The 40 40 20 Rule in Marketing

Terence (0:00 – 4:10)
Today, I’d like to talk about the 40-40-20 rule in marketing that helped us to get $2 leads for a webinar for clients. Welcome to this episode of Founders Go Naked. And in this episode, I’m excited to share with you how we managed to get super cheap leads at a decent price.

And that is by applying the 40-40-20 rule. So what is this 40-40-20 rule in marketing? So the 40-40-20 rule was not invented by me, even though I would like to lay claim to it.

The truth is it was invented by traditional direct response marketers back in the day when people were still writing long sales letters, licking stamps, and pasting them on envelopes and sending them out. So the 40-40-20 rule, the first 40 stands for the list. So basically, it’s the people that you are targeting with your marketing.

So that actually is super important because for traditional marketers in the direct marketing space, it was absolutely critical that they had the right list to target. Because if you send out an offer to the wrong list, basically, you’re not gonna get anybody to respond. For example, if you were to send out a protein powder made of beef, for example, to a vegetarian list, chances of you getting any sales is literally zero.

So that is why the list is so important, and there are very many ways to manage the list. I won’t go into all that, but let’s just say understanding your target audience is super important, and that is the first step that helped us to achieve this great result for this client. So what does the other 40% of the success attribute to?

So the second 40 is about the offer. Now, it is well known that if you have fantastic marketing, but your offer is poor, you would probably go bankrupt pretty fast. Conversely, if you have a great offer and poor marketing, you will probably still make money.

So it is so important to cultivate that offer, and in this instance, our client not only had a very well-defined audience, but the offer for the webinar was very enticing. In this case, we had basically the latest scientific research on a particular type of ailment, a particular type of illness, and he was promising to actually be able to help you to control this disease with his particular methodology. So that is the offer, which was a free webinar.

Keep in mind, the second thing is the offer, and the third thing, which to many of you might be surprising, is that 20% of the success, and only 20% of the success, is attributed to the marketing, which is the creatives, the ads, the copywriting, the videos that you create. That only attributes 20% of the success. Now, I wanna basically put a caveat here to all this, because today, I’ll say that the list is super important, but because of Facebook’s and Meta, rather, and Google’s algorithm, right now it is said that the creatives you create in your ad actually enable Meta and Google to target the right people.

So the stuff that you write in your ads and the stuff that you put in your videos, on your images, that is what Facebook uses to determine who to show the ad to. So in that sense, the creative has become more important, more so than the actual physical targeting that you tell Facebook to target, because of all the sophisticated algorithms. I would say that is why getting great copywriter, getting great video editor, getting great video script is so important nowadays to determine the success of your marketing.

There you have it. Basically, that’s the 40-40-20 rule, but where do marketers place 80% of their time in?

Debbie (4:10 – 4:12)
Drinking coffee and watching TikTok?

Terence (4:12 – 7:52)
Yes, that’s true. We do kind of drink coffee and watch a lot of TikTok, but that’s totally for inspiration, Debbie. I mean, why else would we do it, right?

Because we are highly productive people as marketers. All right, so let me give you some tips about the audiences, right? So I just gave you the first tip that actually about audiences, which is to make sure that creative is super duper targeted and is speaking to the right audience.

The second tip I will give you around that is that you need to have a very clearly defined audience, and we talked about this before, so I’m kind of repeating myself here, but it is so important to clearly define your customer avatar. Otherwise, you don’t know who you’re writing to. You’re just writing to anyone with a pulse, and that is not great for marketing, to be honest.

Make sure you have a very clear understanding of your customer avatar. If you do not, spend time to develop your customer avatar. Look at your customer surveys.

What are they saying? Who is responding? Who is buying your stuff?

Get all that information and develop a very clear customer avatar because that will help you to write better ads, create better creatives so that the whole Facebook, YouTube, Google algorithm can target people better. And the other thing is that don’t forget your existing list, right? You have an existing customer list or if you have an existing prospect list, all those people are probably more likely to buy from you in the future, so create lookalike audiences, right?

And out of that lookalike audiences, you can target these people and retarget these people as well, and through that, you can also find out who are the other interests, the other interests in Meta and on Google that are actually more likely to be responding to your offer, to your marketing message, all right? So that’s all about audience and I think if you’re first starting, it is also imperative for you to also start developing a retargeting audience using like video views because all that will also tell Meta, will tell Google as to who are the types of people who are actually interested in your videos, right? In your ads.

So that will also help train Google and Meta to actually target those people, plus you are developing a retargeting audience for the future so that you can retarget these people again, which is a super great way of developing awareness and also branding for yourself and for your business. All right, so let’s talk about the offer then. In this, I wanna bring up Eugene Swartz, one of my marketing heroes, theory about this.

Now, Eugene Swartz talks about five levels of market competition, right? He talks about the five levels of market sophistication, which is really decided by how much competition you have in advertising. So the first level, all you need to do is you just talk about your products, benefits, okay?

So if your competition is very low, right? There’s no one else like doing webinars on your particular topic, for example, all you have to do is talk about the benefits of your webinar and people will sign up. So what then happens when competition starts heating up?

You have more copycats copying your stuff. That’s where you start exaggerating benefits of your product or service or of your webinar, whatever it might be. Start going into more detail.

When I say exaggerate, it doesn’t mean that you hype it up too much, but you go more into the details of the benefits that people can get when they attend your webinar or purchase your product, okay? So that is level two.

Debbie (7:52 – 7:56)
So if I said radical marketing is the best in the world, is that an exaggeration?

Terence (7:57 – 8:25)
Well, when you say that, Debbie, it’s a, that is, yeah, definitely an exaggeration, but it’s something we also aspire to become, to become the best in the world, helping coaches, course creators to market their offerings. So thanks for bringing it up. All right, so level three, when competition heats up even more, what then happens and your exaggeration of your benefits don’t work so well, this is when you introduce a mechanism.

So what is the mechanism?

Debbie (8:25 – 8:33)
So that’s like your blitzvertising system at radical marketing, which helps your team to kick ass. It’s a unique process or secret ingredient that has a name to it.

Terence (8:34 – 10:12)

Yes, Debbie, a blitzvertising process. It’s a process where we can create this whole framework and this whole process where we can lower down ad costs and at the same time, generate the right type of quality leads for webinars or for one-on-one consultations, whatever it might be. We’ve named it blitzvertising and it’s just hype things that sounds cool, right?

Even though in this case, that blitzvertising helps us to differentiate ourselves from the marketplace because other people may not have such a framework, but we have this framework and this process for creating ads that actually work, that has been developed over the past 10 years of running this agency. So that’s why we have this process and we put a name to it and we call it a very cool blitzvertising, which I like very much personally, but who knows, some people might not like it and that’s cool. So for many of the coaches out there, you might have like whatever formula, whatever blueprints, all that stuff, right?

The ultimate entrepreneur blueprints or the property income blueprints or whatever it is, right? Just coming up with stuff. I’m sure you can make some better sounding mechanisms, but not just only that you have that mechanism, you must clearly define how it actually works because otherwise it’s just fluff, right?

So what happens when everybody else also has a mechanism? Then what Eugene Schwartz says here is that you exaggerate the mechanism. This is where once again, you get more specific about what your mechanism can actually do.

Debbie (10:12 – 10:20)
So that’s like saying radical marketing has a system called blitzvertising, which is geared to get you the lowest cost per lead consistently. Is that what you mean?

Terence (10:20 – 12:50)
Correct, Debbie. That is exactly what I mean by having a mechanism that you name it and then you exaggerate it by actually specifying what exactly it does. And in this blitzvertising system, what we do is that we have a lot of ads, right?

That is running concurrently. We’re split testing like mad on the ads, on the pages, on everything. And we’re looking at the stats, looking at the data to tell us what works and what doesn’t.

And we quickly kill off those that don’t and we quickly scale those that do. So that is in a nutshell, our blitzvertising system to get better quality and leads. So that is in essence, our blitzvertising system to get better quality leads at a lower cost.

So what happens then when the marketplace gets even more crowded and your mechanism doesn’t work because everybody exaggerates the mechanism like crazy. So what do you do then? That is where Eugene Schwartz suggests that it’s level five.

It’s less about the product and more about experience, the value of the product, what it stands for and what it stands against. So this is where I guess people and many coaches create movements because that’s when the market becomes so congested, you attract people by creating a movement. So your movement could be against the corporate lines of life job.

Your movement could be against working your whole life for just having a retirement at 65 that’s just barely comfortable. Your movement can be against working, your movement can be against starting a business that takes two years to be profitable. So this is where you kind of half make a stand and say, okay, this is what I stand for and this is what I stand against and you will repel a lot of people, but you will also attract a lot of people.

And that’s how politics work, right? You kind of like repel half the population roughly and you attract half the population. You can’t win them all, right?

So you have to have that stand, you’ve got to make that stand and you have to appeal to the stand. Of course, it needs to appeal to your target audience as well, right? So if you make a stand that’s against your prime target audience, then you’re making a big mistake there obviously.

So you need to get clear on who your target audience is, what are their values and you support those values. You stand for those values so that you can attract more and more of your ideal customers and of course, you need to be genuine about it.

Debbie (12:50 – 13:00)
Oh, I know that’s why people like me pay like 10 times more to buy Chanel handbags, right? Because I like what wearing a Chanel handbag stands for, like being independent and chic.

Terence (13:00 – 13:23)
Yeah, Debbie, that is roughly correct and yeah, I’m sure you’re very independent and very chic. So on that note, thank you all for watching this video. I hope I’ve made the 40-40-20 principle in marketing clear for you all to see and I hope you can implement it in your own business.

So until the next episode, I will see you and be well.