The power of compound interest is great in theory, but… why do so few people use it to their advantage?
Is it because we always tend to be looking for the quick fix, the big windfall, the silver bullet? Or is it just because we are all too lazy and or impatient to do the little things that it takes to create the compounding effect? I've read a book called The Slight Edge. In this book they talk about how the small items are easy to do, but they also are just as easy to not do. I think this is the case for both money, marketing and sales. People struggle everyday with the small things and so we miss big wins. Because we do not commit to getting the ongoing small things done every day, every week, every month, every year we do not become the millionaire or a marketing thought leader or the sales rainmaker.
I am currently teaching Financial Peace University (a 9 week course) to a class of 20 people to help people get thier finances in order. The funny thing is in the first lesson one of the big things reviewed is the chart below. Let me show how this chart works. On the left the chart shows the Age of the two boys in this example. Ben invests $2K from age 19 to age 26 and not a penny more.
Then you will see Arthur saw that his brother was doing pretty well and he thought he had better start saving for retirement as well. He also invested $2K a year, but did it for 38 years (age 27 to 65). Ben invested $16K and the compounding interest created nearly $2.3 million dollars by age 65. Arthur on the other hand invested $76K and ended with $1.5 million dollars. Wow! You see Ben's investing habits grew the compounding interest to not only $800K more, but cost $60K less to do. So here's my money advice start investing and do it now and do it consistently.
Ok, so how does this tie into marketing? Well honestly it is not only marketing, but branding as well. In order to build a brand, you need to consistently market. That means doing something every week, every month, every year… forever! This is why it is so important to find a cost effective way to market. We would recommend blogging as a low cost solution. Let me give you an example: I have a client that I worked for doing inbound marketing. We redesigned their website, built it on a content management system (hubspot), set up social media business profiles and started blogging twice a week for 9 months.
Notice this client had less than 500 visits a month to their previous web site. In the first month we were hitting around 800 visits, month 4 we crossed the 1000 visit mark. So in four months we doubled the clients traffic. We then had a spike up to 1700 visits in month 6. Sadly at this time the writer and client started slowing down their 8 articles a month pace and dropped down to 4 articles a month for two months or so. As you can see this created a drop in traffic growth because we cut articles in half. Then when we started gearing back up around month 8 it took a few months to get back into growth mode. By the end of the first year we had doubled the site traffic from under 500 visits to 1000 visits per month.
So how does this tie in with compound interest? Ok in August of last year we stopped doing anything for the client (on their website) and the momentum we built kept going. As a matter of fact two months after we stopped blogging the traffic went from 1200 visits to over 1500 visits per month. Then, last month, it went from 1500 to nearly 1800. The point here is this. This site is not being touched, advertised or promoted. It is however building on compound interest off of the work done last year. Now, unlike the money version of compound interest, the marketing version will eventually peter out if you stop marketing all together.
How is this affected by search engines? Well, let's take a look at their organic web stats. Look at that consistent growth at the beginning of the journey. Then see where things dropped off, again due to lack of articles at the regular pace durring the mid-journey. Then see how things started picking up again and continued to grow as the search engines started working the site and it started being ranked. I do not recommend stopping blogging, but this company did. Notice it continued to gain more search engine traffic, even after the blogging stopped for several months. That is the power of the compounding effect of regular weekly content.
If you commit to writing content every week, you to will start to build a compounding powerhouse that will continue to build and bring you more and more traffic. You must however commit to content development for the long haul and it is best to commit to 2 articles a week for a minimum of 6 to 10 months to really see amazing things start to happen. I also have a small new site that had roughly 2500 visits a month. As a test, we wrote one and sometimes two articles every day for 31 days. This site traffic went from 2500 to 4500 in one month. So you can see the daily articles started compounding and nearly doubled the traffic in one month. Wow! That is pretty powerful, right?
Now back to the point. If you want to grow your traffic start creating content several times a week. This will set you apart from your competitors and just like in money… the compound interest of consistent blogging will make you a millionaire! Once you start hitting a critical mass of content on your site, your stats will start to curve up like a hockey stick (see image below). Now, that is the type growth we should be shooting for. Ok, so the question I will ask you is this… What habits are you going to start today and continue for the rest of your life to build the wealth/company of your dreams? Monthly investments? Weekly blogging? Daily prospecting? Or something else?
It doesn't matter which habit you pick up if it is one that will help you reach whatever goal you have. So if you want wealth, set 10% of all your income aside for investments every month. Obviously if you're 19 you will be a multi-millionaire by retirement. If your goal is business growth do the daily prospecting and if it is lead generation or increased traffic, start blogging and creating landing pages. Whatever you do… know that it is easy to do, but it is also easy not to do. This is what sets the successful apart from the unsuccessful; daily, weekly, monthly and annual habits. So what are you waiting for? Get started with something today! Good luck!
(Source: HubSpot's growth curve as of October 2010.)