Last month, one of our clients at MindShift Digital spent $21,320 on their marketing and advertising. They collected $19,250 in cash revenue. If you're doing quick math in your head, you're probably thinking what most CEOs think: "Darrell, they spent more than they made. That's a loss."
And that's precisely the trap I'm talking about.
Those 11 clients they acquired? They represent a potential of $200,200 over the next 12 months. That's factoring in a very aggressive 20% attrition rate. We invested $2,070 net to acquire $200,000 in first-year customer value.
That's a 97x return on investment.
But here's what fascinates me most about this scenario, and what I've witnessed hundreds of times over our 15 years helping companies grow: Most CEOs would look at that ad spend-to-revenue ratio and say, "This isn't working. Kill the campaign."
They destroy the very system that's actually working exactly as it should.
Peter Drucker, considered the father of modern management, said something that changed how I think about business:
"Because the purpose of business is to create a customer, the enterprise has two and only two basic functions: marketing and innovation. Marketing and innovation produce results. All the rest are costs."
Read that again. Marketing and innovation produce results. Everything else is a cost.
Yet most companies treat marketing like it's the cost they need to minimize. They ask, "How little can we spend to get the most out of it?"
That's the wrong question.
The right question is: "How much can we actually spend to acquire a customer profitably?"
Totally different mindset. And it's the difference between companies that scale predictably and those that stay stuck in the same revenue range year after year.
After working with hundreds of companies over the last 15 years, I can tell you that the ones who win with marketing, the ones that actually scale profitably, have one thing in common:
They know their numbers cold.
Specifically, these three numbers:
Not just what a customer is worth when they first buy, but over their entire relationship with your company. For our client in this example, the average customer is worth $18,200 in the first year (factoring in that 20% attrition).
Exactly what you spend to acquire a customer, including ad spend, agency fees, software costs, and everything else. In our case, we acquired 11 clients for $21,320, making the Customer Acquisition Cost $1,938 per customer.
How long does it take to recover your acquisition cost? When you're spending $1,938 to acquire an $18,200 customer, you can see why that initial month might look like a "loss" but is actually an incredible investment.
Most companies are flying blind on these metrics. They think they understand marketing because they've run some Facebook ads or hired an agency to write blog posts. But they don't understand the difference between random marketing tactics and a proper system.
Look, I'm going to be straight with you.
The hardest part of my job isn't the marketing execution. When you've done something 10,000 times, it becomes routine, like asking Kobe Bryant if dribbling a basketball is hard.
The hardest part is getting companies to commit to doing the real work.
If your marketing isn't working, it's probably not the tactics. It's not the strategy. It's not the social media posts or the ads themselves.
It's probably one of these three things:
Most companies can't answer these questions with confidence. They're making decisions based on "how last month looked" instead of real data.
You're looking at marketing like a line item on the P&L that you want to shrink. But remember what Drucker said, marketing is one of only two business functions that actually produce results.
Everything else is a cost.
When you treat marketing as an expense instead of a system to optimize, you'll always struggle.
You want the marketing equivalent of "lose 30 pounds in 30 days." You have this attitude of "let's see what happens" when you run campaigns.
But sustainable growth doesn't work that way.
Let me be crystal clear about something: This client didn't hire us, spend $21,000 in the first month, and boom, instant results. That's not how it works in business or in life.
This client has been with MindShift Digital for over two years. We've built a system together. We've tested, optimized, and refined. We've had our ups and downs.
And now we have a predictable, profitable customer acquisition system.
But here's what people miss: it didn't take us two years to get results. The numbers I'm sharing are from just one month of a system we've been optimizing for a couple of years. We had quick wins in the first 90 days. But that's not what I want to highlight.
Real marketing isn't about tricks, hacks, or overnight wins.
It's about building a system that works repeatedly, then optimizing it over time.
That takes real work beyond just the marketing execution.
I've learned something working with hundreds of companies now, over almost 15 years:
The difference between businesses that scale and those that stay stuck usually isn't ideas, strategies, or plans. It's not even the execution.
It's commitment.
You stop freaking out about what happened last month. You stop asking for daily updates. You start obsessing over the right metrics: Customer Acquisition Cost, Customer Lifetime Value, and payback period. You make better decisions because you're measuring what matters most.
Here's something nobody wants to hear: I mentioned that those 11 clients are worth roughly $200,000. That's an important distinction.
Marketing, when done well, brings you customers. But you still have to deliver.
Sometimes companies blame marketing when they experience high churn. They say, "These leads weren't good quality." But often the leads were just fine; they just weren't ready to buy when you wanted to sell them, or you weren't prepared to sell to this modern era of buyers.
Sometimes your delivery has to change to make your marketing work. That's a whole other conversation, but my point is:
Marketing gets you the customer when done right. Everything else is on you.
Here's my challenge for you. Pull up your numbers. Actually, look at them.
Not just your revenue. Not just your expenses. Not just your profit.
Look at:
And if you don't know these numbers, it's time to figure them out.
Because you can't optimize what you can't measure, and if you're measuring the wrong things, marketing will always seem ineffective.
Suppose you realize you've been treating marketing as an expense to minimize instead of building a system to optimize and grow. In that case, it's time to have a different kind of conversation about your marketing.
If you consistently invest in customer acquisition month after month and understand your Customer Lifetime Value, Customer Acquisition Cost, and payback period, you're looking at millions in predictable revenue over the year.
But most companies never get there because they quit too early. They kill campaigns that are actually working. They treat marketing as an expense instead of an investment.
Don't be like most companies.
A: First, define "underperforming." If you're only looking at cash collected versus ad spend in a single month, you're measuring the wrong thing. Look at customer acquisition cost versus lifetime value. If your Customer Acquisition Cost is reasonable relative to your Customer Lifetime Value, the campaign might be working flawlessly; you need to give it time to see the whole picture.
A: It depends on your industry and business model, but generally, you want your Customer Lifetime Value to be at least 3x your Customer Acquisition Cost. In this client's case, we're at roughly 9.4x ($18,200 Customer Lifetime Value vs. $1,938 Customer Acquisition Cost), which is exceptional. The key is knowing YOUR numbers and optimizing from there.
A: Take your customer acquisition cost and divide it by your average monthly revenue per customer. If it costs you $2,000 to acquire a customer and they generate $500/month in revenue, your payback period is 4 months. This tells you how long it will take to break even on that customer.
A: This is actually a common issue. Marketing can bring you perfectly qualified leads, but if your sales process isn't adapted to the modern buyer's journey, or if your delivery doesn't match what was promised, you'll see a high drop-off rate. Sometimes the marketing is working, but your sales and delivery need to evolve.