The Shift from Gross to Net Profit in Marketing

Unlocking Sustainable Business Growth by Focusing on What Truly Matters

In today’s fast-paced business environment, small business owners often face the daunting challenge of juggling lead generation, sales management, and the ever-evolving world of marketing strategies. Yet, amidst the hustle, many miss a critical insight: the importance of shifting focus from gross revenue to net profit.

In this insightful conversation, I sat down with Kendell Cook , founder of The Prepared Group, to discuss why marketing needs a fundamental rethink. Ken’s wealth of experience, coupled with a no-nonsense approach to strategy, offers a much-needed wake-up call for business owners and marketers alike.

The Core Problem: Misplaced Marketing Efforts

Ken highlighted a major issue plaguing small businesses: investing in the wrong areas. Many business owners are misled into thinking that success lies solely in digital marketing—SEO, Facebook ads, and Google campaigns. While these tools have their place, they often fail to address the unique needs of individual businesses.

Ken’s analogy sums it up perfectly: Imagine training to fight a wrestler, only to find your opponent is a judo expert. The mismatch leaves you vulnerable because your preparation was entirely off target. Similarly, many businesses invest heavily in tactics that don’t align with their customers’ needs.

Shifting the Focus: Ask the Right Questions

Instead of asking, “What marketing channel should I use?” Ken suggests starting with more strategic questions:

• Where can I garner the attention of my ideal customer?
• How can I influence their decision-making process?
• What methods will resonate most with them?

For local businesses, digital advertising might account for only 10–20% of their customer base. The real question becomes: What other strategies can drive sustainable growth?

From Gross to Net Profit: The Game-Changer

One of the most striking insights Ken shared was the industry’s overemphasis on gross revenue. Many businesses proudly display their gross income but fail to address the alarming gap between gross and net profit. This is where most marketing agencies fall short—they focus on increasing leads without considering how to retain customers or improve profitability.

Ken shared a pivotal moment from his career when a client fired him despite tripling the business’s revenue. The reason? While his ads brought in customers, the lack of attention to retention and operational sustainability created a leaky funnel. That experience transformed his approach, shifting his focus to building systems that drive net profit and long-term success.

Rethinking Marketing Agencies

Ken didn’t mince words about the state of the marketing industry. He described how most agencies operate as “technologists,” proficient in tools like Facebook Ads or SEO but lacking the strategic understanding needed to grow a business. This leads to high client churn rates—some agencies replacing their entire client base three times a year.

For a marketing agency to be effective, it must shift from a transactional mindset to a holistic, strategy-driven approach. That means understanding not just how to run an ad campaign, but how to optimize client retention, reduce acquisition costs, and improve lifetime customer value.

The Power of Live Events and Cold Outreach

When it comes to high-quality lead generation, Ken emphasized tried-and-true strategies like live events paired with lead magnets (e.g., books) and the often-dreaded but highly effective cold call. While these methods require more time and effort, they provide tangible results and foster deeper connections with potential clients.

Ken also encouraged embracing the feedback loop. Whether it’s through following up with leads who download a free resource or refining your content based on customer feedback, these actions demonstrate care and build trust.

Key Takeaways for Simplifying Marketing

Ken’s advice boils down to a few actionable principles:

1. Build Systems, Not Just Actions: Marketing should be systematic and repeatable, not ad hoc.
2. Obsess Over Acquisition Costs: Know exactly what you’re spending to acquire customers and ensure it aligns with your profitability goals.
3. Adopt a Customer-First Lens: Every interaction, from branding to follow-up, should prioritize your ideal customer’s perspective.
4. Activate Your Entire Team: Marketing isn’t just the job of one department—every team member plays a role.

The Future of Marketing: From Tactics to Strategy

The conversation with Ken left me reflecting on the broader implications of marketing today. While tools and platforms will continue to evolve, the fundamentals—understanding your customer, building systems, and prioritizing net profit—remain constant.

As business owners, we have the opportunity to rethink our approach and create strategies that don’t just bring in revenue but build sustainable, profitable businesses.

Pick up Kens Book "The Prepared Marketing System" https://thepreparedgroup.com/book/