Industri Advice

How much should AEC leaders spend on their marketing?

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AEC leaders are often skeptical about allocating budgets to professional marketing programs because it’s often difficult to correlate the return on investment with the dollars spent.

In fact, many companies feel so unsure that they tend to stick with the old methods of customer acquisition that have worked, for better or worse, in the past. The danger in doing nothing to improve of course, is that if your competition are embracing new ways of approaching customer acquisition, you’ll be blindsided and one day find yourself a long way behind on this important front.

The cost of ‘catching up’ will then be significantly higher than the cost of putting a reasonable program and measurable budget in place, year-on-year, to ensure you keep pace in the first place.

So what is a reasonable amount to spend?

The answer differs for each company, but the formula used should be based on the customer lifetime value, along with the company’s annual revenue goals.

By using key performance indicators (KPI’s) you can actually calculate how much you should spend on marketing to make your revenue goals a reality.

The first KPI to consider is your Customer Acquisition Cost. As buyers are engaged with both sales and marketing during a sale, it’s critical to align the sales and marketing functions so one is strategically supporting the other. It therefore makes sense to group the costs of those two functions together for the purposes of understanding the true cost of acquiring a customer. Your customer acquisition cost can be calculated with this simple equation:

Customer Acquisition Cost

The next KPI to consider is the Customer Lifetime Value adjusted with your gross margin, and the attrition rate in the business. As follows:

Lifetime Customer Value

Once you know your Customer Acquisition Cost and your Lifetime Customer Value, you can compare the two figures to get a better understanding of the return on your sales and marketing investment. This will allow you to create a growth model that can systematically drive sales.

Contact us today and we’ll run your numbers through our financial modeller.

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Business Development and the Relationship Myth in the A/E/C space

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“We don’t really need marketing, we grow our business through referrals.”

If I’ve heard that statement once, I’ve heard it a thousand times in the AEC space, and although it’s partially true, you cannot strategically grow a business through relationship referrals alone.

Why? Well because you can’t control how many times you get referred, as it’s strictly a ‘luck’ based method for uncovering new leads.

The number of times you can be referred is limited by the number of times one of your relationships stumbles upon an opportunity that fits your skill set—and this is what I call the Relationship Myth.

It’s a myth in that you can’t only use your relationships to grow your business, but you can integrate your relationships into your overall business development effort by turning them into brand advocates for your company. Essentially evangelists that carry your message to the market on your behalf.

“In order to do this successfully though, you must first have a cohesive
message which is easy for them to grasp, and deliver.”

The best way to create a cohesive messaging platform is to stop talking about the ‘What’ in your business, and start focusing on the ‘Why’.

In every situation (that isn’t a lowest-bidder scenario), you are hired for the ‘Why’, not the ‘What’, so you must understand how to articulate the ‘Why’. If you do this successfully it will become the fuel to drive your business development engine.

So, do you know the ‘Why’ in your business?Another way to look at the ‘Why’ is to think of it as the unique benefit you provide as a company—the collective sum of everything you do well as a business. It’s ultimately the reason people hire you over your competition.

INDUSTRI has defined the ‘Why’ for the following AEC clients and we’d like to help you do the same for your company.

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Tried and True Process for Creating an AEC Brand

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1st Rule in AEC branding… never brand the product or service, always brand the benefit.

Why do the majority of marketing efforts fail? Because steps are skipped and best practices are not followed.

Brand advertising and B2B marketing is a mature science. There are well documented marketing best practices. There are right and wrong ways of doing things in marketing and there are no shortcuts to marketing return on investment. Believe me, when shortcuts are taken the likelihood of marketing success diminishes.

When you invest your marketing dollars you expect a return on investment. To see that you get it, we’ve developed a process that combines the best practices of marketing into three proven steps.

These steps help you focus on and talk about the ‘Why’ in your business, preventing you from making the most common mistake AEC companies make when it comes to marketing, which is to continually talk about the ‘What’.

AEC Companies Mistakes

Clients that adhere to the process win more of the work they want to win,and our experienced team is thoroughly trained at applying these branding and B2B marketing best practices to help our clients succeed and measurably grow their businesses.

Download a PDF of this piece here.