Billions Of Revenue from $0 Marketing Budget
This story originally appeared in my book club. Since I recently sold the company I launched at 19 years old — we did $5m in sales and raised $2.5m in VC- I’ve shifted my focus to reading a book a day. Join my book club now to see what a 26 year old with one exit under his belt is reading.
In his book “Marketing Outrageously”, author Jon Spoelstra takes us on a behind the scenes journey into many of the most famous marketing moves of our time.
He breaks down complex campaigns into simple tactics ranging from scooping cream off the top of your customer base to employing jock straps at sporting events to make them memorable.
You’ll get a behind the scene look at why Southwest resisted the urge to increase their top line revenue by 1.5% by charging baggage fees, how King Gillette gave away free razors to turn around and sell 1m razors the year after, and how a simple ad in Advertising Age drove $293 dollars of revenue for every $1 spent on the ad.
Here are 3 specific lessons I took from the book:
1. A perfect product at the lowest price is a fantasy
When Jon was hired to help the Nets sell more tickets and sponsorships, he was met with a major barrier. When he asked sales people what the problem was, the replied “We have a crappy team and our tickets are more expensive than others”.
He replied: “You can’t have better product. We work with product we are given. The team has been awful in the past and its near future looks awful. We market the team we’re given. Now under these circumstances, lets come up with a list of what its gonna take to become the best ticket sales department in all of sports this year”.
Best ticket department in all of sports this year.
Any lazy person can say “the product isn’t the best”. It’s a cop out. Attack that mindset with the thinking “We market what we are given”. How do we be the best now?
2. The Power of Testing Fast: How AOL spent $250k To Usher In The Internet and Billions in Profits
AOL didn’t have a big corporate budget like many of its competitors did so it had to market outrageously.
They decided to test a clever idea by measuring just one benchmark; if they gave disks away, how many people would use them to log on to the internet and become paying AOL subscribers?
The initial test cost AOL $250k for on-serts (plastic bags in magazines). AOL found for every 100 disks it gave away, 10 became customers. It immediately doubled down, giving away over 25 million disks ranging from magazines to boxes you ordered frozen steaks in. It worked big league.
Set a dedicated budget to testing fast, aggressively, and measuring only one critical benchmark. Then focus on execution. Double down the second you smell a big win.
3. Sam Adams Beer and The Compelling Argument for Charging More Than Your Competitors
Jim Koch founded Sam Adams using all unconventional means.
He didnd’t brew his own beer, it was too expensive.
He priced his beer higher than imports. He focused on luring the premium beer buyer where price isnt’ the foremost object.
He didn’t sponsor sports on TV.
He exported his beer to Germany so he could say “The only American Beer exported to German”.
He won the Denver Beerfest which is not a big deal but Koch trumpeted his award like a nobel price. Just another justification for the highest price.
A limited budget forced Koch to market outrageously as a means of survival and growth. What would you do if you had no budget but had your feet to the fire to drive growth and sales?
The answer is market outrageously. Get creative and take these lessons learned to grow your new software company without dropping thousands on Facebook ads.
Or to price your product higher than your competitors to naturally signify premium even if it isn’t.
Or to quickly test your new marketing ideas in a low risk way and double down when you find one that works.
If you found this summary helpful, click the little heart below and if you want to start reading it now, you can grab the book on Amazon here.
