Performance Marketing: A Step-by-Step Strategy

I see this all the time. Someone's new to performance marketing, they've got a budget, and they're ready to 'get customers'. But they don't have a strategy, so they end up chucking money at vague audiences on Facebook, getting a few clicks that go nowhere, and deciding "paid ads don't work". The problem isn't the ads; it's the lack of a proper strategy. It's a common trap, but one you can avoid. A solid performance marketing plan isn't about complicated funnels or a dozen different platforms; it's about getting a few foundational things right from the very beginning. If you're just starting out and need a bit of a roadmap, this guide will walk you through building your first performance marketing strategy from the ground up.

So, your ICP is a nightmare, not a demographic?

Right, let's get one thing straight. The first mistake everyone makes is defining their Ideal Customer Profile (ICP) with useless demographic data. "Companies in the finance sector with 50-200 employees in London" or "women aged 25-34 who like yoga" tells you absolutely nothing of value. It's a lazy approach that leads to generic, ineffective ads that speak to precisely no one.

You have to stop thinking about who your customer *is* and start thinking about what problem they have. A deep, urgent, expensive, career-threatening nightmare of a problem. Your job isn't to sell a product; it's to sell a solution to that nightmare.

Let me give you a couple of real-world examples. We worked with a B2B SaaS client selling a workflow tool for dev teams. Their old ICP was "Heads of Engineering at tech companies." Useless. We redefined it. Their new ICP was a Head of Engineering who is terrified of her best, most expensive developers quitting out of sheer frustration with a broken, inefficient workflow. She lies awake at night worrying about project deadlines slipping and talent walking out the door. See the difference? We're not targeting a job title; we're targeting a state of professional panic.

Another example: a legal tech SaaS. They sold 'document management software'. Boring. Their nightmare ICP? A partner at a law firm who just had a near-miss on a critical filing deadline. One that could have exposed the entire firm to a multi-million-pound malpractice suit. He's not looking for 'document management'; he's desperately searching for a way to prevent that heart-stopping moment from ever happening again.

Your ICP isn't a person; it's a problem state. Once you've figured out that specific nightmare, everything else becomes easier. You can find where these people hang out online. What podcasts do they listen to on their commute from Surrey into the City? Probably something like 'Acquired'. What industry newsletters do they actually open and read? Maybe 'Stratechery'. Are they in niche Facebook groups like 'SaaS Growth Hacks'? Who do they follow on Twitter? This isn't just data; it's the blueprint for your entire targeting strategy. You have to do this work first, or you have no business spending a single pound on ads.

How do you actually find this "nightmare"?

This isn't something you can just guess. You need to become an obsessive detective. Here's a simple process to get you started. It's not glamorous, but it works.

So how much can you afford to pay for a customer?

Once you know who you're talking to, the next question isn't "how low can my cost per lead go?" but rather "how high a CPL can I afford to acquire a truly great customer?" This is a fundamental shift in thinking that separates amateurs from pros. The answer lies in a metric called Lifetime Value (LTV). Most people ignore this, which is why they panic when their lead costs aren't pennies. Calculating your LTV is the single most empowering thing you can do for your marketing.

You'll need three numbers:

Average Revenue Per Account (ARPA): How much do you make from a typical customer each month? Let's say it's £500.
Gross Margin %: What's your profit margin on that revenue after accounting for cost of goods sold? Let's say it's 80%.
Monthly Churn Rate: What percentage of your customers do you lose each month? Let's say it's 4%.

The calculation is simple:

LTV = (ARPA * Gross Margin %) / Monthly Churn Rate
LTV = (£500 * 0.80) / 0.04
LTV = £400 / 0.04 = £10,000

In this scenario, each customer you acquire is worth £10,000 in gross margin to your business over their lifetime. This is your truth. This number sets you free. Now, you can work backwards. A healthy, sustainable business model often aims for a 3:1 LTV to Customer Acquisition Cost (CAC) ratio. This means you can afford to spend up to £3,333 to acquire a single £10,000 customer.

Let's take it a step further. If your sales team, or your funnel, converts 1 in 10 qualified leads into a customer, you can afford to pay up to £333 for a single qualified lead. Suddenly that £250 lead from a LinkedIn campaign targeting CTOs doesn't seem so expensive, does it? It looks like an absolute bargain. This is the maths that unlocks aggressive, intelligent growth. If you don't know your numbers, you're just gambling. Have a play with the calculator below to see what your LTV might be.

A message they can't ignore, because your offer is probably the problem

Now you know who you're talking to and what they're worth. The next piece of the puzzle is what you're actually saying to them. This is where your offer comes in, and frankly, it's the number one reason I see campaigns fail. A bad offer to the right person will always fail. A great offer to the right person is unstoppable.

An offer isn't just your product or service. It's the entire package: the messaging, the value proposition, and the call to action. It needs to speak directly to the nightmare you've identified.

For a high-touch service business, like a fractional CFO, you should be using a Problem-Agitate-Solve framework. You don't sell "fractional CFO services"; you sell a good night's sleep. Your ad copy should sound something like this: "Are your cash flow projections just a shot in the dark? Are you one bad month away from a payroll crisis while your competitors are confidently raising their next round? Get expert financial strategy for a fraction of a full-time hire. We build dashboards that turn uncertainty into predictable growth." We identify the problem, we twist the knife a little by agitating it, and then we present our service as the clear solution.

For a B2B SaaS product, you use the Before-After-Bridge. You don't sell a "FinOps platform"; you sell the feeling of relief. Imagine this ad: "Your AWS bill just arrived. It’s 30% higher than last month, and your engineers have no idea why. Another fire to put out. (That's the 'Before' state). Now, imagine opening your cloud bill and smiling. You see where every single pound is going, and waste is automatically eliminated. (That's the 'After' state). Our platform is the bridge that gets you there. Start a free trial and find your first £1,000 in savings today." It's a powerful narrative that focuses on transformation.

Even for high-ticket physical products, like scientific equipment, you have to attack the feature-obsession. Nobody cares about your specs on their own. They care about the *consequence* of those specs. Don't just say, "Our new mass spectrometer has a 0.001% margin of error." Add the "So what?". "Our new mass spectrometer has a 0.001% margin of error. So what? So your lab can publish results with unshakeable confidence, securing more funding and attracting the top talent that other university labs can only dream of." You're not selling a machine; you're selling scientific prestige and career advancement.

A weak offer is often the root cause of many advertising failures. For a more detailed breakdown of this and other common issues, you might want to look into the real reasons why paid ads fail and how to fix them.

For god's sake, delete the "Request a Demo" button

This brings us to the most common failure point in all of B2B advertising: the offer itself, specifically the Call to Action (CTA). The "Request a Demo" button is quite possibly the most arrogant, high-friction CTA ever conceived. It presumes that your prospect, a busy, important decision-maker, has nothing better to do with their time than book a slot in their calendar to be sold to. It's a low-value proposition that instantly positions you as just another commodity vendor begging for their attention.

Your offer’s only job is to deliver a moment of undeniable value—an "aha!" moment that makes the prospect sell *themselves* on your solution. You need to give them something valuable for free to earn their trust and attention.

If you're a SaaS founder, this is your unfair advantage. The gold standard is a free trial (with no credit card details required) or a generous freemium plan. Let them actually use the product. Let them experience the transformation from the 'Before' state to the 'After' state. When the product itself proves its value, the sale becomes a formality. You're not generating Marketing Qualified Leads (MQLs) for a sales team to chase; you are creating Product Qualified Leads (PQLs) who are already convinced.

If you're not a SaaS company, you're not exempt from this rule. You have to bottle your expertise into a tool, a piece of content, or an asset that provides instant value. For a marketing agency, this could be a free, automated website audit that shows them their top 3 keyword opportunities. For a data analytics platform, it could be a free 'Data Health Check' that flags the biggest issues in their database. For us, as a B2B advertising consultancy, it's a 20-minute strategy session where we audit their failing ad campaigns completely free of charge. You must solve a small, real problem for free to earn the right to solve their whole problem for money. That's the deal.

Choosing your battleground: Google, Meta, or LinkedIn?

Alright, you know who you're targeting, what they're worth, and you have an irresistible offer. Now, where do you actually run the ads? The platform you choose is completly dependent on your customer's intent. Are they actively looking for a solution right now, or do they not even know a solution like yours exists?

Google Ads is for active searchers. This is for when the 'nightmare' is so bad that your customer is actively typing solutions into a search bar. They have high intent. For a local service business, like an electrician in Manchester, you'd target keywords like "emergency electrician Manchester" or "electrical repair service near me". For a B2B software company, you'd target "best accounting software for small business" or "hubspot alternative". You're capturing demand that already exists. It's often more expensive per click, but the leads are usually much higher quality because they're pre-qualified by their own search query.

Meta (Facebook & Instagram) is for passive audiences. This is for when your customer has the problem, but they aren't actively searching for a solution. You're creating demand. Here, your 'nightmare ICP' work is everything. You're not targeting keywords; you're targeting interests, behaviours, and lookalike audiences that align with the problem state. For our legal tech SaaS, we might target people who follow 'The Law Society' page, have 'Partner' as a job title, and are in a lookalike audience of our existing customers. The ad creative has to do all the heavy lifting here – it needs to interrupt their scrolling, call out their pain, and present your high-value offer.

LinkedIn Ads is for surgical B2B targeting. If you need to reach a Head of IT at FTSE 100 companies in the UK, LinkedIn is your only real option. It's expensive, there's no way around it. But you're paying for unparalleled targeting precision. You can target by company name, industry, company size, job title, seniority, and more. This is where you run your ads for those high-value B2B leads when you know exactly who the decision-maker is. I remember one campaign we ran for a B2B software client on LinkedIn that brought in leads from decision-makers at a cost of just $22 each, which was a fantastic result given their LTV.

Deciding on the right mix is a big part of the initial strategy. To help you weigh the options, we've put together a data-driven comparison of Google, Meta, and LinkedIn Ads specifically for UK businesses.

The "Awareness Campaign" trap: how to pay to find non-customers

Here is a piece of advice that might sound contrarian, but it will save you a fortune. Never, ever run a "Brand Awareness" or "Reach" campaign objective on platforms like Meta, especialy when you're starting out. It's a trap.

When you set your campaign objective to "Reach," you are giving the algorithm a very specific, and very literal, command: "Find me the largest number of people inside my target audience for the lowest possible price." The algorithm, being the ruthlessly efficient machine it is, does exactly what you asked. It goes out and finds all the people in your audience who are cheap to show ads to. Why are they cheap? Because they're not in demand. They're not in demand because they never click on ads, they never engage, and they absolutely, positively never pull out a credit card to buy something.

You are actively paying the world's most powerful advertising machine to find you the worst possible segment of your audience. It's financial self-sabotage.

The best form of brand awareness for a startup or small business is a competitor's customer switching to your product and raving about it online. That only happens through conversion. Awareness is a byproduct of having a great product that solves a real problem, not a prerequisite for making a sale. Always start with a conversion objective: sales, leads, signups, appointments. Let the algorithm find you people who actually take action. Many find they get traffic but it doesn't convert, a problem that often stems from a mismatch between your ad and your landing page.

Finally, a simple structure and budget to start with

Okay, let's put it all together. You don't need a complex 10-stage funnel. For 90% of businesses starting out, a simple two-part structure is all you need.

Campaign 1: Prospecting (or Top of Funnel - ToFu)
This is your campaign for cold audiences. The people who have never heard of you before. -> Objective: Conversions (Leads, Purchases, etc.)
-> Audience: Your 'nightmare ICP' audiences. On Meta, this will be your interest and lookalike audiences. On Google, your keywords.
-> Job: To identify potential customers and drive them to your website to take up your high-value offer.

Campaign 2: Retargeting (or Middle/Bottom of Funnel - MoFu/BoFu)
This is your campaign for warm audiences. People who have visited your website but haven't converted yet.
-> Objective: Conversions (same as above)
-> Audience: Website visitors from the last 30-90 days (excluding those who have already converted).
-> Job: To bring people back, remind them of the value you offer, and get them over the finish line. This is often where most of your conversions will happen, especialy for higher-ticket items.

For a complete, step-by-step walkthrough, check out our guide on setting up your very first paid ads campaign.

As for budget, how much should you spend? I usually recommend a starting ad spend of at least £1,000-£2,000 per month. This gives you enough data to make informed decisions. A good rule of thumb is to allocate 70-80% of your budget to the prospecting campaign and 20-30% to retargeting. And if you're a bootstrapper, there are definately ways to make a smaller budget work; we've written a low-budget growth playbook for bootstrapped startups that covers this in detail.

And what should you measure? Forget vanity metrics like clicks and impressions. Focus on the ones that actually impact your bank account.

A Final Summary and Why You Might Need Help

Building your first performance marketing strategy can feel overwhelming, but it boils down to a logical sequence of steps. If you focus on getting these fundamentals right, you'll be miles ahead of the competition who are just boosting posts and hoping for the best.

This is the main advice I have for you:

Executing this strategy takes time, expertise, and constant testing. You have to analyse the data, kill the ads that aren't working, and double down on the winners. The process I've laid out is simple in theory, but the implementation can be tricky. It's very easy to burn through a lot of cash making simple mistakes.

This is often where working with an expert can make a huge difference. An experienced paid ads consultant has already made the expensive mistakes on someone else's dime. We can help you shortcut the learning curve, avoid common pitfalls, and get to profitability much faster. We've seen what works across dozens of different industries and can apply those learnings to your specific situation.

If you've read through this guide and feel like you have a better grasp on the strategy but would like a second pair of eyes on your plan, we offer a completely free, no-obligation strategy consultation. We'll take a look at your business, your goals, and help you map out the first steps of a profitable paid advertising campaign.