The document discusses how to determine an appropriate marketing budget based on key business metrics. It recommends starting by calculating the lifetime value of the average customer based on annual sales, gross margin, retention rate, and present value. The business rhythm, closing rate, and source of leads should also be considered. Marketing spend should be 30% of the average customer lifetime value. An example is provided where the average customer is worth $1,295, allowing for a $3,880 marketing budget aimed at generating 10 new customers. Spending should be measured based on relevant metrics like traffic, downloads, calls, proposals, and sales. Increasing referrals can help reduce marketing costs.

1. MARKETING BY THE NUMBERS

2. HOW MUCH SHOULD YOU SPEND ON
MARKETING?
• Start with Questions
– What is a customer worth?
– What is the rhythm of your business?
– What is your closing rate?
– Where do your leads come from?
– What is your market concentration?
• Measure Results
– Traffic, Leads, Conversion, Sales

3. WHAT IS THE AVERAGE CUSTOMER WORTH?
• Annual Sales
• Gross Margin
• # of Years
• Present Value of Money
– http://www.investopedia.com/calculator/

4. EXAMPLE:
• $1,000 = Annual Sales
• $300 = 30% Gross Margin
• %1,500 = Projected 5 Year Revenue Stream
• Present Value varies based on interest rate
– $ 1,175 = 5%
– $1,295 = 3%
– $1,428 = 1%

5. BUSINESS RHYTHM
Daily, Weekly , Monthly or Annually

6. HOW MANY CUSTOMERS?
10

7. CLOSING RATE
10
25%

8. WHERE DO LEADS COME FROM
10
25%
40 3010

9. HOW CONCENTRATED IS YOUR MARKET
10
25%
40 3010
1%
3,000

10. BREAKING THROUGH THE CLUTTER
10
25%
40 3010
1%
3,000
10
30,000

11. WHAT HAPPENS IF YOU CLOSE MORE?

12. CLOSE MORE
10
50%
20 1010
1%
1,000
10
10,000

13. CLOSE MORE
• Improve sales skills
• Drive more qualified prospects
• Increase referrals

14. HOW MUCH CAN YOU AFFORD TO SPEND?
• LTV: $1,295
• $388 = 30% for advertising
• 10 New Customers
• $3,880 advertising budget

15. HOW DO MAKE 30,000 IMPRESSIONS WITH $3,880
10
25%
40 3010
1%
3,000
10
30,000

16. INCREASE REFERRALS
10
25%
40 2020
1%
2,000
10
20,000

17. MEASURE WHAT YOU SPEND
• Social Community – Mentions Not Fans
• Web Traffic
• Downloads
• Calls
• Proposals
• Sales

18. LORRAINE BALL
lorraine@roundpeg.biz | 317.569.1396
@roundpeg | @lorraineball | www.facebook.com/roundpegIndy