💰The 3 Question Formula to Knowing Exactly What You Can Spend on Marketing💰
Whenever I’m speaking with a potential client, say for a website project, I like to ask the following questions:
🎯 How many leads are you currently generating per month from your current marketing?
💳 How many of those leads turn into paying customers?
📆 What’s the average, ballpark annual value per customer?
These 3 questions give you almost everything you need to know about budgeting for your marketing.
Let’s say your business generates 10 new leads per month from your marketing, and one of those leads turns into a paying customer (a 10% conversion rate). And let’s say the annual value of your customer over a year is about $15,000.
Your marketing should ideally deliver a 10x return. For our example, $15k/10 = $1,500.
That means if you’re getting one new customer per month for $1,500 or less, your marketing is paying for itself.
Of course, you’re ideally adding 2, 3, or even 10 new customers per month. That means you can safely spend $3,000, $4,500, or even $15,000 per month and get a positive ROI.
(Note: This works for design budgets, too!)