Planning a Marketing Budget
Marketing can make or break a company, yet it is often overlooked - especially by small businesses that don’t have a lot of money. A marketing budget should be included in every company’s plan, no matter how big or small. The first thing to think about is why you are marketing. Pinning down what you are trying to accomplish will help focus your efforts. Are you a large company that is trying to influence your brand image? Are you a small company that needs to attract new customers? Do you want to increase customer loyalty? Gain referrals from customers?
Second, you need to figure out who you’re directing your message to. Figuring out your specific target market or markets is key to seeing a return on your investment. If you determine that your target market is teenagers, maybe you’ll want to run a commercial on a local Top 40 music station or become a sponsor for a high school sports team. Getting in front of your intended audience is the main goal. Some forms of marketing are better at this than others. But if you don’t reach your target, your marketing will most likely not be very successful.
Next, you should think about what you want your prospective customers to do. Your main goal is probably a purchase of your goods or services. But what about the people who don’t buy? Is there some way to still convert them? Maybe they can sign up for your newsletter or subscribe to your blog. Or you could give out something for free like a button or sticker. At least your brand or marketing message will keep spreading with it.
Once you have thought about all of the above points it is time to start planning your budget. Take into account what you will need to do to reach your prospective customers and how much those avenues cost. Normally a company should set aside 8-12% of net sales for marketing. This can vary greatly depending on how established a company is, how large the company is, and what they are trying to accomplish. Earlier this week James wrote a post about the cost of different marketing mediums and the value of SEO. Often times SEO is overlooked by businesses because it is not a traditional approach, but it can have a big impact and be very cost effective. Obviously it is not for everyone, but it is worth considering.
It is also important to consider when you need to implement your marketing strategy. For a company who has a certain busy season, it may be important to focus most of the budget on the months leading up to that season in order to gain as many sales as possible. For another company that doesn’t have a busy season it’s important to avoid “feast or famine.” Keeping the marketing consistent will ensure you never have a “famine.” Many businesses will have this problem if they forget to keep marketing when they are very busy or successful.
Finally, don’t forget to track your ROI. It is often easy for web-based businesses to track marketing success because of analytics programs. But for other businesses you can do things like ask customers how they heard of you, implement separate coupon codes for different sales, set up multiple 1-800 numbers, etc. Use this data to track which marketing strategies work best and revise your plans, or reallocate funds, as you go along. There’s no single right answer, but if you create a strategy, a budget, and track your success, you should start to see greater returns.
