Dashboard: How Would You Spend $5,000 on Marketing Now?

[Music] welcome to another 21 hats dashboard brought to you by our sponsor the great game of business I'm Lauren felin I'm here with Sean busy to talk about the things we think business owners should know this week Sean is CEO and founder of Kinesis which is based in Portland Oregon and he works with small businesses on marketing culture and strategy welcome back to dashboard Sean hey good to see you Lauren always good to see you great to be here I'd like to start by throwing a question at you that I hear business owners raising pretty often uh that question is I have $5,000 say or $10,000 a month to spend on marketing I don't know what to do with it what should I do I'm guessing you hear some version of that from time to time too and I'm wondering if you uh have an answer yeah it's funny too you th those two numbers you pick are really popular numbers um people often pick the 5,000 or the 10,000 it's easily multiplied by 12 and so they can kind of do the math in their head and and and I think that's actually a good sort of illustration of the part of the problem is they're sort of picking arbitrary numbers um they they don't necessarily know what they're trying to achieve or what it costs to do what they're trying to do and that's not their fault but that's part of the challenge right so I think some of the things I would I would um start the start asking first before like what do I do with it is you know what's the value of a customer um how much is the value of a customer customer for the lifetime of the customer versus maybe in year one or for maybe it's a oneandone type of business so I think about like you know my business a customer's lifetime value it could be hundreds of thousands to over a million dollars so what am I willing to do to to get that customer versus say my dad he he sells a product online that's like $50 he he can't really spend more than maybe five or $10 to get a customer and so that's that's a really important thing I think to to think of first um and then outside of that I think there's three questions that really you you kind of need to ask too is like um how mature is your business if it's if it's a new business you probably need to spend on the higher end because people don't know about you and so acquiring customers is going to be more expensive and you're probably going to need to orient those dollars towards that effort versus say maybe brand awareness or um customer um retention so that maturity piece is really important a lot of people uh especially startups fail to appreciate how hard it is to get customers and how expensive it is to get customers so you'll see more mature businesses have smaller expenditures but that's because they have a existing customer base that knows about them the other thing Lauren i' I'd say is like looking at the industry so are you in an industry for which buyers know to buy those services and are asking for them you know so for example you know we have some people on the podcast who do recruiting right that's just it's a mature business lots of people know they need to hire recruiters or think they need to hire recruiters they know to ask for it also means it's a very competitive space there's lots of people competing for those same customers so how you deploy those dollars may vary quite a bit how mature your your industry is what industry you're in it's really expensive to educate people to what you're offering is if they've never bought it before and they don't know how to buy it but then again if you can do that you might be the only one who does that thing so that's the that's another piece and then the third piece is I think the most important piece which is before you spend money on marketing is really carefully examining what is the value of the offer is the thing you're trying to sell and you're trying to Market and promote is it really worth paying attention to and the more it's worth paying attention to the less you have to spend on marketing the less it's worth paying attention to the more commoditized it is and the more met too it is the more you have to spend on marketing so those are those are kind of like three things maturity industry and then value of the offer my sense when I hear this question kicked around is that even if they won't say it directly a lot of owners what they're really hoping to hear is kind of a a silver bullet response yeah here's what's working now just go here and put your money on red or whatever it is and that's what's going to work for you am I hearing do you hear that too is that your sense as well a thousand percent I mean you're what they're looking for is in many ways sort of an variation on the idea of a best practice right so they're s you know if I were to say you know come to you and say gosh my my my bookkeeping is a mess and it's not working well for me you could probably give me some advice you could probably say you know you need to spend probably $2,000 a month on an outsourced bookkeeper you need to use QuickBooks Online like there's kind of a formula of like how to solve that financial problem at the size you're at there's different formulas depending on the size the problem with marketing is that it's so complex now that there is no one-size fits all and so when you get somebody asking that question they're they're kind of asking the wrong question you know they're look like you said they're looking for a silver bullet they're looking for a an answer um but even if let's say you find somebody who's in your industry who does what you do and they' figured something out and they tell you sp I've seen this happen I'm spending $10,000 a month on this thing uh if you go and try to replicate at that it doesn't work why doesn't it work the guy it worked for this guy over here why is it working for me right there's so many variables that you haven't considered you know maybe in your Market the behavior of the buyer is different maybe your offering is just slightly different even though you're in the same industry um maybe the way you're executing that plan is there's something in there that you just didn't realize is different from this person who's F quote unquote figured it out maybe and this is a real Hazard the thing that worked really well for that specific person with in that specific industry maybe it doesn't work anymore at all you know you've you''ve talked about the guy who sells pools right the guy who like he won the battle for customers hearts and Minds through SEO and swimming pools right content marketing it was just content marketing right being willing to talk about things that other people weren't talking about and Rising on in the rankings on Google right so what is that guy doing now he's not selling swimming pools he's selling advice on how to do content marketing right I mean I think that's what he's doing right that's correct you could totally copy his Playbook which lots of swimming pool companies are probably doing and in the beginning it probably worked for them but soon everybody in the swimming pool industry is doing the same thing so even though that strategy or I would say tactic at that point uh might work in the beginning it's going to diminish and diminish and diminish and diminish and that is kind of the nature of marketing is that somebody will figure something out and then by the time other people get the memo the thing has already started to not work as well as it used to work um and that's one of the real friction points for owners the person we're talking about is Marcus Sheridan he's pretty well known um In fairness to him he I think if he were here he would say I wasn't telling people I I don't tell people to do exactly what I did uh in the pool industry I tell them to listen to their customers to figure out what questions they asking and then respond to that and if you respond better than your competitors you you will do okay in in your marketing yeah and that's I honestly I think that's better higher level strategic advice but it will often get interpreted to oh I need to just put out content marketing like Marcus did right and and I think he's actually operating at a much higher level and it may be that somebody figures out how to take marcus' strategy and put it into Chad JT somehow to where it actually directs it you know I'm sure Marcus is working on that he's proba working on it yeah so I think that's something for listeners to really think about is like it's not about the tactic it's it's more of the strategy that's guide that's guiding things I mean we used to be page one of Google like for marketing for for brand for websites for Logos page one very top in 2005 to probably 2010 we owned that space uh I don't spend a dime trying to do that anymore it's it's a it's a Fool's errand it's a total waste of I I mean I could but I'd have to spend a lot of Dimes I'd have to spend hundreds of thousands of dollars and it just wouldn't be worth it in terms of what how my customer is buying um so that's it's just a good example you can't rest on your laurels and just sort of figure one thing out and then hope it's going to work forever um or copy somebody so back to that frustrated owner asking for a silver bullet obviously if it's impossible to answer that question for an individual business owner it's really silly for us to sit here and try to answer it for hundreds or thousands who who who might actually hear this um but can you venture into that tactical discussion a little bit it can you give us some way to to questions to ask yourself the approach to take when trying to figure out the right tactics to use I mean there are some Universal truths that I would spend money on in those early days so rather than saying I want to spend $5,000 a month or $10,000 a month I would say I want to frontload my investment in a certain realm of um uh Discovery and learning you know for example I would front reload my investment around um interviewing and talking to customers just like Marcus is talking about I would really deeply deeply understand my customer I would pay really good money to do that and what I mean by that is like either my time or hiring somebody who could be maybe a neutral or more objective third party I would look at the industry as a whole and and ideally have somebody from outside the industry look at it because they're not going to have the bias that you have when you look at it you know everybody thinks their industry is great perfect and all these great things I'm being a little factious but but generally having somebody who can like look at it from the outside and go you know industry is great in a lot of ways but in 10 years I think there's some real challenges ahead how are you going to adjust to those I would um look at the buyer's Journey uh really deeply how do how do current customers you're successful with how do they go through that process how can we make that process better how can we make it easier to get into that journey I would profile those customers and understand their values and and your own values as an organization so I would spend money on Mission values purpose the benefits you provide your customer [Music] um and then you know I would spend some energy and time and money on the like what's possible questions not just all about optimizing what we know today but also what what's possible you know what could we do that we've never thought about before because oftentimes it's those possibilities that become either a big opportunity for much much higher growth and not just incremental growth or in some cases they're the thing that save your business when this other business you've had for so long gets wiped out by a pandemic chat GPT some technology changes in hiring you know etc etc etc those are things I would spend money on in the beginning so you you understand how to then deploy it more tactically of what you just said there the thing that really lit out at me was the idea of spending money to really get to know your customers and as you said that it occurred to me of all the conversations I've had with business owners about marketing and I have a lot because I think it's the biggest pain point that I hear people running into the two most successful uh Endeavors I've heard about of late have come from you and Paul DS who both essentially took the same approach which is to reach out and talk to more of your target market customers people that you would like to to be working with and you did it in different ways but it was basically the same idea and I think you're both pretty happy with the progress uh that you've made yeah I very small sample size but I think it's meaningful yeah sure I mean when my business was really in Rapid growth mode you know I was going from you know 30 40% growth per year we're talking 20112 for like a five seveny year run um the the success of that was really listening to customers and what were they frustrated by and in my case I realized the frustration was exactly what you started this question with which was people had come out of the of the Great Recession they knew they wanted to grow again they were moving past that I saved you know I didn't die but they didn't want to rehire that in-house marketer that they had fired you know three or four years ago and I thought really long and hard about that why aren't they rehiring that person why do they have this pile of money they want to spend but they're not spending it what could they spend it on and the more I thought about the more I realized there was something broken and and the broken thing was that that $60,000 spend which they were deploying as an in-house marketer wasn't being spent in the right way that that in-house marketer was undere equipped to deal with the complexity of marketing at the time they were Junior they didn't have enough sophistication and they didn't have a team to support them so the owner didn't understand the friction they just went and hired marketers and so I said aha I'm going to deploy a basically fractional marketing team where you will get like a strategist a designer a writer you know all these people that can do marketing and it will cost you about $60,000 at the time it was super cheap but uh you know to J gos like I didn't charge enough but but fundamentally that's what I was saying I was saying spend the same amount of money but get a different product because the product you've been buying doesn't work and and that was me listening to the customer and understanding their frustration through a different lens and knowing like the the in-house marketer in these small businesses was probably never going to be successful at $60,000 and that that was like the key to our growth in those in those in those days um yeah very Mark very Marcus listen to the customer so we're running short of time here but I got to ask you you recently posted on LinkedIn kind of a tease suggesting that you've got a series coming uh in which you're going to try to answer the question why some businesses uh do really well with digital marketing and others get nothing out of it at all can you give us a little bit of a hint of where you're headed with that are you trying to take my scoop I mean I'm trying to I'm trying to your audience SE I want people to start looking for it yeah I was super motivated to to kind of put that out there because I've just it's just really hit me a lot of these questions you're asking I've been wrestling with is like why why do these digital marketing firms exist because I have so many people I know that like hate them like they hate them they've been they paid them money they've gotten poor results and yet they these firms keep existing and it's like well clearly some people are getting value from them and when I say digital firms that's a broad term it can mean social media it can mean payer click it mean Etc and I've just come to realize that this is this is kind of the scoop is that under each business model you know and a business model being maybe your Revenue model you know who your customer base is your industry and your offering kind of an aggregate think about if you've ever read the book business model canvas that's a really good kind of way to think about a business model underneath the business model is this hidden system which we're calling the value model and the value model model is kind of like the macro way of looking at a business and there's there's really about three and those three models are chains so think like manufacturing networks like uh media companies or Amazon lots of buyers lots of Sellers and then shops which are people like me where we solve hard problems for people often using strategy and if you're a product company which is usually a chain actually digital marketing is probably part of your mix you need to be exposed to lots of customers you got to get the word out there to lots of people you got to find ways to do it efficiently in in economy of scale where your spend per person is really low so you need a network you need maybe a social media Network maybe you need a pay-per-click network you need a network to get customers if you're a shop if you're like me I don't need thousands or hundreds of thousands of customers I need maybe 10 a year right and and so for me to just broadcast all this stuff and spend all this money and to tap into into these networks to do it it's just a Fool's errand it's a waste of money it doesn't it doesn't end up working and so i' the the big aha is like knowing are you a chain are you a shop are you a network and once you know that then you can start to like actually eliminate things from your mix of marketing strategies or bring them in and and I think a lot of businesses are taking advice from the chain you know which is often scale lots of things low value per customer and trying to apply it to either their Network or their shop and that's that's where that friction is coming from um so more to come on that one I think that's uh already really helpful and I will look forward to reading more and I'm sure we'll uh we'll talk about it some more right on thank you Sean Sean busy is CEO of Kinesis which is based in Portland Oregon and works with small businesses on marketing culture cure and strategy this episode was brought to you by the great game of business which helps businesses use an open book management system to help build healthier companies you can learn more at Great game.com thank you Sean thanks Lauren have a great week everybody [Music]