Most founders spend on marketing before they know what they are spending it for. The money goes out. The results are unclear. The conclusion is usually that marketing is hard, or that the agency was wrong, or that the channel does not work for this business.
The question that precedes the spend
The question that should precede any marketing spend is not “which channel should we use” or “how much should we spend.” The question is: what does a customer need to believe before they buy, and what is the fastest way to get them to believe it?
The answer to this question determines the channel, the message, and the budget. Without the answer, the spend is a guess. With the answer, the spend is a test. Tests produce information. Guesses produce invoices.
What most founders skip
Most founders skip the customer belief question because it requires talking to customers in a way that is uncomfortable. The conversation is not a survey. It is not a focus group. It is a direct question: what did you believe before you bought, and what changed your mind?
The founders who have done this work tend to find that the belief that precedes purchase is specific and often surprising. It is rarely the belief the founder assumed. The marketing that works is the marketing that addresses the actual belief, not the assumed one.
The unit economics question
The second question that should precede marketing spend is the unit economics question. What is the maximum the business can afford to pay to acquire a customer? The answer is a function of the customer’s lifetime value and the margin the business earns on that value.
A business that does not know its customer lifetime value cannot know whether its marketing spend is rational. It can know whether the marketing is producing customers. It cannot know whether the customers it is producing are worth what it is paying for them.
The attribution problem
The attribution problem is the reason most founders cannot answer the unit economics question accurately. Attribution is the problem of knowing which marketing activity produced which customer. In a multi-channel environment, the answer is rarely clean. A customer who saw an ad, read a blog post, and then converted through a referral is attributed to the referral by most tracking systems. The ad and the blog post are invisible in the data.
The founders who manage this best tend to use a combination of quantitative attribution and qualitative customer research. The quantitative data tells them what the tracking system can see. The qualitative research tells them what the customer actually remembers. The combination is more accurate than either alone.
What to do before the first spend
Before the first significant marketing spend, the founder should know three things. What the customer needs to believe before they buy. What the business can afford to pay per customer. And what the baseline conversion rate is for the channel they are considering. Without these three numbers, the spend is not a marketing decision. It is a hope.
