INVESTMENT VS EXPENSE
When it comes to marketing, too many flooring entrepreneurs view their budget as an expense instead of an investment. This wrong way of thinking leads to poor decision making and budget allocation issues. Ultimately, this hurts the potential upside of the business and caps long-term growth.
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In this article, we review why this is so and how to start changing the way we think.
INVESTMENT VS EXPENSE
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In our experience in dealing with flooring entrepreneurs, the overwhelming majority view marketing as an expense designed to deliver immediate results. While there is some transactional based marketing that is beneficial and drives instant revenue, Google for instance, the ideal marketing strategy is a mix of short and long-term objectives designed to build name recognition and trust in the minds of your consumers.
A reason that business owners struggle with long term thinking is because they only think of people who are buying right now as their potential customers. If you’re trying to build brand recognition and trust with consumers who are actively in the marketplace, it’s already too late. The seeds for building recognition and trust need to be planted long before a flooring customer is in the consideration phase. More on this later.
One simple cure for this flawed mindset is for flooring entrepreneurs to start thinking about marketing as an investment instead of an expense. This might seem like a small distinction, but the cumulative effect of treating marketing like an expense, creates bad habits in terms of how their marketing budgets are being deployed.
The formula for scaling customer acquisition is reaching potential customers regularly over a long period of time. The idea is to create brand awareness and trust to stimulate demand for your products and services. This requires patience as money spent today will not return to its full potential for a year or two down the road. It simply takes time for customers to recognize and trust your business through advertising.
Much like an investment into a mutual fund, the stock market or an interest bearing savings account, the reward for the financial outlay is meant to be realized at some future date. Yet, when flooring entrepreneurs look at return on investment for their marketing dollars spent, they look at it in the short term, usually by the month.
During my time running an advertising agency working with flooring businesses across the country, I have been fired by many clients within sixty days of getting started. These clients were guilty of the short term transactional mindset. I would coach them ahead of time to think about marketing in the long term, but the instant return on investment mentality meant they lacked the patience to last beyond sixty days.
Meanwhile, clients that stay with it month after month, year after year, get incredible results. Not surprisingly, clients who got past the six month mark, started to see drastically increased leads and conversions, as customers became more familiar and comfortable with their brand.
Those who don’t make it past the 60-day mark are the classic example of looking at marketing as an expense rather than an investment. In their mind, the income must exceed the expense immediately, or they cannot justify the expense. Had they viewed the marketing as an investment and acted with patience, eventually the investment would’ve returned considerably more than the expense, as it does for my company and our long-term customers.
The unfortunate byproduct of this short term mindset is that it creates a self-fulfilling paradox around marketing. These entrepreneurs do what I call “the marketing hop”; bouncing from one marketing opportunity to another without ever giving any of them a real chance to work.
Since no truly effective marketing works within 60-days, they try one, cancel it quickly, then “hop” to another, try that one for another 60-days, and so on. Eventually, they become disillusioned with marketing and start believing that marketing doesn’t work. Now, their business has absolutely no chance to achieve sustainable growth, and the business plateaus.
All of this would be cured with a simple shift in thinking, treating marketing as if it were an investment instead of an expense. Focusing on reaching as many customers as possible repeatedly over time is the greatest recipe for marketing success and long-term sustainable business growth.