Rule #5 of Marketing: Capitalization

Ok, this is where I break your heart. Effective marketing takes money. That’s just the truth. Take a deep breath now and accept it. it’s not just a question of “how much” – it’s more a question of “how fast”.  The more money you invest, the faster you realize a return. When it comes to investing in marketing and getting a return the trick is to know your ROI Threshold.  

You would think that if you invested ten dollars and got a five dollar return that investing five dollars would produce a return of two dollars and fifty cents. Not so. It is more likely that you will spend five dollars and get zip. Goose egg. Zero. Why? You did not invest within the ROI Threshold Range. I.e., you cheaped out.

The ROI Threshold Range
Depending on your goals, industry and dozens of other variables, there is a range that represents the right amount of investment for ROI. Just under this curve and ROI drops to zero. Spend over it and waste becomes a problem. Figuring out the minimum and maximum investment takes time and good metrics. But careful planning and systems for measuring effectiveness can help you settle on the budget that matches your goals and situation.

To be clear – there are things you can do to market your business on a dime. These things will help but it will be slow going or you may never see the results you desire. But to compete in today’s marketplace, you’ll need to find a way to fund marketing activities that make sense for you. You don’t have to go nuts, but you need some source of funds to participate in trade events, have a decent web site, etc. If you are handing out free VistaPrint cards you may want to rethink your concept of what it takes to build a successful business.

The good news is that money used for marketing activities is an investment that should be expected to produce a return. It should not be thought of as an expense. Properly deployed, an investment in marketing pays dividends in new sales, reduced expenses and sustainable growth.

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