Chase Musser: Yeah. Jerome asked, “What is a reasonable marketing budget in terms of percentage of gross revenue?”
Andy Stickel: Nick, you want to take this or you want me to?
Nicholas Werker: A reasonable marketing budget as it pertains to your gross revenue… I don’t really like to stick to a number. And at my company, we don’t stick to a number either. Our philosophy is, “Come up with the best ideas possible, right, and then find out the cost later.” So when we were first starting out… We were a startup business. And I would find out things. And maybe it would cost $1,000, right. And I would bring it to my boss and I would say, “This is X, Y, Z solution for us. This is how it could work. This is the ad. This is what it’s going to get us.” And then I determine whether or not it’s going to bring me the ROI that I want. So the answer is it really depends. And it depends on your budget, too. But we don’t really limit ourselves to just a budget. I don’t say, “Oh, my budget doesn’t let me do this,” or, “My budget doesn’t let me do that.” I try to find the best ideas first and then worry about how much it costs and how much it’s going to bring me afterward. I just find that a budget really limits us.
Andy Stickel: So what I do is I look at it… I take it as a more objective approach. I don’t look at the percentage of sales or anything like that. What I look at is, “How much does it cost to acquire a customer?” Because if it costs you $100 to acquire a customer and each customer is worth $5,000 for you, then you know you can spend a lot of money. And those are really simple numbers. But what I do for my business, for example, is I break it down. So my biggest way I sell stuff for myself is I have people go to a webinar and then book a call and then, on the call, we sell them something, right? So what I first look at is I look at, “Okay. What is the cost to get them into a webinar?” And then I look at, “Okay. What is the cost to book them on a call?” And then, “What percentage of calls will actually turn into sales?” And then once you have that information, then you can actually assign a budget. Because once you can make it profitable, then you really don’t have a marketing budget. At the end of the day, whoever can spend the most to acquire a customer will always win. So what you have to do is you just have to figure out what is your… You’ve got to know your numbers. That’s why… It’s so cheesy when they say, “Know your numbers.” All of this stuff, “Know your numbers,” all that stuff, I always feel like it’s very cheesy. But it’s super important. Because if you know that it costs you… If you know that, basically, your profit on a… Or let’s say you’re an estate planning attorney and you charge $5,000 for an estate plan but it’s costing you $6,000 to acquire a customer. That’s a major problem. But if every lead costs you… I don’t know. Let’s say every consultation costs you $50 and you guys close 25% of your consultations. Well, now, you know that as long as you’re getting consultations in, then you’re going to be making money you can scale up. So I feel like I’m doing a terrible job of explaining this. But basically, the gist is if you know all of your numbers, then you don’t really have an advertising budget. At my company, I’ve never actually looked at the percentage of revenue compared to my marketing budget. Because if your marketing actually works and you actually are paying attention to your numbers, then you really don’t have a marketing budget because you should be profitable. So if you want to start small, start with small tests. And I wouldn’t do it as a percentage of your budget. Because if you’re just beginning, the budget might be a bigger percentage or it might be a smaller percentage just depending on how far along your law firm is. But as Nick said, you might need to spend $1,000 on Google. I always say, “You’ve got to spend at least $30 to $50 a day to test Facebook ads out.” So if you’re a firm with one client a month, that might be a significant portion of your budget compared to a firm that’s getting 20 to 30 clients a month through referrals. That’s not a significant portion of your budget. So that’s how I look at it. I always pay attention to what’s the cost of every step of the equation, what’s the cost per lead, what’s the cost per consultation, what’s the cost per sale.
