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The Marketing Secret Weapon Sitting In Your Desk Drawer

secret weapon in your desk drawer

My dad was a real estate guy. And when I was young, he taught me the value of knowing your numbers.

When he dropped me off at BYU my freshman year, he gave me the calculator I still use to this day (I won’t say “over twenty-five years later,” because I’d be dating myself): the HP-12C Financial.

The thing is older than my oldest child, but it still works like a charm.

Since it’s a financial calculator, it calculates everything “backward,” which makes it confusing for the uninitiated. Seeing someone try to use it is like watching a caveman trying to operate an iPhone.

It’s pretty fun to witness.

Regardless of how you like to crunch your numbers, though, make no mistake—your calculator is your most important marketing tool.

By knowing your numbers, you can determine your marketing budget and how much advertising you can accomplish.

Let me show you a wild example.

An HVAC company wanted to target homeowners whose heat pumps were likely to fail within the next few years with a postcard campaign. The company had made a series of about six postcards they’d send every six weeks to a thousand homeowners who had heaters between 10 and 12 years old.

The goal was to get the homeowners to replace their heaters BEFORE they broke down. This would likely happen in the winter, which is a busy season for HVAC companies. Homeowners with broken heaters would have to suffer days in an ice-cold house while the HVAC company tried to fit them into their overloaded rotation.

As I reviewed this client’s marketing strategy, I had an overwhelming sense their campaign was going to fail.

Getting people to spend thousands of dollars on a problem they MIGHT have in the future can be a colossal feat. The client reasoned that “the longer you wait to replace your heat pump, the bigger the failure risk” would get people to take action.

I countered with “the longer a homeowner’s heat pump works, the more convinced they’ll become that it will never break.”

An ounce of prevention might be worth a pound of cure. But when we’re talking about people parting with their money, spending oodles of it on preventative measures isn’t something most folks are dying to do.

Think about it… do people buy treadmills BEFORE they get fat? Or those extended television warranties the cashier at Best Buy always tries to hock?

Nope.

But then the client told me something that changed the playing field.

He said it’s not a matter of “if” these heat pumps will fail—they WILL fail, guaranteed.

He said these heat pumps NEVER last longer than 13 years, so homeowners with a 10-year-old heating pump would without a doubt need one within the next 36 months. Period.

I asked him how sure he was the pumps would fail. I asked, “Would you bet your life that 100% of the pumps will fail by the time they’re 13?”

He said he’d bet his life that 90 percent of them would.

Time to bust out the ol’ HP-12C.

The client’s average sale was $8K with a gross profit of $3.5K. So 1,000 prospects on the client’s list is $3.5 million in potential gross over the next three years—$3.15 million if you exclude the 10% of heat pumps that might not fail.

Think about that—a guaranteed $3.1 million in gross profits over the next three years… just sitting there, ripe for the plucking.

Are you salivating yet?

A better question… how much cash would you be willing to spend to get that $3.1 million?

If it were me, I’d spend at least 10 percent of that number: $310K.

Why? So I could unleash the Wall Drug method (incessantly hammering prospects with your marketing message).

To start, I’d send one 6” x 11” inch postcard per week to each of the 1,000 prospects. That’s 52,000 postcards a year for three years, totaling roughly 150,000.

If every postcard costs 60 cents to send, the total cost for the 36-month campaign would be only $90K.

This is chump change compared to the anticipated gross profit, so let’s bump it up to two postcards per week—a little more than 100 per year per prospect. That’ll cost $180K, not including all the customers we’d remove from the list once they actually become customers and we quit mailing them. And we’ve still got $130K and change to spend.

Next, we’ll get a little old school. I’d hire a college-aged kid to knock on every one of those 1,000 doors every month.

If he knocked five days a week, he’d have to hit only 50 doors per day—easily done assuming all the homes are in a reasonably close proximity. After a couple months go by, the homeowners would immediately recognize my door knocker as the dude from the company that sends all the postcards that keeps coming by. If I paid that door knocker $3,000 per month, it would eat $108K out of my three-year budget—leaving me with just $72K remaining.

So let’s think of something fun to do with the remaining 70 grand. How about creating something for my door knocker to hand to people when he knocks their doors? Like fridge magnets. Or calendars. Or an ice cream scooper. Something—anything—for crying out loud.

At this point, you might be thinking, “Uh, Rich… so what message goes on all of these marketing touches?”

Here’s the thing: At the rate, we’re hitting prospects, it almost doesn’t matter what I put in the marketing message, as long as it’s something like “Hey, we can replace your freaking heat pump when it goes out?”

Seriously—this is more about what the calculator says than the messaging.

Now put yourself in your prospect’s shoes. Imagine receiving multiple postcards per week from an HVAC company warning you that your heat pump will most definitely fail within three years. How many weeks would it take before you started noticing the postcards? As in, “Hey, this company is sending me a crap load of mail!”? Around four or five weeks, probably.

Now think ahead 18 months. You’ve received two pieces of mail from the company every week for a year and a half, and the college kid has knocked on your door about 20 times. Is there any chance at all that you’re not aware of who this company is? Is there any conceivable way you DON’T know why this company is contacting you? No way, José.

This is what I call “Wall Drugging” potential customers. Hit them so often that they can’t help but recognize your name and brand.

Listen. I don’t want to hear, “But my company is different. We don’t sell heat pumps, and we don’t know exactly who our customers will be.” The moral of the story is to look at your numbers and determine how much you can spend to acquire a new sale.

How could you best spend that money? Use your calculator to find answers to these questions. You just might find a formula for success that you hadn’t expected.

Compliments of HP.

 

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How To Get The Money You Need For Your Marketing Budget

how to get money for your marketing

In the last post I told you how to find your Most Important Number.

Basically, this is the number of sales per month you need to generate with your “bread and butter” product to get you where you want to be financially.

Example: Windows is your main product. You’re selling eight window projects per month. So your Most Important Number might be 25 jobs per month.

Today, we’ll determine how to get the money to create the marketing budget to get to your Most Important Number and where to spend the money.

Because, let’s face it: It’s easy to say that if you were doing 25 window projects per month for $8,000 per job (and $4,000 gross profit), that you’d allot 15% of sales ($1,200 per sale) to marketing.

But when you realize that would require a monthly marketing budget of $30,000—over $20,000 more than what you’re currently spending—you automatically think, “How the heck do I get there?!”

Short answer: Patience.

Here’s what you do…

  • Determine how much you’re ALREADY spending on marketing to get those eight sales.
  • If eight sales mean $64,000 in revenue, then let’s say you’re already spending 15% of that, or $9,600. (Note: If you think 15% is too high, fine. Use your own numbers.)
  • That means you need to generate an extra $20,400 in your marketing budget.
  • Next, figure out how much extra money you can afford to spend RIGHT NOW on a monthly basis—taking cash flow into consideration—even if the extra money doesn’t produce an instant ROI. Some faith will be required here.
  • This is where you need to be patient: I’m asking you to spend money right now you might otherwise put elsewhere—like your pockets.
  • Invest that amount in aggressive marketing tactics likely to yield the most immediate returns: canvassing, PPC, guerilla marketing, past customer marketing, home shows, and direct response advertising.
  • The goal here is not necessarily to make your IDEAL return-on-investment (15% marketing-to-sales in the example), though it’d be nice. The idea is to make back enough cash to pay for the advertising, THEN invest the lion’s share of the incremental revenue on your marketing budget. For example:
    • You determine you can afford to spend an EXTRA $5,000 a month on advertising on highly aggressive tactics, per above.
    • The first month you get two extra sales for a total of $16,000 ($8,000 of gross profit)
    • This means you made BACK your $5,000, PLUS an extra $3,000
    • Your accountant will tell you that’s terrible and to stop it. But don’t. Instead, double down.
    • Allocate 75% of the extra money to marketing, and 25% to overhead.
    • This gives you an EXTRA $2,250 in marketing budget ON TOP of the $5,000 you already committed to. The total extra marketing budget is now $7,250 for month 2.
    • Note: If the extra money you spent does NOT bring in enough extra sales to cover its cost, continue to invest that minimum amount each month until you find something that DOES work. Remember, this is an amount you said you could weather.
  • Repeat this cycle, BUT spend 50% to 80% of every incremental marketing dollar on LONG-TERM ADVERTISING, not the ultra-aggressive stuff. I’m talking about methods like TV, radio, and direct mail campaigns designed to nurture prospects over a period of time. Essentially, you’re nurturing your 2015, 2016 and 2017 customers RIGHT NOW.
  • This is how the big get big—they INVEST in advertising (Amazon, for example)… and how the small stay small—they DON’T.
  • Keep doing this until you get to the $20,400 in extra budget you decided you would need to hit your goal of 25 sales. (Adjust for your own numbers.)
  • IMPORTANT: Continue to spend the extra $20,400 a month in marketing, EVEN if you are only breaking even on it.

    The long-term nurturing advertising, by definition, is going to take a while to really start working. People need to see and hear your ads over an extended period of time so they come to know who you are, what you stand for, and have confidence you can perform.Over time, you will see your monthly sales climb, while your advertising budget stays static. Eventually—12 to 36 months, you will hit your Most Important Number. And you’ll hit it with a marketing budget that’s acceptable—15% or less.

The key is to be willing to invest in the future of your business right now in a smart, responsible way. It takes a little faith and patience. But tough it out, and you’ll soon find yourself exactly where you want to be financially.

Trust me!

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