Thinking About Spending On Marketing? Make Sure You Answer These Three Questions First

Of all the decisions that entrepreneurs face, deciding when to start investing in marketing is one of the most difficult. If you ramp up your marketing spending too early in your lifecycle, you run the risk of burning cash with very little to show. On the other hand, if you wait too long to get serious about marketing you risk being eclipsed by the competition and never reach the scale you desire.

The abstract nature of marketing and the uncertainty that goes along with launching a new initiative is enough to drive a founder to the brink. Fortunately, the decision process doesn’t have to be as painful as we often make it out to be. In fact, I’ve found that there are only three major concepts that you need to master before making your marketing move.

Have you found product/market fit?

This is the single most important factor for any business, regardless of size or industry. The good news is that you don’t have to spend heavily on marketing to prove to the world that the product you have built serves the market you want to serve.

At BodeTree, we took to the streets of our local community to connect with small business owners and learn about their unique needs. From there, we revised both our product and our message to reflect what we learned from our prospective customers. We held back from spending on marketing until we were confident that we had the right fit. This decision was often easier said than done, mostly because it takes a lot of time to reach product/market fit and the temptation just to dive in and push for growth can be strong. However, the disciplined approach that we adopted ensured we didn’t burn through cash too early and helped us create a solid foundation for the future.

Do you understand your customer acquisition cost?

For those who aren’t familiar with this concept, customer acquisition cost (CAC) is the average cost of attracting a new user or customer to your business. For many companies, CAC is the single most important cost in the business. Marketing, of course, is the “cost” part of customer acquisition cost.  Depending on how much and how often your customers spend with you, it’s entirely possible that the cost to bring in a new customer could exceed the revenue generated by them. In other words, if your acquisition cost isn’t well managed or focused exclusively on getting in front of potential customers, it’s possible to find yourself quickly going broke.

Can you support new customers?

Last but not least, entrepreneurs have to make sure that their organization is prepared to support the marketing initiative and the growth that will result from it. Far too often founders focus so much on product and strategy that they neglect to develop strong service and support teams internally. If the growth you’ve been chasing arrives ahead of your ability to support it, you might not get the chance to catch up. Remember, one bad customer experience can poison a client forever.

With BodeTree, we were lucky that we built out a customer support channel early on in our history as a direct result of our efforts to find product/market fit. We took an extremely hands-on approach when it came to learning what they cared about, and eventually that communication style simply became part of our company’s culture. Once we felt prepared to increase our marketing spend, we were confident that we had the right internal processes in place to support the new growth.

The decision to ramp up marketing spend has the potential to make or break any organization. While every business is different, there are core concepts that always hold true. Every single entrepreneur, regardless of industry, size or sophistication needs to understand product/market fit, customer acquisition cost and customer service before spending heavily on marketing. Only then can you make sure that the effort and resources you put toward marketing your product or service will pay off.

This article originally appeared on and was written by Chris Myers.  He is the Cofounder and CEO of BodeTree, a web application designed to help small businesses manage their finances.