The One Marketing Tactic Needed To Build a $1M Company
Today, I'm talking about the one thing you need to know about marketing that most people don't talk about because they're trying to sell you something. But if you know this one thing and you stay focused on this one metric when it comes to marketing, it'll completely change your small business. It did for me.
The Marketing TacticOnce you start focusing on this one thing when it comes to a small business, every single dollar you spend on marketing needs to be spent efficiently. A lot of us buy into this theory that I'm going to track what leads are coming from Facebook, what leads are coming from Google, what leads are coming from the newspaper, what leads are coming from the door hangers...
Regardless of what industry you're in. It is a good thing to try to maximize the bang for your buck, get more leads, more customers for your marketing dollars. I understand that. But the thing that we focus on too much is tracking and metrics and getting the code snippets and the analytics behind where the leads came from, when what we should be focusing on is just two things.
Customer Acquisition Cost
These are the only two things you need to know. If you're a small business and you're spending less than several thousand dollars per month in ad spend, if you're spending a bunch of money on advertising hundreds of thousands of dollars, then it's worth spending a lot of time and energy and money getting analytics, doing funnels, having multiple websites created, etc.
And you're hearing this from a web design company. I have lawncarewebdesign.com and homeservicewebdesign.com that come and home service web design dot com. I know for a fact that if someone is trying to sell you on the idea that if you are a small business owner with a couple hundred thousand dollars in annual revenue and spends a few hundred dollars a month on ads, you are going to somehow need multiple websites and different funnels and lead pages and... they're trying to sell you something. They're trying to make it sound so complicated that you'll think you need their marketing services.
At the end of the day, for most small businesses doing under a million in annual revenue and spending less than several thousand dollars per month in ad spend and advertising budget, these are the two things, you need to know. What you need to do is figure out what part of the year your customer acquisition costs and demand are varying.
They have an inverse relationship, meaning that if demand goes up, your customer acquisition costs will go down. This leads to some of the biggest issues in seasonal and small businesses. So we look at demand - I'm going to take lawn care, landscaping for example, but this applies to any small business that has any seasonality whatsoever.
And you're like, oh, no, I'm a retailer - I don't have any seasonality! Okay. Most of your sales are probably happening the last quarter of the year. That is when demand is going up. So every single business, regardless of industry, has some level of “seasonality” or demand fluctuations.
So, let's use lawn care landscaping, for example. If I look at the course of a year, January, you know, in the middle of the year, June and July, and at the end of the year, I got December. When I start out, my my demand is very low in the wintertime, most people don't need my services. It's not super popular. But as we get into spring, it takes off. The spring rush is extremely busy for several months. It slows down for July or August. It gets really hot. Then we kind of have a resurgence for the fall season and then it really kind of comes right back down during December in terms of demand.
Now, what I want you to know is this: Demand has an inverse relationship to customer acquisition cost.
Customer acquisition cost - the cost to acquire one customer, how much you have to pay in advertising to get one new customer.
So when my customer acquisition cost is extremely high, that's when my demand is really low. This is when we don't have to spend a lot of money in order to get a customer because no one needs my services. So what happens as time goes on here? Customer acquisition costs get very high because I'm in the winter season. No one needs my services. Demand is low. But what happens in the spring rush is everyone needs my services and therefore my customer acquisition cost becomes very low. Then, as the summer goes on, the cost of my acquisition is going to go up because people don't need my services as much.
People need leaves, cleanup, etc., but then what's going to happen as the winter approaches? My customer acquisition costs go way up simply because my demand is extremely low for my product and service.
What is The Only Thing That Really Matters in Marketing?
The timing is what matters most - because why would I want to do marketing when I have very high customer acquisition cost for the lawn care landscaping industry? Folks spend money on advertising because they're slow, so they spend all of their marketing dollars in the winter time when they don't have enough work to keep their crew busy. That's when they spend all their marketing. But the problem is that's when the worst customer acquisition cost is high. If they could just spend their money all their marketing budget during the periods of time when the customer acquisition cost is the lowest, that's when they would get the biggest bang for their buck. And so I believe that timing is the most important part of small business marketing and advertising.
This is a problem for every single industry: Guess what happens during what we call the spring rush in lawn care landscaping. Everybody needs service. Demand is extremely high, but the fact is we don't have enough workers, we don't have enough trucks, we don't have we don't have enough employees and infrastructure and equipment.
So what do we do? We stop marketing. We get some employees, everything's going good. We're still spending money on marketing. Our customer acquisition costs is the lowest, the best bang for our buck in marketing is happening, but we turn our ads off because we're so busy!
So, what I would encourage you to do is anticipate when demand is high in your industry, anticipate that during those times when customer acquisition costs are going to be the lowest, that when you can buy customers for pennies on the dollar, that's when I can buy a customer for maybe a $20 customer acquisition cost (or “CAC”). My cut might literally equal $120. I'm getting six customers for the price of one - If I just spend those marketing dollars during the season and the timing when demand is high and that customer acquisition cost is the lowest.
How Can You Prepare?
So what can you do? How does this help you prepare for the times? Demand is high, customer acquisition cost is low... You should allocate your marketing budget towards those times when you can take advantage and then make sure that the constraints that are going to limit you from spending marketing dollars and getting more customers is removed or at least prohibited by having a bunch of employees ready to go. This is why I'm pushing right now to hire up for the spring rush - because there's going to be a massive demand like we've never seen before in America for landscaping and lawn care services. And this is in a lot of industries. That's why inflation is happening.
Whether or not you're able to actually spend your marketing dollars during the best time of the year to do it depends on whether you remove the constraint of labor. That will be the constraint in this industry and really, regardless of whatever business you're in.
Web designer making funnels, doing my analytics, making sure my code is all aligned, and tracking everything will be much less accurate. When you're getting tens of thousand dollars, then you actually have a collective sample of data that actually drive results.
If you want more information, go to mikeandes.com that come check out p4psoftware.com or this new book that I wrote. This is going to be the key to unlocking your ability to hire employees going into a spring rush and being able to take advantage of the massive opportunity that's coming up this year.