I spend about $100,000 every week marketing my company to businesses nationwide. Spending that much per week on marketing may strike many business owners as excessive. And for some businesses, it is.

Obviously, I wasn’t spending $100,000 on marketing when I first started out in 1998. I didn’t have much working capital back then (just a $5,000 credit card, if you can call that capital), and I bootstrapped everything. I paid myself a minuscule salary for years in order to invest as much as possible in marketing. As a result, I’ve closely tracked my marketing returns — and failures — from the beginning.

Here are the two biggest, most business-defining lessons I’ve learned since spending my first dollar on marketing.

Lesson 1: Any decrease in your overall marketing can have a similar effect on your revenue.

I learned this lesson early on. Back then, my only marketing strategy was sending 1,000 postcards per week to businesses around me.

As those 1,000 postcards brought in new leads and those leads turned into revenue, I started to increase the quantity of my weekly outflow — first to 2,500 and then to 5,000. Each time I increased my weekly marketing expenditure, leads and revenue followed after about four to six weeks, like clockwork. Since then, I haven’t missed a mailing in 21 years, and we mail about 180,000 postcards each week.

My point is that your marketing sets a pace for leads and revenue. This includes cutbacks. I learned this in 2008. The housing market crashed, and I lost virtually all of my mortgage clients, who made up 46% of my entire client base.

I was advised to cut my marketing budget midway through 2008, and I reluctantly agreed in order to avoid layoffs. Shortly after, incoming leads started to slip. At the close of 2008, gross revenue was down 7.2%.

That was the first and last year our revenue ever decreased. In early 2009, I returned our marketing budget to its rightful place. By the end of that year, we had regained all lost ground and then some with a 14.5% increase in revenue.

How much your business should allocate toward marketing will vary, but it typically will be a percentage of your gross annual revenue. From what I’ve seen, larger businesses hover somewhere between 5% and 25%, with an average of about 12%.

Small businesses, on the other hand, often spend a significantly smaller portion on marketing. In fact, 50% of small business owners don’t even have a marketing plan. And the majority (55%) spend less than 5% of their annual revenue on marketing.

If you’re a small business owner reading this and want to increase leads and sales and grow your business, I recommend increasing your marketing budget by at least 3%.

Finding the right number for your business will require testing and (most importantly) close tracking and monitoring.

Lesson 2: If you have any competition whatsoever, you likely need a unique selling proposition (USP).

Your USP can set your business apart and give prospects a reason to choose you. Without one, you’re effectively surrendering to the buying process and relying on luck (or worse — being the cheapest) to attract new business.

I learned this lesson not long after founding my company. To compete with other direct mail companies, and ensure that we wouldn’t become another commodity racing to the bottom on price, we had to develop a USP.

Now, a real USP goes beyond merely positioning your business and actually offers something unique and tangible. Let’s say you’re a dentist. It’s the difference between statements like “We put dental health first with excellent board-certified care and attention” and “We put dental health first — if you develop a cavity within six months of your last appointment, we’ll fill it for free.”

The first merely positions the dentist as an expert. The second offers a real and tangible selling point: “No worrying about cavities as long as you’re with us.”

To develop your USP, start with competition research. Blind shop them. That means going through the entire customer journey, from new lead to buyer. Along the way, note what you like about their processes and what could improve.

Then, repeat the process within your own business. Compare notes to see what differences emerge, and analyze those differences. Do any stand out? Would any actually sway someone to choose you?

For my business, back then, the answer was no. Sure, I could say we did this and that better, but every business claims that. You need something real.

At this point, I suggest listing the pain points in your industry. What do consumers dread about your industry? If you can eliminate that from their experience with you, you can really stand out.

For my business, a marketing agency, consumers usually dread wasting money and getting zero results. I addressed that apprehension with our USP. We created a new position (our results manager), whose role is to compile results from our clients and train staff on successful tactics to ensure expertise from top to bottom.

Formally, we came up with this USP: “PostcardMania is the only marketing company to create your campaign based on the results of thousands of small businesses.”

Not only is this still our USP (though the number of businesses is up to 87,537), but we’ve outlasted and outgrown many of our competitors. So if you’re facing commoditization, don’t wait — run toward a USP for your business now.

There you have it: my two biggest marketing lessons. Hopefully, you’ve gained some insight to help you grow your business with smart, well-spent marketing dollars.


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