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What Do Compound Interest & Marketing Have In Common?

As it turns out, a lot more than you might think ...

· Digital Marketing
Albert Einstein is rumoured to have said that “compound interest is the 8th wonder of the world.”

Although there is (as far as I can gather) no real evidence to support him having made this statement, the meaning behind it remains totally valid.

And who doesn't love a good fake quote anyway?

Most of us will be familiar with the concept of compound interest.
Your savings or investments start off growing at a small pace, and then that pace increases over time.

It looks a bit like this:

Compound interest is the fundamental secret behind the wealth of famous investors like Warren Buffet.

"My wealth has come from a combination of living in America, some lucky genes, and compound interest." – Warren Buffett

But what has compound interest got to do with marketing?
It is my belief that successful marketing exhibits many of the same characteristics as compound interest.
Most importantly, when you market and promote your business, things tend to start off slowly.
Let’s use content marketing as an example.
I’m a big believer in the approach that many businesses can see the best results in the long run by taking the following approach:
1. Understand the problems your target customers have, and the questions they are asking; know the pain they are in.
2. Understand how your product/service solves said problems, answers said questions, and relives said pain.
3. Educate your target customers on potential ways to solve their problems - answer their questions for them. Get this educational content in front of them on the channels they like to use (e.g. social media, web content, emails).
4. Build trust with them so that when they are ready to buy, they come to you directly. Even if you do outreach to them and do some “old-fashioned” selling, they can see your commitment to solving their problems and they will be more receptive.
At the heart of this approach is creating quality, informative content (articles, videos, eBooks, podcasts etc) that answer their questions and solve their problems.
But content marketing takes time and effort to start generating a return, just like compound interest takes time to start growing your money for you.
Unless you have a large, pre-existing audience that you can leverage, you’ll need to start building an audience largely from scratch.
This means that for a while (and the exact amount of time will depend on your output, the quality of your content, the success of your promotion, the competitiveness of your market etc) you may need to commit to putting in effort without seeing much in the way of results.

However, over time your marketing efforts should compound, resulting in accelerating gains in terms of brand visibility, web traffic, enquires and sales. This is just the same as with compound interest. In the early days, the compounding effect of your savings/investment is small - but it scales up over time!

Here's an example from one of my websites:

One other thing to note is that paid marketing doesn’t always have an immediate, direct response.

Depending on your customer’s needs/wants and what you are selling, there’s no guarantee that setting up a strong Facebook ad campaign or taking out radio advertising will immediately result in a deluge of new enquires and sales - you will probably see faster results than you would from content marketing, but there is still an element of needing to commit to grow results as effectively as you can.

The businesses I have and continue to work with that are successful with this approach all have one thing in common - they understand that commitment and diligence is required to see results with marketing.

This is just as a good investor understands that a long-term mindset is essential to success through compound interest.

If you’d like to see how your business can benefit and grow with “compound interest marketing”, then send me an email on info@samfrost.co.nz or call me on +642102781721 to book a no-obligation strategy call. You’ll walk away understanding exactly how your business can grow with effective marketing in 2020 and beyond.

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