Page 287 - Duct Tape Marketing

Duct Tape Marketing

Determine the Client Contribution Factor

To determine how to create a “spend as little as you need to” Duct
Tape Marketing budget, you’ve got to do some more simple math.
Note that I’ve said you should spend as little as you need to, but that
is not the same as saying, “Don’t spend money on your marketing.”
I have tied the entire budget process to your goals so they will either
influence or constrain your budget, depending upon how aggressive
they are and how much money you are willing and able to invest in
achieving them.

Before any of that can be determined, though, you need to take a
look at something I call your client contribution factor. This is sort of a
fancy way of saying, how much is a new client worth to your business?
When you get a new client, you should be able to predict how much
revenue that new client will produce over the course of two or three
years. What this number will do for you is allow you to understand
how much money you can afford to invest to acquire a new client.
This should be one of the factors you consider when creating a mar-
keting budget.

It’s not perfect, but it certainly warrants your attention. If you
are a consultant, for example, and you know that each new client is
likely to produce $50,000 worth of revenue for your firm, then you
can begin to think in terms of how much you can spend to land each
new client.

If you sell a $79 product that never needs replacement parts, the
amount you can budget to acquire each new client will be signifi-
cantly lower than the above consultant and certainly less than $79.

The first step is to attempt to determine what the client contri-
bution factor for your business is. This may not be a very difficult
equation for most small businesses. Look at a list of your ideal clients
and determine what your average revenue per client over a three-year
period is or could be. (Three years is pretty arbitrary, but a good place
to start.)

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