Let me tell you the single biggest secret every multi-million-dollar CEO learns when they start to scale a business.
You have to spend more to acquire more.
It’s an undeniable fact, and yet so many business leaders struggle to wrap their brain around it.
So today, I’m going to unpack the logic, and show you that to prevent your business from stalling out (and eventually dying) you need to be investing in what matters the most: Customers.
One of the big arguments going on out there is that of the marketing budget. The push and pull between marketers and finance-conscious business leaders grows more and more heated every day.
And on the surface, the conflict makes sense.
The CEO’s job is, in part, to safeguard the money.
And when the marketing team comes knocking, asking for an increase in budget, it’s easy to assume that the correct answer is “Hell no!”—especially when times are tough, and cash is limited.
But I’m here to say that it’s not always that simple.
If you want to build a company, you’re going to need a few things….
- A great, sellable product
- Customers who want to buy, and
- Everything else ( i.e. everything that goes into having a team to build and manager the flow of money in and products out)
All three of these building blocks are important, but one stands above the rest, and always will.
Without customers, you can’t run a business. It’s that simple.
If you’re reading this article, you probably already know this (and if you don’t, well you probably shouldn’t be here.) but my point is, the success of your business depends solely on your ability to acquire and keep customers.
Now, who’s job is that?
Well, some would argue the sales team, and that’s partially true. But I would argue that your marketing team is primarily responsible for identifying, targeting, and acquiring new customers.
And that is why having the right acquisition strategy is the most important factor for scaling.
The Key to Scaling: Go Negative
Allocating the same ad budget every month and believing that you have to recoup that immediately (or even within the same month) is limiting, and ultimately damaging to your long-term growth and profitability.
I’ve made this mistake in the past, and it’s left me with “super great” metrics that were all in the green, but low profitability overall.
It wasn’t until I realized that there is a significant gap in time between the moment you invest in your customer and the eventual ROI that I was actually able to scale my businesses in a meaningful way.
Your customers need time to get to know you and try out your low-ticket items before they begin on your ascension path.
This is especially true for the customers that stick around. Turning a stranger into a raving fan takes time, patience, and a lot of hand holding.
So what does this mean for your acquisition strategy? Well, if you want to grow your customer base, but you know that you won’t recoup that cost overnight, you’re going to have to spend some money upfront.
Specifically, you’ll spend more in acquisition costs that you’ll make in profit that month. You’ll intentionally run at a loss, going negative.
Growth doesn’t happen overnight. You’ve got to be prepared to spend the money up front, even if it means sacrificing the joy of meeting your monthly profit goals.
The Scaling Customer Acquisition Model
I know that what I’m saying probably made you a bit anxious, and maybe even a little scared.
And that’s okay!
I’m a firm believer that naming your demons makes them less daunting.
That’s why we’ve put together a process to help you go negative with confidence.
Over the next few weeks, we’ll be unpacking a customer acquisition strategy designed specifically for scaling. We’ll show you…
- How to identify which customers you should be targeting (hint, not all customers are equal in value,)
- How much you should spend to acquire your ideal customer,
- How to calculate the lifetime customer value so you know how much you’ll ROI, and
- a process to identify when you’ll ROI on your investment.
I believe that if you put your data to work, and know what metrics to keep track of, investing up front becomes a no-brainer.
So, if you’re ready to take the next big step in growing your business, come back next week for part 1 of The Scaling Customer Acquisition Model.
See you back here next week, where we’ll dive into Part 1: Who’s Your Real Ideal Customer?