November 05, 2018

Underspending

Here's an example of the concept of Carrying Capacity for a brand.

Yes, I know, it's hard to read and it is a tiny image. There's a lot of data there. Click on the image for more details.

This company is making a killing on customer acquisition. It's spending a million dollars a year, and is generating $1.6 million in annual profit from customer acquisition. This company is simply not spending enough money to acquire customers.

Let's try a simulation. Instead of spending $1.0 million, let's spend $1.5 million acquiring new customers, ok?

We're less profitable after on year. We're less profitable after two years. We're less profitable after three years. But we're more profitable in years four through ten. After ten years of total profit summation, this strategy is more profitable.

The new Marketing Leader runs a bunch of simulated outcomes, then sits down with the CFO and comes up with a sound strategy for the business - one agreed upon by both the CFO and the new Marketing Leader.

Tomorrow, I'll share what the carrying capacity is for this business.









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