Every successful company must find a way to sell their services or products. Often, in relationship-based businesses, companies are selling themselves. Companies that don’t have a solid marketing plan find the money they spend on their marketing efforts to be wasted. Here are six keys to building an effective marketing budget.
Start with a Plan
The biggest part of every marketing plan is to know the audience and where they get information. Once this is understood, business owners can focus on reaching their audience. Every good plan must include tactics for reaching clients, outline the business’s position in the marketplace and convey how the company differentiates itself from the competition.
“Sometimes businesses are using a shotgun approach to marketing. They spend money without thought and focus on who they are reaching and why,” says Ashley Cooke of Red Cape Design, a Charlotte area marketing firm. “If you’re going to invest in marketing, your approach should be thoughtful and intentional.” Not every company needs a social media campaign, the latest gizmos on their website, or a vehicle wrapped with their logo. Identify what drives your customers or clients and target the channel(s) best suited to reaching them
Know the Costs
A business owner needs to know their operational costs. Does it make sense to handle marketing internally, or should an agency be used? Does the internal team have the bandwidth to do the work? Often the costs of paying existing employees to handle the marketing duties don’t provide costs savings over contracting those duties to an outside source. Companies must also evaluate the cost of doing nothing. Taking a hit in market share and lost revenue due to lack of growth can make spending extra funds on marketing justifiable.
What Are the Company’s Goals?
Figure out the short-, medium- and long-range business objectives and how the business should grow. Then figure out what percentage of revenue can be budgeted for marketing. Don’t make the mistake of spending any left over funds on marketing – rather allocate a percentage of the company’s revenues to be spent on the tactics outlined in the marketing plan. Most small businesses spend between 6-9 percent of their revenue on marketing and sales.
See It as an Investment
Some companies that are reluctant to spend money on marketing are looking at it incorrectly. View the money being spent as an investment in the company with a goal of growing. If marketing is seen as an expense, it’s easy to adjust the budget without considering the organization’s goals. Think of the funds being spent as being applied to the business’s long-term growth, which will lead to a return down the road. While immediate results may not be seen right away, the seeds planted today will pay off.
Measure the Results
Make sure to measure the return on the organization’s marketing investment. Whether it’s advertising on social media, a website investment or Google advertising, have a plan that includes evaluating the traffic and leads that spending generates. Seeing immediate results allows companies to evaluate the potential impact of their long-term objectives. Many business owners evaluate their marketing plan twice a year, once when preparing the next year’s budget and again mid-year to update their forecasts.
Online advertising channels all come equipped with the ability to measure a business’s reach. As technology becomes more embedded in communication, this form of marketing has become more affordable and more measurable. Understanding these trends and how to use them are vital to any marketing effort.
Just Do It
Remember the old Nike campaign? Starting somewhere and running a marathon begins with getting off the couch. If a business owner hasn’t put any effort into marketing before, then they should test the waters. Most companies understand that marketing is important, but they just haven’t taken the step to develop or implement strategies. Simply put, start somewhere. Start small; create a reasonable plan and then act. As the company grows, slowly increase the business’s marketing efforts. Sometimes, the price of inaction is an expense an organization just can’t afford.
Need help with building a marketing budget for your organization? Contact the Lucrum team for assistance at 980.999.2100. We look forward to working with you.