The Santa Barbara Web Design and Marketing Blog

When It Comes to Winning Customers, The One Who Can Spend the Most Wins: Why Funnel Economics Are the Key to Outspending—and Outsmarting—Your Competition

There’s a well-known quote in the world of direct response marketing: “The person who can spend the most to acquire a customer, wins.” This quote, most famously attributed to marketing legend Dan Kennedy, isn’t just a catchy soundbite. It represents a crucial strategic truth that distinguishes thriving, dominant businesses from their struggling competitors. If you’re a Santa Barbara business owner or entrepreneur seeking not just to survive but to scale in today’s challenging digital marketplace, understanding this single concept—spending more profitably to acquire customers using the power of sales funnels—can utterly transform your growth trajectory.

In this in-depth post, we’ll break down why this principle works, how practical sales and marketing funnels are engineered to allow you to outspend your rivals, and what steps you can take to methodically implement these strategies for your own small business—whether you’re a coach, consultant, e-commerce entrepreneur, local service provider, or creator.

The Myth of the Cheapest Customer Acquisition

Let’s first tackle a pervasive myth in online marketing: that the person who acquires customers most cheaply is the winner. It seems to make sense at a glance. Who wouldn’t want to pay less than their competitors for every lead or sale?

But here’s the uncomfortable truth: “cheapest” almost always means “least effective.” When you focus only on minimizing ad spend or cutting costs, you’re often left with the lowest quality leads, the smallest audiences, and the least scalable strategies. The real winners in every field are those who can afford to pay more for each customer and still turn a profit. That’s not about being wasteful—on the contrary, it’s the ultimate sign that your business model is robust, your offer is compelling, and your customer relationships are deep.

Dan Kennedy’s Rule in a Modern Context

Dan Kennedy didn’t invent customer acquisition or funnels, but his principle is more relevant now than ever—especially in the era of social media, AI-driven ads, and fiercely competitive digital marketing.

To paraphrase Kennedy: If you have a properly constructed customer journey—a funnel—that maximizes the value of each relationship over time, you can outbid your direct competitors for traffic, command higher visibility, invest more in testing campaigns, and ultimately dominate your market.

But how does this work in practice? Why does building a value ladder or sales funnel allow you to “spend the most” and still thrive, while your competitors scramble to break even?

Let’s go deeper.

Funnels: The Ladder of Offers

At its core, a marketing “funnel” is simply a step-by-step process that moves a potential customer from first contact (awareness or entry) to higher levels of engagement and purchase. Each step in the funnel increases the value and depth of your relationship with the customer, and typically the price or commitment they make.

Here’s a simplified version of how a funnel might work:

1. Entry Offer (Lead Magnet or Low-Ticket Offer):

This could be a valuable free download, a low-cost ebook, a webinar, or a discounted first service. The entry offer isn’t meant to make you rich; it’s designed to get your foot in the door, to start a relationship and gain permission to communicate further.

2. Core Offer:

Once trust and initial interest are established, you introduce your core product or service—something that tangibly solves a main problem for your customer and generates real revenue for your business.

3. Upsells and Cross-Sells:

After an initial purchase, you may offer upgrades (upsells), related add-ons (cross-sells), or bundled products/services that align with the customer’s needs or aspirations. These increase the average transaction size.

4. Follow-Up and Re-engagement:

The journey doesn’t end at the first sale. Through email, retargeting ads, or personalized communication, you continue to nurture the relationship, offer additional solutions, capture repeat business, and generate referrals.

Each step in the funnel, if constructed with care, increases the total lifetime value (LTV) of that customer.

Why Spending More Is a Winning Strategy

Let’s connect the funnel concept to the competitive advantage of spending more. If your competitors are only making $20 per customer (say, through a one-time sale) and can only afford to spend $5 on ads to get that customer, their growth is limited. If you have a funnel that’s well-built—meaning your average customer spends $60 during their relationship with you (even if it’s over several offers)—you can comfortably spend up to $10, $15, or even $30 just to acquire a single new lead or buyer and still turn a healthy profit.

You can:

- Invest in broader, more aggressive ad campaigns

- Outbid the competition for premium keywords or targeted audiences

- Splurge on better creative, landing pages, and follow-up systems

- Test more channels and platforms for growth

- Absorb higher initial advertising costs (knowing you’ll be profitable on the back end)

- Scale up with confidence, knowing that your funnel (not just your front-end offer) sustains your growth

Instead of scraping for the bottom-dollar buyer, you move upstream—engaging the highest-value clients and customers, while your competitors risk running their businesses into the ground chasing ever-cheaper traffic.

The Numbers Behind “Who Can Spend the Most”

Let’s look at some real math to illustrate this point:

- Business A has a $20 product, no upsells or follow-ups, and thus a max customer value of $20. Competition for ads is fierce, so their max cost per customer—after fees, product costs, and overhead—is maybe $5. No more, or they lose money.

- Business B has a $10 entry offer, then a $20 upsell, a $40 one-on-one option, and a $99 membership down the line. Many customers just buy the low-ticket item, but enough buy more that the average customer value becomes $60 over six months.

Now, Business B can pay $10, $20, or even $30 up front for traffic—three to six times more than Business A—and they’ll still be profitable. Who do you think will get the most customers, the best leads, and ultimately control the market? That’s the heart of Kennedy’s maxim.

Building a Funnel That Can Afford to Win

You may be thinking, “That sounds great in theory. But how do I actually build a funnel for my business?” Here’s a step-by-step roadmap—perfect for Santa Barbara entrepreneurs (and beyond!) who want to future-proof their customer acquisition:

1. Map Your Customer Value Journey

Begin by reverse-engineering the path your best customers already take. What gets them in the door: free info? A sampler? An entry-level service? What do they often buy next, and in what order? List every offer, service, and add-on you provide. You might be surprised how many steps there already are, even if informal.

2. Design an Irresistible Entry Point

Your first funnel step should be no-brainer easy—something valuable, low-friction, and quick to deliver. Free guides, mini-courses, $7 offers, or “first visit free” discounts work great. Don’t stress about profit here; you’re investing in relationships.

3. Add Strategic Upsells and Cross-Sells

Once someone buys (or signs up), what’s the logical next step? This could be an add-on service, a larger bundle, a customized upgrade, or priority support. A well-crafted upsell can double your revenue per customer, with minimal extra effort.

4. Build in Ongoing Engagement

Have a game plan not only for immediate follow-up (email sequences, phone check-ins, retargeting ads) but also for long-term nurturing: newsletters, loyalty programs, periodic check-ins, and exclusive member content. The longer you’ve got a customer’s attention, the higher their value and the better you can serve them.

5. Track Lifetime Value (LTV) and Adjust Your Budget

The essential metric isn’t just the value of each initial sale—it’s the total value a customer brings over their relationship with you. Track this meticulously, segmenting by funnel, offer, channel, and customer type. As your LTV increases, so does your “ceiling” for spending on acquisition.

6. Reinvest Aggressively (But Smartly)

Now that you know exactly how much a new customer is worth, don’t be shy about spending up to that amount to get them—especially when scaling your marketing. Monitor results, iterate your funnel steps, and always be testing new entry points and follow-ups.

Avoiding Common Funnel Pitfalls

While the “spend the most” principle is powerful, it only works if your funnel is set up for profitable synchronicity. Here are some traps to avoid:

- Thin or Incomplete Funnels:

If you only have a single product, or no structured path for customers to ascend, you’ll be stuck competing on price and volume (a race to the bottom).

- Neglecting Follow-Up:

Most of your customer value comes post-purchase. Automated emails, retargeting, and even personal touches can triple results versus “one and done” sales.

- Relying on a Single Channel:

Diversify! Use Facebook ads, Google, YouTube, organic social, partnerships, and good old community engagement. Different customers will respond differently to varied entry points.

- Treating All Customers Equally:

Remember, 20% of your clients will typically account for 80% of your revenue. Segment, personalize, and especially nurture your highest-value customers—you’ll be amazed how much more they’ll spend (and refer).

A Real-World Example: The Course Creator

Let’s say you’re a Santa Barbara course creator, educating locals (and clients nationwide) on web design and automation. Your funnel might look like this:

1. Free Lead Magnet: “10 Essential Web Design Hacks for Small Businesses” PDF download.

2. Tripwire Offer: $19 “Quick Fix Web Audit” video assessment for new subscribers.

3. Core Online Course: $97 self-paced program, delivered via video modules.

4. Premium Upsell: $500 live coaching and implementation support.

5. Membership/Subscription: $29/month ongoing mastermind group with regular Q&A and templates.

6. Occasional High-Ticket Event or Mastermind: $2,000 for a yearly in-person work retreat.

With each entry, upsell, and follow up, your average lifetime value per subscriber might rise from $19 to $220 or more. Now, compare what you can afford to spend on ads to get new signups, versus a competitor stuck on the $97 course alone. The difference is day and night.

It’s Not About Burning Money—It’s Building Sustainable Relationships

Allowing yourself to “spend the most” is only possible because you engineer a profitable, long-term customer relationship. It’s not about risky spending or wasteful advertising. On the contrary, it lets you be the most generous, reach the biggest pool of prospects, provide the greatest value, test new methods fearlessly, and sleep well knowing your funnel keeps cash flowing in.

Conclusion: Future-Proof Your Marketing With Smart Funnel Economics

The single biggest lever for winning your market isn’t who has the flashiest ads, cleverest slogan, or the deepest discounts—it’s who can afford to build and maintain the richest customer relationships over time.

If you construct your funnel with a blend of smart upsells, strategic follow-up, and a focus on customer lifetime value, you’ll not only survive in an increasingly competitive digital world; you’ll dominate it. Your competitors will be left scratching their heads, wondering how you can “afford” to be everywhere, offer so much, and keep growing.

Remember Dan Kennedy’s wisdom. But more importantly—act on it. Build those ladders, track your numbers, outspend (and outserve) your competition, and you’ll find yourself at the top of your industry, one happy customer at a time.

And that’s how the person who can spend the most truly wins. Start mapping your funnel today—and watch your marketing, and your business, take off.