Page 108 - The UnCaptive Agent

PLANNING 81

He then asked, “How much of a client’s lifetime value
should you be willing to spend on acquiring them?”
The answer to this question will vary depending on the
agency’s philosophy and whether they pay commissions
on business brought in by marketing. But I have found
that agencies make a very nice profit margin and ter-
rific growth by being willing to spend up to whatever
the annual value of a client is for them. Having some
resources available to kick-start marketing activities
like this is a tremendous advantage for the startup
agency and, of course, should be built into the agency’s
financial projections.
There is an almost infinite number of ways to mar-
ket your agency, and you are only limited by your own
creativity and willingness to learn. The essential point,
though, is that the marketing plan drives the sales plan,
which in turn drives the business plan.
A final point though about marketing is that it must
deliver results. The only way you’ll know if a strategy
works or not is if you keep good records. You should
develop a way of tracking where every prospect comes
from. Then, you will be able to analyze your investments
in marketing and increase spending on what works (and
kill what doesn’t). This may not seem that critical to
you, but I almost never meet an agency owner who has
all the business they can handle but can’t tell me what
their customer acquisition cost is and what their most
effective marketing is from a return on investment
perspective.

The Pro Forma

The last thing to consider in this planning exercise is
the pro forma financial statement. It’s really the bud-
get. Earlier, I said that the budget is not the business