How much should you spend for marketing?

How much you can or should invest in marketing is primarily a numbers game. Instead of thinking “how can we minimize marketing costs?”, think “what marketing costs are necessary to dominate our market or to generate a desired level of profitability?”

If possible, a business should position itself to dominate its market.

Very few businesses have the resources to dominate in the general marketplace. In most cases, competing against Coca Cola, Procter and Gamble or Walmart is a losing proposition. These companies have huge war chests to spend and brands that are well established in most consumers’ minds.

One of the reasons tech companies initially work with venture capitalists and eventually go public is to amass the funds to establish themselves in the marketplace by investing in research and development and marketing.

When Amazon was getting started, Jeff Bezos cautioned investors not to expect short-term profits. Amazon was developing the technology to create its own storefront as a “toll booth” for other companies (not to mention ancillary services like cloud hosting) and investing in developing a customer list. Now Amazon is one of the “500 pound gorillas” of the internet.

Most small businesses don’t have these resources.

Instead of competing in the ocean, redefine your marketplace as a small pond, hopefully stocked with big fish. This is usually done by defining a special niche where you can target your marketing dollars.

How much you can or should invest in marketing is primarily a numbers game. Instead of thinking “how can we minimize marketing costs?”, think “what marketing costs are necessary to dominate our market or to generate a desired level of profitability?” In other words, whoever can spend the most to get a customer while remaining profitable wins!

This requires a long-term mindset and adequate financing. Sometimes companies can “start on a shoestring” and fund their marketing with reinvested profits from sales.

The key number you need to find out or estimate to determine your marketing budget is The Lifetime Value Of A Customer (Client/Patient.) Another way to say this is, “What is a customer worth to you?”

The Lifetime Value Of A Customer is the present value of expected future receipts for an average customer. (In some cases, you can “silo” different groups of customers to find out the lifetime value for each group.)

Most companies operate as if the purpose of getting a customer is to make a sale. In direct marketing, we believe the purpose of making a sale is to get a customer. We are building relationships with long-term returns.

That’s why many direct marketing companies have initial offers where they obviously lose money. For example, the Columbia LP Record Club used to offer a choice of six LP records for $1. The company knew that customers who joined would continue to buy records offered each month for months or years.

The Lifetime Value Of A Customer is the maximum you can spend to get a customer.

To get dominant positioning over competitors, you need to be willing and able to spend more to get customers than they can.

How can you increase the Lifetime Value Of A Customer to get this positioning?

First, are you serving an affluent group that is willing and able to pay premium prices for a premium or luxury product or service?

Second, can you establish more value for what you offer so your customers are willing to pay premium prices for it? Can you establish yourself as a preferred provider/expert?

Third, does your offering lend itself to continuous use into the future? (Examples include general practitioner doctors, dentists, tax return preparers, some specialist doctors, acne medications, laundry detergent, continuity/subscription products and services, mortgage refinance monitoring, etc.)

Fourth, are there additional “back end” products and services that you can offer? For example, barber shops and beauty salons offer hair and skin care products. Legal, accounting, financial planning, and financial services are being combined into one company or affiliated companies.

An advantage of direct response marketing is it’s designed to be able to measure the cost of getting customers and return on investment for each campaign segment.

Going through this process will help you work on your business so that your business will work more effectively for you and your family.

If we can be of service to help you in this effort, please email Michael Gray,

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Do you make this common mistake in your sales presentations and business communications?

A very common mistake in sales presentations and business communications is to take the viewpoint of “I” or “we” (the company), instead of “you” (the customer.)

A very common mistake in sales presentations and business communications is to take the viewpoint of “I” or “we” (the company), instead of “you” (the customer.)

“We have been in business for 50 years!” (Why should I care? I need someone who can help me today! Why are you a better choice than another company?)

“We make the best pizzas in the county!” (Every other pizza parlor in the county says the same thing about themselves. Why should I believe you?)

“We offer the best engineered cars in the marketplace.” (What does that mean to me? I think your cars are ugly and I wouldn’t want to be seen driving one of them!)

Because we are in our line of business, we tend to think about the features and “quality” of our products and services. We tend to be self absorbed, including being obsessed with our “brand”. We can’t understand why our customers can’t see why our products or services are the logical choice to buy.

But our customers, clients and patients (for this discussion, “customers”) don’t think about our businesses, products and services like we do. Our businesses aren’t the center of their lives. They are concerned about their own lives — their problems, their desires, their loved ones, their pet interests/causes. This is a natural survival trait of all living things, including human beings.

This means that almost all business communications, especially sales and marketing communications, should be phrased from the concerns of the customer.

“If you have any questions or issues with the product or service, you can rely on our being here to serve you. We have a 50-year track record of excellent customer service. Here are some testimonials from several customers that had great experiences with us when they needed us.”

“Your family will love enjoying our delicious award-winning pizza. It’s made with loving care with the freshest cheese and toppings from the farmer’s market and hand-tossed crust made the traditional way. And it’s guaranteed to be hot when we deliver it to your door, or it’s FREE.”

“You can be confident that your family will enjoy comfortable, safe and reliable transportation in our fine automobiles that have been engineered with the latest technical innovations. You’ll love the way it handles turns on mountain roads when traveling on family vacations. Your children will love the surround-sound system and having wi-fi included so they can use their smart-phones and tablets when traveling. (And you can relax because you won’t have bored, whining children in the car when traveling.) You’ll also be proud to be seen driving an automobile designed with style that will impress your neighbors, while enjoying the economy of great gas mileage and durability for years of trouble-free service.”

In any sales presentation or business communication, count the number of times “I” or “we” is used and then count the number of times “you” is used. Then think about how to rephrase “I” or “we” sentences into “you” sentences.

Would you like our help putting “you” (the customer) into your businesses communications? Send an email to to schedule an initial consultation.

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These words will always get a reader’s attention

A reader’s name will always get their attention

A reader’s name will always get their attention, if only for a moment.

The reader thinks, “Is this message for me?” and looks or listens to find out if it is.

We are so attuned to our name, we can hear it whispered in a crowd.

One of the most valuable skills that a salesperson or business leader can have is to remember names, associate them with faces, and use them in conversations. Wouldn’t you rather hear your name from a salesperson than “Sir”, “Ma’am” or “Miss”? Are you offended when an acquaintance can’t remember your name? Aren’t you embarrassed when you can’t remember someone’s name when you meet them on another occasion?

One of the great things we can do with technology is to be able to pull a name from a database and insert it into a document or an email. This capability isn’t used as much as it should be.

If you receive two letters without other writing on the envelope, one addressed to “Occupant” or “Business Owner” and the other hand addressed with your name, what will you do with them? Wouldn’t the envelope without your name go in the trash, and won’t you probably open the one addressed with your name to see if there’s an important message inside?

According to copywriting guru John Carlton, who has created thousands of marketing messages, his clients have experienced a 30% increase in response in letters just by personalizing the salutation. Instead of reading “Dear Friend”, Jane Smith reads “Dear Jane Smith.”

I read a story about two advertising writers. Let’s call the younger writer John Smith and the older, more experienced writer Susan Smart.

John says to Susan, “Nobody reads long sales letters anymore. They are too impatient.”

Susan replies, “I can write a long letter that I can guarantee you will read from beginning to end.”

John says, “You’re on! I bet $100 you can’t!”

Susan says, “The headline for the letter is, ‘This letter is all about John Smith.'”

John, defeated, says, “You win!”

As you write or review a marketing communication to a prospective customer, ask the question, “How can I make what I am writing (or this message) all about the customer?”

The customer doesn’t care about your products, services or company, except how what you offer helps them solve their problems, achieve their desires, or improve the lives of themselves and their loved ones.

Would you like our help writing messages that get the attention of your customers or prospective customers? To arrange an initial consultation, write Michael Gray at

Bookmark this page and watch for more business-building ideas!

(c) 2019 by Michael Gray

Does your company have a “sales prevention department”?

When prospective customers call, there are often barriers in the way of their becoming customers.

When prospective customers call, there are often barriers in the way of their becoming customers.

For example, the prospective customer might be caught in “voice mail hell.” The telephone rings and rings and no one picks it up. Or the prospective customer is left on hold for what feels like forever. The customer gets so frustrated he or she tries to find help somewhere else.

In some cases, a sympathetic employee might suggest that your business is too expensive and refer the prospective customer to a competitor!

Getting a prospective customer, client or patient (for this post, “customer”) to call can be an expensive proposition. You might have paid for an advertisement, a web site, or other promotional efforts. That prospective customer represents a return on the promotional investment and the future revenue for your business.

These issues are indications that the process of welcoming a prospective customer hasn’t been thought through to develop a reliable system of getting them onboard, or that employees haven’t been properly trained and supervised.

What is the objective when a prospective customer calls? Shouldn’t it be to get their name, telephone number, the purpose of their call, how they found out about your company and to make an appointment to see them?

A script should be written for the receptionist with a process to get this information.

For example: Good morning, XYZ Company, this is Sally Smith. (The prospective customer will usually respond with “Good morning, this is Jack Customer.”) Hello Mr. Customer, may I ask how you found out about our company? (I found you by searching on the internet.) Oh, we have so many people find us like that! May I ask why you are calling us today? (My computer is broken and I need it fixed.) We would be glad to help you with that or find someone who can. Mr. Boss can meet with you tomorrow at 1 p.m. or 3 p.m. Which time is better for you? (I really need it fixed today. Is that possible?) Well, we are repairing a lot of computers right now, but we’ll try. Can you come by and see Mr. Backup in about an hour? (That would be great!) May I have your telephone number please? (It’s XXX-XXX-XXXX.) O.K. Before I let you go, do you have a pen or pencil and some paper so that I can confirm some pertinent details? (O.K.) Your name is Jack Customer. You found us by an internet search. Your telephone number is XXX-XXX-XXXX. You have an appointment to meet Mr. Backup in an hour about fixing your broken computer. Our address is XXXX Ready Drive, Suite 101, Anytown. Our telephone number is XXX-XXX-XXXX. Is that correct? (Yes.) We’ll look forward to seeing you in an hour!

Employees will often fight using a script like this. This must be part of their training, and should be role-played regularly. They should keep a copy at their desk. You (or their supervisor or trainer) must explain that dealing with customers is a performance and they should think of themselves as actors learning a part.

Alternatives can be developed for when the customer doesn’t respond according to plan, but every effort must be made to get the customer back on the script.

The same thing can be said relating to the sales presentation. It should be scripted out. A member of the “sales prevention department” might be you! Sales representatives should also role-play (rehearse) their scripts as a performance. After a sales presentation, the sales person should review how it went to determine things that went well, things that could be improved, and suggestions to improve the script. With the customer’s permission, record sales presentations and listen to them to evaluate them.

You have probably heard when making business calls, “This call may be recorded for training purposes.” You might look into doing this for your business. Alternatives are to have someone listen when others answer calls, or to hire “mystery shoppers” to find out what the experience of prospective customers is like.

Relating to the eternally ringing telephone, there should be a performance standard of responding by the third ring. The call could roll to voice mail and the call promptly returned. Alternatively, a receptionist could ask for the customer’s name and ask when would be the best time to return the call. No call should be put on hold for more than a minute. Then, thank the customer for waiting before moving to the next step.

Take these steps to eliminate your “sales prevention department”, and you might multiply your sales without spending any additional marketing dollars!

Would you like help developing scripts for your business and training your team to better serve your customers? To schedule an initial consultation, write Michael Gray at

Bookmark this page and watch for more business-building ideas!

(c) 2019 by Michael Gray

Six ways to create a Unique Selling Proposition

A Unique Selling Proposition or can stop qualified customers in their tracks.

What will make qualified customers stop in their tracks to pay attention to what you are offering?

This is the purpose of a Unique Selling Proposition, or USP.

It’s intended to answer the question, “Why should I buy what you are offering from you instead of from your competitors or doing nothing?”

The first characteristic is “unique.”  What distinguishes your business or your offering from anything else in the marketplace?

The second characteristic is “selling.”  What about your business or your offering appeals to a desire of the customer?

The third characteristic is “proposition.”  This is a description of what you are offering that the customer must respond to.

An early example is a campaign created by advertising legend Claude Hopkins for Schlitz beer.  Hopkins visited the Schlitz factory and was fascinated by the process of how beer is made.  By sharing romanced parts of the story in advertisements, he persuaded the public that Schlitz beer was special.  For example, he talked about how the bottles were “cleaned with live steam” and the beer was made from pure water from artesian wells.  Every beer was made the same way, but Schlitz beer told the story first, and dominated its market for many years.

Another classic USP is Federal Express’s “When it absolutely, positively has to be there overnight.”  It communicates a clear benefit to the customer.  Customers were willing to pay a premium to assure their deliveries were made the next day.

Domino’s Pizza built its business on its USP, “You get fresh, hot pizza delivered to your door in 30 minutes or it’s free.”  This promise initially appealed to college students who ordered pizza when they were studying late at night.  Notice there is no promise of delicious pizza made from an old family recipe!  (Domino’s had to discontinue the campaign because its drivers were having automobile accidents when rushing to deliver pizzas to customers.)

It’s nice to talk about these examples, but developing USP ideas isn’t easy.  Some products and services seem to be commodities – like everyone else’s.  How can you create a USP to distinguish a “commodity” product or service?

  1. Say the product or service is “for” a particular group.  For example, “Time management training especially for surgeons.”  Surgeons believe the time pressures of their profession are unique.  By slanting a time management system to them in their language and their job description, such a course should appeal to them, and demand a fee premium compared to generic time management systems.
  2. Create a unique offer that others in your industry don’t offer.  “Send no money now.  Only pay when you see the service works.”  “Just make a $100 deposit now and then additional deposits of $500 for three months.”  “No surprises!  Your fee is stated when you hire us.”
  3. State an extraordinary guarantee not commonly stated or offered.  “Your satisfaction is guaranteed.  Return within 90 days for a full refund.”  “Lifetime guarantee.  Even your grandchildren can return the product for a full refund with no questions asked.”  “If you aren’t delighted with the product, return it for a refund of double your money back with no questions asked.”  “Try our beauty cream.  If your friends don’t ask you if you’ve had cosmetic surgery, return the empty jar for a full refund.”
  4. Research for an interesting story.  How is the product made?  Where did the ingredients come from?  How was it developed/invented?  What is the history of the people involved?  Was the product or service created to solve the problem of an inventor, family member or friend?
  5. Find an interesting personality associated with the product.  Although Jared Fogle later got in trouble, his story of losing weight when eating Subway sandwiches had a great appeal and moved Subway into the weight loss market.  An owner or spokesperson can become a celebrity by authoring books and making public appearances.  Is there an interesting story in their background?  Were they an adventurer, mercenary or scientist?  Hiring a celebrity as a spokesperson can create an appeal for your product, just be sure it’s your product and not the celebrity spokesperson that customers are impressed with.
  6. Promote performance standards that address a key frustration.  “Your appliance will be delivered within 30 minutes of the scheduled time, or you will receive a $100 prepaid VISA card.”  “When we repair your bathroom sink, we will leave your bathroom as clean or cleaner as when we arrived, or we will waive the charges for the service call.”  “Unless there is an emergency, a doctor will see you within 15 minutes of your scheduled appointment, or you’ll receive a $100 gift certificate for Maxim’s restaurant.”

As you develop your USP, remember your customer, client or patient doesn’t care about you or your product or service.  They care about solving their problems and improving the lives of themselves and their loved ones.  A good question to ask about your USP is, “Who cares?”  If the only person who cares is you, it won’t sell.  Try another one.

A USP can also focus a company’s employees to deliver on their company’s promises.  Remember the Domino’s delivery persons rushing to meet the 30 minute delivery promise.  Don’t you think Federal Express employees moved just a little faster because customers were expecting their deliveries “absolutely, positively overnight?”

The USP also functions as a mission for the company – a statement of the company’s position in the marketplace, so it’s essential that the promises of the USP be delivered.  With social media these days, customers will find out almost instantly if they aren’t and it can be very expensive to repair the reputation of a company that has broken the public’s trust.

As you can see, this is serious business that requires serious thought.  How confident are you about what you sell?  Do you have an organization that can deliver outstanding customer service?  Do your employees have the resources, training and scripts that they need?  Are your promises impressive and realistic?

Would you like help developing a USP for your business?  Send an email to to schedule an initial consultation.

Bookmark this page and watch for more business-building ideas!

(c) 2019 by Michael Gray