Had a question recently about setting a marketing budget for small to medium sized businesses in the Caribbean. My take on this topic is unconventional yet very simple: I’m NOT A FAN OF MARKETING BUDGETS.
That’s right; I don’t believe in and am not a fan of setting traditional marketing budgets for simply budget sake. Benchmarks, yes, especially as expressed in percentages but what if you set out a 7% marketing budget and the campaigns you implemented work famously. Do you sit tight? We like to see our clients think in terms of ROI at all times but also what the lifetime value of a client/guest/patient means long term as well as from a referral perspective.
So here are some questions to seriously consider:
If we were able to devise programs that when deployed would increase your business and profits of $1,000,000 each time, what would you willing to invest to make that happen? Would you allocate 10%? Keep in mind that would leave you with
$900,000 in gross profits. How about investing $200,000 which would still leave you with $800,000? $300,000 to make $700,000? Even if we invested 50% you would still derive $500,000 in profits up front.
Not a bad deal, right? But that’s only scratching the surface. Perhaps the bigger point is that once we have those customers in the door, we have an opportunity to sell to him/her over and over for many years to come. So the real point here is lifetime value, right?
So perhaps the real conversation needs to be switched from, “What’s the least amount we can spend to acquire a customer?” to the far more important question, “What’s the most that we can/will spend to acquire a new customer?”
When you truly understand the true LIFETIME VALUE of your client/guest/patient any Caribbean business owner or anyone braking into the Caribbean marketplace would find the money to get them on board. It’s the vast differed between getting a customer to get a sale to making a sale to get a customer.
When we sincerely grasp this concept, it’s a real game changer.
– – – Rich Sadler, Caribbean Marketing Director