How much does it cost?
As a digital marketing agency, that’s among the first questions we hear when talking with clients. The question might be related to a new website, a PR campaign, a marketing automation infrastructure, or some other digital marketing project.
It makes sense, of course. Corporate marketing departments have budgets allocated for specific projects and programs. They need to know whether an agency or freelancer can deliver what they want within that budget.
But starting with “how much does it cost?” is all wrong. First, you have to look at the value you can expect from the marketing program you will implement. That changes everything.
Let me give you an example. A manufacturing equipment maker came to us looking for help. It had an out of date website and no SEO and a contact database of about 3,000 contacts with sporadic email outreach using Salesforce. The company was spending $1,000 per month Adwords campaign. It didn’t know if anything was working because they didn’t measure any of this. The Adwords ads linked back the company’s home page and it had no calls to action.
The sales and marketing VP wanted to know how much it would cost to redo their website and do ongoing marketing. He said that he wasn’t sure how to market in the age of online marketing. He also stressed that the company’s internal resources were maxed-out and wanted to could not take on additional tasks.
“How much will it cost?” they asked.
That’s not the right place to start. Especially when you don’t even know what you want.
“How much is a customer worth?” we asked back. The average sales price for the company’s products was around $250,000. How long does a sale typically take? Three to nine months. What is your growth target for this year? About $1.25 million, or five additional products.
The company wanted a marketing program to generate $1.25 million in new money and was fixated on how much it will cost. OK, we get it. No one wants to be overcharged or to leave money on the table, so they compare marketing agency services like they compare everything else–cost being a key consideration.
To get to the moral of the story, we gave them a quote of $32,000 for a new mobile-responsive, search-optimized website and $4,000/month ($48,000/year*) of outreach, which would involve monthly emails with calls to action and landing pages with automated follow up. We would manage everything, all that they would have to do is approve a content calendar and review content for accuracy.
We presented our quote. $80,000. Eyes bulged. Objections flew. “That’s way over our budget,” he said.
“Would you invest $80,000 if it brought in $1.25 million in new business,” we asked.
“Yes,” was the immediate and emphatic answer. “But how do we know it will work?” “That’s why you hire us,” we said. We explained to him how the numbers would add up with new traffic, leads, and sales, based on our experience with similar companies. With a bit of fear and trembling, they agreed to move forward.
We then did what good agencies do. We worked with the company’s sales team to understand their ideal customers, the customers’ key problems and challenges, and how and where they look for solutions, and how they make decisions to purchase. We did the keyword research, revised their web pages, wrote white papers and case studies, and implemented a marketing automation program for ongoing lead nurturing and communication.
We then created a communications calendar with monthly emails topics, content offers, and follow up plans. Here are the results after about a 15 months (the marketing program started after the website was completed):
All things considered, not much at all. This is why the question of cost gets companies and marketing agencies speaking the wrong language.
Maybe a better question would be how much it would cost if you don’t make the right investment in marketing.
*Monthly costs include the cost of a marketing automation platform.
**This figure represents booked revenue during this time frame, though most was shipped as well.
