Are You Holding Yourself Back Through Rookie Mistakes with Your Marketing and Customer Acquisition?

Every year I try my best to make it to as many trade shows as I can so I can get in front of agency owners and producers to learn about their customer acquisition techniques.  Last fall I was speaking with a rather well known agent who was discussing his customer acquisition costs. This is a guy who is very in-tune with digital marketing, and just marketing in general as he had worked for company doing SEO marketing  before becoming an agent, and someone who is very numbers-oriented when it comes to his processes.

When he revealed that his acquisition cost was almost $300 per customer, almost everyone in the room gasped. They were stunned.  Other agency owners balked at how he was upside down on his marketing and that he couldn't possibly be calculating his ROI correctly.

I smiled, and quietly fist pumped for that agent who is one of the few agents I’ve ever met that is thinking like a millionaire business owner.

You see there’s a rookie mistake that I see a lot of agencies and business owners alike making and it’s costing them a lot of money and more than that... a lot of business growth.

This big mistake (which is commonly made by new agency owners) comes from their fundamental lack of understanding of basic customer acquisition principles. Let me explain…

 If you’re like most agency owners, you likely have a marketing budget.  A specific amount of money you feel you can invest every month to get new customers and grow your business.  The key word here is invest.... we'll come back to this word later.  If you don’t currently have a marketing budget, it means you likely haven’t made this mistake yet, so you should still read this.

What many business owners don’t understand though is the difference between the way typical agency owners use their marketing budget… and the way million dollar agencies do.

The average insurance agency owner looks at their marketing budget transactionally.  Here’s what I mean by that...

To the agency owner, every transaction has the same purpose: To generate immediate profit. Whether it’s a transaction with a brand new customer or a loyal, multi-purchase customer, the goal is always to generate profit for the small business owner. This is the wrong way to look at your marketing!

Think like a Million-dollar business owner

The million dollar agencies look at their marketing budget differently.  First, the big agencies allocate their marketing dollars between both the front-end of their sales funnel and the back-end.

The front-end being all the marketing processes that turn leads and prospects into customers.  And the back-end being all the marketing to existing customers to increase lifetime value and generate profits.  They see those two with completely different objectives.

Second, the million dollar company sees the purpose of front-end marketing not as a profit generation tool. But, instead, purely as a customer acquisition tool.

Stop and think about that for a second.

The mistake a lot of agency owners make is they look at their front-end marketing budget as an expense on their profit and loss statement.  And like all expenses, they assume the point is to keep their front-end marketing budget as low as possible. Agency owners believe that the ultimate accomplishment is to spend the least they can on acquiring new customers.

This thought process needs to stop because it is killing your business.  Let's focus on the front-end marketing funnel as that's where many agents get tripped up.

It’s not an expense, it’s an investment

For the million dollar company, the goal is not to spend the least amount possible on front-end marketing, it’s just the opposite.  The goal is to invest the MOST amount possible on customer acquisition every month because for the them, the front-end is simply about acquiring maximum new customers at a reasonable cost.  This “reasonable cost” always begins with "break-even".

The break-even

Meaning, for every $1 invested into front-end marketing, their aim is to simply recoup $1 in the form of new customers (and new leads).  They’re NOT looking for profits. Not on the front-end. Not when acquiring new customers.

Think about it like this:  If every $1 you put into front-end marketing comes back to you in the form of new customers and leads — and returns your $1 — why in the world would it make sense to ever reduce or constrain our front-end marketing budget?

The Big Mistake To Avoid!

The big mistake many small business owners and agency owners make (and the one you want you to avoid) is seeing your front-end marketing budget as an expense, and therefore, trying to reduce it.

Marketing is not an expense. It’s an operational cost. It’s a cost of doing business.

When you have a marketing funnel that allows you to recoup your marketing budget, even at just break-even with no profit, and you know your numbers… any money you invest is NOT an expense... it’s an investment into future profits.

It pains me to think about the lost customers, profits, and growth agencies are sacrificing by limiting how much they invest each month into their front-end marketing budget.

You can’t survive without a front-end funnel

You can’t cross-sell into other products or get multiple referrals from a client, thus maximizing your profit-per-client, unless you get them in the door to begin with.

Today, your goal should be to work on building your front-end funnel, and investing as much as possible every month into it. Trust me... if you do it right, you will make your money back 10 fold.

As long as you have a properly constructed front-end funnel, one that simply allows you to break-even, you will experience growth that you had only dreamed about before.

At Avenge Digital, we’re big on data, tracking, and analytics. Year over year, across multiple platforms, data shows that over 90% of purchasing cycles now start online. This means that your website, online marketing vendors, and overall digital footprint will be the “front-end” funnel of your business over 90% of the time!

If you’re an agency owner reading this, understand that your digital footprint is not an “expense” either. It’s a mandatory, non-negotiable part of your business that 90% of the time is setting the first impression with your prospects.

What is a front-end funnel?

A front end funnel is any online or offline practice or campaign that gets new customers in your door.

Here are some examples:

  • Online lead vendors, like Avenge Digital, which provide you with inbound marketing 
  • Paid Ads 
  • Seminars + Webinars (which often times come at no cost to you)
  • Referral programs (you need to have a well-oiled referral program)

These are all customer-acquisition funnels.  The point here is, you don’t have to be a millionaire to think like one.  Stop viewing your marketing budget as an optional account, and start treating it like an investment in your business. We’re in too competitive of a space to think of it any other way.


Tell us what you think?  Are you looking at your marketing budget as an expense or an investment?

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