The cost of inbound marketing – is it really worth doing?

we're-practising-what-we-preach-inbound-marketing

Towards the end of 2015, we made the decision to invest in our own inbound marketing. After all, it’s a service that increasingly we’re being asked to deliver by our clients, and it would look pretty bad if we didn’t do it for ourselves as well.

The evidence is overwhelming that, although it takes time to deliver the goods, the return on investment can be substantial.

Over the next few months we will be sharing our journey with you. It’s our intention to be honest about our successes and failures. We’ll tell you about the obstacles we face along the way and how we overcome them. We’ll share what works, what doesn’t work and the results we get.

We also hope it’ll be a good way to show you how we work, and to demonstrate our agency values: to be as helpful, honest and generous as we can.

The story begins when we started pulling together the 2016 financial plan for our business. We drew up two options – one ‘safe’ plan with 10% predicted growth, and a more ambitious proposal with 20 -25% predicted growth.

But when we looked at the 25% option, we found it would mean spending more money than we had. We looked at areas that we could cut costs, but quickly realised we’d be chopping out the marketing and investment we needed to grow and develop as a company.

Catch 22!

So, we could continue as we had been during 2015 – covering costs and paying ourselves enough to live on; but we wouldn’t be moving forward and the business wouldn’t grow.

Or we could invest in marketing to grow our business, but that would mean making a loss for most of the year.

This is a dilemma that many of our customers face, and we decided we needed to treat ourselves just like one of them. We show them a business case that demonstrates the need to invest for several months, before starting to reap the rewards, and we expect them to trust us and find the money to invest.

Treating ourselves as we do our customers

The fact is, we tell our customers that inbound marketing works, yet we were nervous about taking the risk of investing in it ourselves.

So with a deep breath, we decided to practice what we preach and we opted for the second, more ambitious plan.

We’re confident this investment is going to pay off, so watch this space and see how we get on.

Getting started with Inbound Marketing

We had already done a discovery exercise to identify our goals, target market, buyer personas and competitors. We’d defined our services, how we planned to deliver them, and the staff, partners and freelancers we would use.

That meant we were ready to move on to the same cost and investment calculation exercises that we do with our clients. We looked at our average order size and the lifetime value of our customers – both now and where we want to be – and we took into account our gross profit margin. This showed us what a customer is worth to us.

Hubspot-Nail-Your-Pricing-StrategyWe then assumed that we should invest at least 10% of the value of a customer to attract a new customer. We were helped in this exercise by a useful article from HubSpot.

In most cases with our customers we use our experience to determine the right mix and level of marketing activity to meet their objectives. Then we use the calculations to check that we’re in the right ballpark.

That is exactly what we did for ourselves, and we came up with a figure of about £1,000 per month, plus an upfront investment of £2,500.

This is lower than it would have been for a similar client project for two reasons:

  1.  Any resources we buy in will be at cost with no mark-up for profit
  2. We already have at least 25 hours per month earmarked for internal effort on marketing. We made the decision some time ago to aim for about 66% utilisation of our delivery staff, rather than the 75% some agencies use, because we want them to have plenty of time for training and technical development, as well as making a contribution to our marketing.

So with appeals to family and raiding pension pots, we were able to find the money to invest in our marketing. The investment will be spread across a number of areas:

  • brand-clarity-clinic-clear-and-creativeA brand clarity clinic with branding specialists Clear and Creative. This was an incredibly useful exercise that helped us to figure out what really sets us apart from the competition and what makes us valuable to our customers.
  • External copywriters to boost our article writing capacity from 4 blog posts per month to 8.
  • Regular website copy and structural improvements.
  • Design work to improve the look of the website and to create beautiful Calls-To-Action
  • Software to support social media posting, content management and marketing automation.
  • A bit of investment in hardware – some of our PCs were really old and slow!

So it’s December 2015, we know what we need to invest, and we know the resources we need.

Our first step is to find freelance copywriters and a freelance designer. And we confidently forecast that everything will be in place ready to kick off in January. But, in fact, we don’t actually get going until March.

Read our next update, due in a couple of weeks, to find out why.

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