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Lessons for Entrepreneurs #3:
Don’t spend more than you can afford (don’t be too cheap either)
Evaluating marketing budgets is difficult for startup brands, because it can seem like you are working in a vacuum. Unbelievably, some startup brands will assume that if a modest amount of money spent will garner a real, measurable return on the marketing investment, then an enormous amount spent will produce exponentially impressive results.
At the other end of the spectrum, there are those startups that will assume that as long as the product is superior to the competition and priced correctly, and adds great customer service, simple media buzz combined with word-of-mouth will set off a wild frenzy of customers climbing over each other to get to your products. Both approaches are potentially disastrous.
Spend something on marketing. Anything. Whatever the amount, the key factor determining marketing success is how adept is the startup at performing ongoing data capture and analysis of the effectiveness of different types of marketing. Cost Per Acquisition (CPA), Cost Per Conversion (CPC), Revenue To Cost Ratio (RTCR) etc.…whatever the formula used to calculate the overall Return on Marketing Investment (ROMI), the important thing to remember is to estimate your costs up front and then research the results of any campaign or program to determine if ROI was met.