I have an orchard at my house. It gives us a lot of fresh fruit throughout the year which I love.
One unexpected bonus has been the cherry tomato plants. They have self-sewn at the base of some of these fruit trees.
My wife and I assume that the seeds must have been in the mulch spread around the base of the trees. Given the warm weather in QLD, we’ve been able to harvest cherry tomatoes all year round. This has been a welcome addition to the salad bowl.
It only took one of those seeds to find the right soil, germinate and produce a crop of over 300+ tomatoes.
With 5 of those plants growing and more starting, we’re getting an increasing number of tomatoes each month.
Marketing In the Right Soil
Planting seeds is a bit like taking $1,000 and saying, I’m going to do some marketing.
That $1,000 is the seed.
If you plant it in the right soil and take care of it in the right way, it will give you a return greater than itself.
The Cost of Digital Marketing
In 10+ years of digital marketing, I’ve noticed many businesses view marketing as an expense rather than an investment.
They hope they will see a return, but they expect it will cost them.
Hooked on A Feeling
I get it, sometimes you do spend money on marketing and don’t feel it made a difference.
Notice I said, “feel”?
Unfortunately, this is because businesses often feel the results rather than knowing if it worked.
Questions That Shouldn’t Be Hard to Answer
Here are some questions a business should be able to answer:
- How much does it cost you to get a new customer?
- Do you know the average lifetime value of your customers?
If a business can answer those questions, you can have some fun with digital marketing. This is because they can work out the return on investment from marketing initiatives.
Turn $2.5K Into $28.8K
Let’s take that $2,500 and spend it on some Google Ads for three months. We’ll also make some website tweaks to help improve the website’s enquiry rate.
For the $2.5K spent we can see in the business’s CRM that they got 52 enquiries over the three months.
Of those enquiries, they managed to turn eight into customers.
Each of those customers’ value to the business is $3,600 over 12 months.
So, from the $2.5K they’ll make approximately $28,800 in the next 12 months. That’s $11.52 for every $1 spent. A nice return on investment.
BUT, if you take a further $2K of that $28.8K and create a well-crafted email marketing strategy for the client, they’ll stay for three years.
Now the $2.5K + $2K has returned $86,400.
Another bonus is that your email marketing strategy was a one-off investment.
It requires a much smaller monthly fee to maintain its effect. This means you keep getting the value but with less investment.
That’s some nice leverage.
It Cost Me What for a Customer?!
Remember, if you had only looked at the $4,500 as a cost you might be shocked to see that each customer cost $562 to get and decide that your marketing didn’t work.
It’s All in Your Head
The above scenario is not fictitious. I know there are businesses that could spend a similar amount and see similar returns on that investment.
The takeaway should be that digital marketing is an investment. You should expect a return and you should know how to measure that return.
If you’re seeing it as a cost, it’s all in your head.