How to get 5 times the value from your Marketing

The key to getting a bigger pay-off from all your marketing is to adjust your mindset to that of an investor. Marketing is by far the most economic investment business owners can make. It is also an attractive way for High Income Earners to invest tax effectively - where the initial dollars they invest are tax deductible, the income earned can be managed so that tax can be converted in to capital gains and long term profits can flow tax free (with the appropriate structuring and management).

For the Business Owner - Instead of writing off marketing outlays as expenses in an endeavor to produce one off increases in Sales - regard the expenditures as tax-advantaged investments. However there is a vast difference in the Economics from the capital you spend in acquiring property investments to spending money on marketing. First off marketing expenditure is usually tax deductible. This feature reduces the economic cost significantly to produce an immediate tax free investment result of close to 26.5% - as a $100 outlay on marketing effectively costs only $79 (applying the 21% tax rate for Corporations in the US today). Percentage the $21 tax rebate on the $79 net cost.

In setting objectives for your marketing programs look at them in terms of the short, medium and long term. Short term you might consider any increase in sales as a satisfactory result. However do not be satisfied with that. What will be the actual increase in cash for every dollar spent? In most instances you could expect a several times increase in end profit of 3 or 4 times. Make sure you look at the after tax profit in calculating ROI.

Next when you have a sale to a new customer regard that as the commencement of your investment program rather than a final objective. Provided you can retain a customer for a number of years they have a lifetime value to your business - of all their purchases - not just on the initial sale but also from all their repeat purchases. Therefore in evaluating marketing programs you must look further than the one-off sales.

Longer term the retention of customers should increase the value of your business by more than new customers who do not stick around. One of the major benefits of being able to capture customers and have them stay with you is that those loyal customers will refer others. The additional sales and new customers resulting from their recommendations adds to the value of the loyal customers to your business - not from just their own repurchasing but also from their recommendations. Customers who do not stay with you but switch to competitors are unlikely to give you referrals - and so are not of as much value.

Long term as your sales and customers grow in numbers so too should your earnings. The earnings of your business determines its value - when an investment multiple is applied to it. It is your marketing programs which generate customers and sales, ultimately responsible for the value of your business to an investor. It is common for multiples of 3 to 5 times to be applied to earnings to determine how much you can get from the sale of your business. Additionally as there are tax advantages in respect of the treatment of capital gains the profit on the sale of your business will be several times greater after tax than the profits resulting from revenue.

If you digest the above you should be able to develop a broader perspective of the significance of your marketing to the overall financial position of your business. In which case it is important that you consider the financial objectives of your business plan and all the elements of your marketing together - if you really are in business with the goal of making money!