires research, analysis, and strategy. This mindset sticks with the client well beyond the initial engagement, keeping them disciplined vs. demanding immediate results.
Most prospects want to skip straight to tactics without strategy. Most prospects are shitty. Coincidence?
Paid discovery forces them to slow down and do the work to build an intelligent foundation. Or f** off.
3. I Better Framed My Agency’s Value
The most profitable clients who truly grasp the value you provide. Discovery allows you to demonstrate this value first-hand, making your (now higher) pricing much easier to swallow.
When clients experience how your strategy can transform their business, they are more than happy to pay your retainer fees.
4. I Increased Lifetime Value
A paid discovery phase enhances lifetime value in multiple ways:
The close rate from paid discovery to retainer is extremely high.
You establish periodic planning sessions upfront as part of the engagement. This strategic review process increases retention.
Ongoing planning keeps the relationship fresh and evolving vs. stagnant. Again boosting retention.
When you combine higher close rates with longer retention, the lifetime value impact is massive.
5. I Ensured Consistency
This structured process enables your team to deliver consistent quality by removing variability. Your proven methodology guides all client engagements, rather than reacting (and re-scoping) case-by-case.
Consistent deliverables lead to consistent client satisfaction. These systems are also essential for smooth staff growth and transitions.
Making the Shift
Transitioning to paid discovery will take some work, but the payoff for your agency will be immense. Here are some tips:
Adjust Sales Conversations
Get your sales team on board to position paid discovery as a required starting point. They need to convey the value of investing in strategy before tactical execution.
Refine Your Discovery Offering
Clearly define what your discovery engagements include, their duration, and pricing. Then stick to it consistently across clients. No exceptions.
Educate Clients
Develop marketing assets explaining why discovery is a must, not a luxury. These can include emails, one-pagers, webinars, etc.
Enhance Onboarding
Beef up your internal processes around onboarding new discovery clients. Document playbooks to ensure consistency across all engagements.
Mine Retainer Leads
Leverage current retainer clients to generate referrals specifically for discovery engagements. They already know first-hand the power of your process.
Review Results
Track conversion rates from discovery to retainer closely. Look for patterns in who opts for ongoing engagements vs. one-off projects. Refine your positioning and targeting accordingly.
If you hate your clients – if your close rates suck – paid discovery can change that. That’s what it did for me.
That was money I needed, because this was my first business – and my bank account was running on fumes.
Here’s the bad choice I made, and what you can do if it happens to you –
I did what most businesses do: I delivered to the customer- then sent an invoice, and waited. And waited… Followed up… Waited some more… And again… Until I realized I wasn’t going to get paid.
It’s the worst feeling.
THREE Things You Can Do Right Now to Get Your Client to Pay
If you’ve got clients that aren’t paying, it’s the worst feeling. You’ve done the work, they aren’t paying the bill … And you feel this pit in your stomach like you’ve been robbed. If it’s an ongoing client, feeling like you need to keep working for a deadbeat.
Here are three things you can do right now to get your client to pay:
1. Negotiate New Terms
If the client says they don’t have the cash to pay, your first move should be to negotiate terms.
This could mean agreeing to be paid in installments. If you do this, the key is to get it in writing so you have a paper trail if they stop paying the installments.
The second approach is to agree to take a partial payment – say 60% of the total amount owed. Get it in writing. It’s better to take something than nothing at all.
2. Send a Demand Letter
If the client won’t play ball on negotiated terms, the next escalation is sending a demand letter. This is a formal letter saying you expect payment by X date and will pursue legal action if the deadline isn’t met.
Hire a lawyer to draft and send the demand letter on their legal letterhead for maximum effect. The letter will outline the amount owed and date it was due. It provides written evidence you have formally notified the client and are owed the money.
I find with my clients who are going through this (before fixing it once and for all as I describe below) – sending a demand letter results in successfully collecting payment 30-50% of the time. Not great odds – but better than nothing.
3. Go to Collections
If a demand letter doesn’t work, the last resort is to go to a collection agency. They’ll take a percentage cut of anything they can recover – usually between 20% to 30%.
I find the odds of getting anything vary between 10-30% on average. But collections agencies have legal knowledge and tools you don’t, so they may succeed where you won’t.
Be sure to choose a reputable firm (ideally getting a referral) and check reviews to avoid shady outfits who could make the situation worse.
TWO Things You Should NEVER Do
When trying to get a client to pay, there are two crucial things you should never, ever do:
1. Self-Enforce
Don’t take matters into your own hands by holding a client’s assets hostage, ceasing work until you’re paid, or releasing confidential information. These open you up to lawsuits (or even criminal charges), and make the situation much worse. Talk to an attorney before taking any enforcement actions.
2. Public Shaming
Posting on social media, writing bad online reviews, or telling all your contacts not to work with them may feel satisfying. But again – doing this without first consulting your attorney can create legal issues. Defamation lawsuits are not fun. Keep your fight confidential.
ONE Way to Prevent This from Ever Happening Again
Want to make sure you never have non-paying clients ever again? Here is the #1 technique:
Don’t be a bank.
Banks lend money based on the creditworthiness of the customer. And they charge interest for that. Invoicing in arrears is giving the customer a loan. Unless you’re evaluating creditworthiness, and charging for a loan, don’t do it.
Before starting work, have a written agreement in place requiring that payment is to be made in advance.
I did this with my clients – using ACH (directly debiting their bank account) to get paid before I delivered.
For large projects, require installments correlating with milestones or upon completion of phases – and get each installment in advance. The key is tying payment to progress – never, ever do 100% of the work before getting paid in full.
By getting payment upfront or in installments, you’ll weed out deadbeats unwilling to commit capital and will get compensated as you hit milestones.
Doing this one simple thing ensures you’ll get paid for the work performed. I’ve owned services business for over 15 years and not once had a collections issue once I adopted this.
Client not willing to pay in advance? Not a good client. Move on.
It isn’t fun dealing with clients who refuse to pay – negotiate terms, send a demand letter, and use a collections agency if needed. Then stop messing around and get paid in advance.
Your Product Will Change, But Your Promise Should Not
Falling in love can cause you to make poor choices. That goes for business, too.
Many businesses become so enamored with their product (or service) features that they lose sight of why customers buy in the first place. In their quest to churn out new iterations and upgrades, they overlook the promise made to their buyers.
This product-centered approach is short-sighted, and we’re going to go over why (and what to do). Read on to see why you must shift to a promise-driven approach to strengthen your bond with consumers and secure their allegiance for a lifetime.
Make a Promise, Not Just a Product
Savvy businesses build their brand around a promise—a pledge of value they make to customers. This promise transcends any individual product.
Let’s look at some examples:
Southwest Airlines promises friendly, reliable, and affordable air travel. They don’t define themselves by the specific planes they fly.
Apple promises convenience, style, and thinking differently. Their brand retains its cachet even as they roll out products that might not always be on the bleeding-edge specifications-wise.
Starbucks promises a welcoming “third place” between work and home. Their brand retains its allure whether they’re selling coffee, tea, food, or merchandise.
In each case, the company makes a pledge to customers that goes beyond products. When you think Starbucks you do think coffee, but you think more than that. You think about the experience of Starbucks. That’s brand. And that’s built through a promise.
This promise becomes a competitive advantage.
The Product is Transient—The Promise is Forever
No matter how much they’re loved, products have a finite lifespan. I loved my 1st gen iPod, but it’s a brick.
Look at Kodak—once a titan of photography brought low by digital disruption.
Or Blockbuster, which thought its brick-and-mortar stores would always bring in customers.
But a company’s promise need never expire or go obsolete. Southwest still delivers a great flight experience, even though air travel has been transformed since the 1970s. If they keep their promise, they’ll be doing it in an era of space travel.
Apple and Starbucks still embody their core promises, even as they’ve rolled out thousands of new products.
Their promises give them flexibility to adapt with the times. They’re not tied to a bright blue candy-looking iMac or a Chocolate Black Tea Frappuccino with Earl Grey Jelly (I have no idea what that is but Starbucks used to offer it).
As long as they continue to fulfill their pledge to customers, they have permission to retire old products and try new ones.
Fulfilling the Promise Builds Real Loyalty
Promises create an emotional bond that products alone cannot achieve. And that bond begets loyalty.
Consider Peloton—they struggled to fulfill demand for their bikes and treadmills during the pandemic. Shortages forced people to wait months for their pricey equipment.
Yet few customers jumped to competitors. They were bought into the Peloton promise of an engaging, community-oriented fitness experience. Owning the gear was secondary. Peloton’s promise earned loyalty beyond any one product.
Companies earn this loyalty when the promise guides all their actions:
Product design considers how to best fulfill the promise
Marketing communicates the promise
Support is ready to assist if the promise falls short
Staff embrace their role in keeping the promise
The promise acts as True North for every customer touchpoint. Every decision made through the lens of that promise, because today’s product is just a means to an and.
If you’re a services business, it’s the same thing. Stop thinking in terms of “what I do for the customer” but “what is the bigger reason for customers to come to my business for their entire lives”?
Lead With Outcomes, Not Outputs
An old saying goes: “People don’t buy drills, they buy holes.” Customers are not moved by technical specs and features. They buy solutions to problems and desires.
The promise articulates the outcome a customer seeks. Features and technical details are outputs in service of that outcome.
Peloton shoppers don’t analyze metrics like resistance levels and video quality. They want the outcome of an engaging fitness experience. So Peloton emphasizes the promise in its marketing, not the specs.
Outcome-focused promises are also agile. The outputs can change with the times while the promise remains constant.
Southwest doesn’t define its brand by legroom inches and 737 models. The promise of friendly, reliable, and affordable air travel accommodates new planes and configurations.
Pinpoint the Desire, Then Build the Solution
Many entrepreneurs are so passionate about their product or service they put the cart before the horse. They start with the output then seek a market.
But when the product is the focus, it’s too easy to get lost in the weeds of features. You geek out with the tiny fraction of the customer base who cares about the stats rather than the purpose.
The promise-driven approach brings discipline. First pinpoint an unmet customer desire. Dig deep into the jobs they want done and the outcomes they seek.
Only then develop products purpose-built to fulfill that promise. Your passion should be for the customer, not the output. Build what they need, not just what you want to make.
The promise-driven approach is built around continuity. While products come and go, the pledge to customers remains steady. This is True North.
Fulfilling a promise earns loyalty beyond individual products. And focusing first on customer desires, not outputs, ensures your solutions are necessary and useful.
Though it requires discipline, this approach is well worth the effort. A lasting promise turns customers into lifelong fans who follow wherever your business leads. Is it time to shift your focus? If so, I’ve created a worksheet for you to get this solved fast. It’s available for free on the CEO Workbench.
I was yet another small firm saying “big firm quality at small firm prices” … and prospects weren’t biting. Why?
It was BORING.
Here’s how I fixed it:
Brands walk a fine line between communicating key information and fading into the background with boredom.
You need prospects to remember. Building a unique voice with a unique message makes your brand pop.
So how do you give your brand a voice that’s bold, memorable, and distinct? It’s not enough to just say you’re “different” or “innovative”. Or worst of all “just like the big guys but better prices” (ask me how I know).
You need a systematic process to uncover what makes you truly one-of-a-kind.
Think of your brand as an eccentric celebrity or superhero.
What makes someone like Lady Gaga stand out isn’t just her music – it’s her entire persona. From her wardrobe to her opinions, she’s unlike anyone else. Your brand needs that same X-factor.
Here’s a four-step process to build your brand’s captivating voice:
Step 1: Discover Your Brand’s True Personality
Start by asking: if my brand was an actual person, what would they be like?
Forget what you want people to think – what do they actually think after interacting with you?
Make a list of adjectives that describe your brand’s personality. Be brutally honest. Don’t hold back – really get to the core of how your brand makes people feel. Eclectic? Serious? Down-to-earth? Elitist? Trusted? Quirky? Professional?
The answer could be “nothing special” – which isn’t good, but at least now you know so we can fix it.
Step 2: Pick Your Celebrity Brand Doppelgänger
Now comes the fun part – which celebrity or superhero is most like your brand? Finding your brand’s celebrity doppelgänger (alter ego) creates a shorthand for what your brand embodies.
For example, if your brand is authoritative yet playful, you’re more Tony Stark than Captain America. If you’re an innovative pioneer in your industry, think Nikola Tesla, not Thomas Edison. If you’re aiming for bold yet glamorous, go for Lady Gaga over Celine Dion.
Making these connections crystallizes what your brand’s persona should be.
It also serves as a North Star when you’re creating content or making business decisions – “what would [my celebrity doppelgänger] do in this situation?”
Step 3: Establish Your Brand’s Core Contrarian Beliefs
Great brands all have something in common: a point of view that challenges the status quo. What common industry beliefs does your brand reject? How does your brand see the world differently than competitors?
For example, my marketing agency worked with law firms – and we believed that lawyer marketing should be based on bringing out the real people behind the stuffy suits. Don’t look fancy, look like a real person – which is the opposite of most legal marketing (and works better).
My eCommerce company is also doing it differently – our purpose is helping rescue animals before taking any profit. Who do you think customers are going to buy from – the company that’s making a difference, or the one hell bent on lining their pockets?
Clearly establishing your contrarian point of view is crucial. It’s not enough to say you “think differently,” are on the cutting edge, or have expertise – you need to specifically call out what you’re rebelling against and why.
For example, Tony Stark believes superheroes shouldn’t be anonymous vigilantes. Tesla believes gasoline-powered cars are primitive dinosaurs awaiting extinction. Lady Gaga believes artists must push boundaries through relentless reinvention.
Make a list of 3-5 core contrarian beliefs that will form your brand’s manifesto. What change does your brand want to inspire in the world?
Step 4: Tell Your Brand’s Captivating Origin Story
Every superhero has an origin story explaining their powers and motivations (e.g. Batman sees his parents murdered). Your brand’s origin story is a key touchpoint to connect with customers emotionally.
Does your brand fill an unmet need the founders once experienced? Were you an underdog disrupting a stagnant industry? Did you oversecome unique challenges to get where you are?
Craft your brand origin story to highlight what makes you singularly passionate about your mission.
And remember – origins can evolve over time. Tesla’s origin today is about accelerating sustainable energy, even though they started just aiming to build an electric sports car.
Bringing It All Together
With these four steps, you’ve uncovered your brand’s true persona, celebrity alter ego, central beliefs, and backstory.
Now it’s time to translate these insights into your brand voice. Here are some ways to do that:
Content style: Embrace your brand’s personality in your content – be playful, authoritative, or outrageous as fits your persona.
Messaging: Put your contrarian beliefs front and center in messaging to show you’re unlike competitors
Visuals: Bring your brand persona to life with imagery that conjures your celebrity doppelgänger.
Storytelling: Share your origin when introducing your brand – it’s part of what makes you exceptional.
Values: Let your brand beliefs shape your culture and how you make business decisions.
Remember when my first business was failing? This is exactly what I did. And that took it from $70k/year to seven figures.
With this formula, your brand can develop a captivating voice that wows customers and sticks in their minds. The more you share what makes you genuinely one-of-a-kind, the more that authenticity will come through.
Embrace your brand’s kooky inner self. The success you’ll have will be anything but boring.
Want a shortcut do doing this? I’ve got a free worksheet for you at the CEO Workbench.
In my eCommerce business, we lose money acquiring every customer. I did the same thing at my agency. And even today, I’m looking for ways to lose more money.
Insanity? No, an understanding of how marketing REALLY works.
Marketing Drives Results, Everything Else is a Cost
“The purpose of business is to create a customer, the business enterprise has two — and only two — basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.” – Peter Drucker
Peter Drucker perfectly encapsulated why sales and marketing are the lifeblood of any business. Too many businesses view sales and marketing spend as an expense. The reality is that customer acquisition is the one area where you can take $1 and make it $2.
Marketing Creates Customers – Who Create Revenue
I’m going to say the obvious because it bears repeating. Without customers, you have no revenue. And without marketing, you have no customers. Marketing brings in customers, who bring in revenue. That revenue is the fuel of the business.
Think of marketing as the seed that allows the rest of the business to grow. No seed, no growth.
Customers aren’t just a one-time revenue event. They have significant lifetime value if retained and nurtured properly.
The lifetime value of a retained customer will likely be a multiple of what that customer originally spent. This makes acquiring customers one of the best investments a business can make.
That’s part 1 of why I’m losing money acquiring customers in my business … More on this as I explain:
Building the Marketing Machine
As you refine your sales and marketing machine, customer acquisition costs can decrease. Yes, even if the cost of ads are going up (if you’re not sure how, visit CEOworkbench.com for free trainings). Conversion get more efficient. Messaging improves. Targeting gets sharper.
This means that over time, the same marketing investment yields an increasing number of customers. The return on investment goes up.
Marketing is leverage.
If you’ve rigged your ratios right a small increase in marketing budget can result in a disproportional increase in customers acquired.
Cutting Marketing Cripples Growth
When times get tough, weak leaders look to cut expenses. Marketing budgets are frequently first on the chopping block. This is, simply put, stupid.
Cutting your marketing efforts during downturns means fewer customers coming in. This reduces revenue. Which then requires more cuts. Puts you into a dangerous death spiral.
When others are fearful, get greedy.
It’s the best time to acquire customers.
Right now, my ad costs are up. I’m paying 2.5x my average order value to acquire customers. But I’m doubling down – because I understand that cutting marketing is long term suicide, and I understand long term math.
Marketing Pays Compound Interest
Think of marketing as a flywheel. At first it takes a lot of effort just to get it moving. But as customers beget more customers (through upsells, referrals and repeat business) it starts spinning faster.
Suddenly that initial push pays compound interest. The momentum takes over. But it never would have happened without investing up front.
Many businesses want to pull profits out of the company as soon as possible. But the fastest growth comes from reinvesting profits back into marketing to drive growth.
This virtuous cycle compounds over time. Taking money out too early cripples the company’s potential.
Marketing at a Loss Isn’t Always a Loss
Marketing allows you to acquire customers now in order to profit from them later. This is the idea behind loss leaders (and many subscription sales) – selling something below cost in order to land a customer who will be worth more over years.
Loss leaders don’t make money on the first sale. But the lifetime value of the customer makes up for it many times over.
But loss leaders are one of the reasons business owners get afraid. They calculate on the short term, get afraid, cut marketing budget … and lose in the long term.
As long as the lifetime value of a customer exceeds the cost to acquire them, marketing works.
That’s where I usually live. I’m fine losing money on the front end, because I know what the customer is worth.
The only question I need to answer is “how can I float the period while I’m underwater on customer acquisition?” Your answer may be different from mine: it could be cash from operations, debt, investors, factoring … But the point remains:
Do NOT stop marketing just because you lose money on the front end. It’s more nuanced than that.
Market or Die
Marketing is the thing that will determine whether your business has cashflow in the future.
You can make the decision now to invest in it, or to call it a cost and deny the reality of how business works.
Cash is oxygen for a business.
And marketing generates the cash.
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