Many entrepreneurs invest in their products or service and neglect to invest in marketing. If you don’t have a marketing budget, you will probably not be able to build a sustainable business. Join Jay on today’s Black Entrepreneur Blueprint podcast episode # 422 as he discusses why and how to create a marketing budget and tips to consistently generate new customers.
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BLACK ENTREPRENEUR BLUEPRINT SHOW NOTES – EPISODE # 422
Let’s start by defining the difference between marketing and advertising:
Marketing definition – the action or business of promoting and selling products or services, including market research and advertising.
Advertising definition – advertising is the exercise of promoting a company and its products or services through various channels. In other words, advertising is a component of marketing.
WHY YOU NEED A MARKETING BUDGET
- Build your database (now have created owned media which is the cheapest form of exposure because it’s free)
- Generate more leads
- Generate more sales
- Ensure you replace the customers you lost (offset attrition)
- Stay in business and create a sustainable business
- To scale
Objectives Of Your Marketing Campaign
Each marketing campaign is going to look different based on the goals and objectives of the campaign. You can have multiple marketing campaigns running at the same time. The end goal is always to make a sale, but the initial objectives can be different.
- Lead generation marketing campaign – (where your objective is to build your database not necessarily get a sale) – Example: using a lead magnet in exchange for your name and email address.
- Sales marketing campaign – where your objective is to create a sale. Example: creating a sales promotion by discounting prices
The Economics Of Marketing
You need to become a mad scientist and start to understand your marketing and your ROI (return on investment) for all of your marketing campaigns. You want to create that marketing arbitrage, where you bring in more than you expend for certain campaigns.
Example: On one of my flat iron marketing campaigns, during the holiday season I spend $1,000 per day in advertising to make an average of $2,700 per day.
Examples Of Marketing Plans
- Advertising campaign – via social media, radio, tv, magazines, newspapers, podcasts, etc.
- Affiliate marketing campaign – create an affiliate program
- Joint ventures – create strategic partnerships
- Free samples – my hot sauce, at the mall, etc
- Free trial – like software
- And more
HOW TO CREATE A MARKETING BUDGET
I understand that many times we are working with limited funds when we start our business, but I always use the phrase “You’ve got to feed the beast.” Means you’ve got to give resources to the things that will make you money.
Steps to create a marketing budget
- Determine what you can invest in marketing each month even if it’s as little as $100
- Figure out the most impactful marketing campaigns that generate the most money
- Allocate resources to the campaigns that are making money, and stop spending on campaigns that aren’t making money
Use my simple “One Sale Marketing Formula” to create a daily marketing budget:
- Step 1: What is the net profit you make from selling your product or service? If you are selling a service like consulting and your fee is $200 per hour, your net profit should be $200. If you are selling a physical product like a T-shirt and your cost is $5 and you sell it for $24 your net profit is $20. If you’re selling a digital product like an online course and you’re selling it for $97, your profit should be $97.
- Step 2: Take the net profit you would make from one sale and allocate that dollar amount to a marketing campaign. So if you’re netting $20 from selling a t-shirt, invest $20 per day in marketing. So if you sell one t-shirt a day, you’ve recouped your investment.
- Step 3: Improve your conversion rate to sell more than one product per day. In the example of the t-shirt, that $ 20 a day marketing investment may produce more than one sale which means that the marketing campaign is profitable. So if the $20 campaign sold three shirts, you’ve generated $60 in profit for a $20 spend. Once you tweak your marketing campaign where you’re making money there is only one step left.
- Step 4: Scale your ad spend slowly. Not every campaign will scale dollar for dollar, so gradually up your daily ad spend until you hit a plateau. So if you’re selling three t-shirts by spending $20, that doesn’t mean you’re going to sell 15 t-shirts if you up your ad spend to $100 per day.
The objective here is to start slow and test your marketing campaigns until they are profitable, then add more money to scale your business.
TIPS TO CONSISTENTLY GENERATE NEW CUSTOMERS
Knowing how to communicate with your audience is the key to getting more sales and more customers. You must know and understand the formula that makes sense for your specific market.
Message – the right message
Market – to the right market
Media – using the right media
Motivation – with the right motivation
Measure – that can be measured
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