Because financing your marketing strategy is top of your agenda…right? Don’t worry, we’ve been in business long enough to know now that as spending for the year ahead is being allocated, marketing tends to slip down the list of priorities.
As Marketeers, we obviously think this is an inadvisable thing to let happen but we’re business people as well, commercial animals, red in tooth and claw and we know, first hand, the power of effective marketing. Now, more than ever, your marketing strategy is arguably your most important one.
The channels through which we can communicate our brand are more plentiful than ever before and if you’re not using them, you can bet your competitors are. The old industry adage was ‘spend 10% of your revenue on marketing’. It was always privately deemed to be an optimistic, even wishful target, kind of like aiming for your ‘five-a-day’ when really, it’s more likely to be at best two or three. However, at long last, businesses seem to be waking up to the potency of a well-developed, properly funded marketing strategy.
An annual survey carried out of CMOs in the States in 2015 found that for B2B firms, marketing budgets as a percentage of firm revenue fell within the 7-8% range and for B2C firms, it was around 9%. And it seems (like us Marketeers have always said!) that the more you spend, the more you get back. For example, American software company Tableau revealed that, on average, they were spending a whopping 53% of revenue on sales and marketing.
That wasn’t the only whopping figure though, the other was their revenue growth which currently stands at 78% year-on-year. By contrast Manhattan Associates, another software company spends on average 11%, yet still see a year-on-year revenue growth of 19%. These are typical results. When us Marketeers tell you, you need to safeguard your marketing budget, it’s because we already know all this.
So, we’ll assume now that sorting your marketing budget is back in its rightful place at the top of your priority list for the coming financial year. Let’s find out how we can get the budget just right for your business.
Outline your business goals
This is easier if you’ve been in business a while because obviously, you have a frame of reference and have an idea about what is realistic. If you’re new in business this may seem a daunting step but it’s necessary. A year from now where do you want to be? What kind of revenue do you expect to be generating? Perhaps more importantly; what kind of revenue do you want to be generating? Ask yourself these kinds of questions and write them down. Be it on a Word document, in a notebook, or even on the back of a Big Mac wrapper, the important thing is to get a plan and some projections for the year ahead down. It’s surprising how less unnerving it actually is once you start doing this. Once you have clear-ish plan in place and have some idea about what kind of money is going to be coming in you can move to the next step.
Build the Marketing Plan
So, you have your goals - what now? How are you going to achieve them? The more you ask yourself this the clearer it becomes that you need to reach out to your customers, current and prospective alike. You need to do some marketing.
Start by thinking about the demographic of your audience. It’s no good hammering Facebook if most of your customers are 65+, you’re just not going to reach them. So really think about this because if you get it wrong your ROI could put you off marketing for life. Get it right and well, look at Tableau. Once you’ve built up a picture of your audience deciding how to target them becomes easier and you can start collating some ideas and put them into a plan. At this stage, don’t get too bogged down in costings. Enjoy the creative side of this step and once you’ve got something in black and white then you can start number-crunching.
Decide on the Budget
Now you can get your calculator out. It goes without saying that you need to cost up your proposed marketing activities as accurately as you can. Estimate costs for the activities itemised in your plan, if you have carried out a similar activity previously this will act as a guide. If not, then a little research may be required. But with the internet comes a wealth of information at your fingertips, finding out costings is a pretty simple exercise. Example costings you may need to consider include printing, graphic design, website construction and updates, trade shows, business listings, copy writing and entries for awards. Get it all down and total it up but don’t amend the total…yet.
Cross reference your Budget
Before finalising your marketing budget, it is important to cross reference it with your total budget. Is your marketing investment compatible with your wider business budget? Or are you proposing to invest too much/too little? You may need to review your marketing strategy and modify your budget. You may think we’re bound to say this but prioritise your marketing activities to make this task easier, obviously not at the expense of other key areas of the business such as wages and stock but don’t let it start slipping too far down that list.
If you have a prior year budget to use as a template, then that is of great benefit. Which activities generated a positive ROI? Which should be consigned to the wheelie bin outside? If you don’t have this information, then look at what you can realistically afford to invest in marketing and work within these parameters. Remember that even a small budget can achieve great results if invested wisely.
Measure twice, cut once
If you’ve got this far then well done you for building a plan (you may, if you wish, pat yourself on the back). However, building the plan isn’t enough, even following the plan isn’t enough. You need to be meticulously monitoring how each activity is performing. For each scheduled activity, there should be a measure or indicator so that performance can be assessed. Measures might include product sales, website traffic, likes and retweets or newsletter sign ups. Regularly review how your initiatives are performing (quarterly is fine) so that you can identify which are working well and which aren’t and tweak where necessary. It’s a good idea to build in a small buffer into your budget to offer you some flexibility during the year, especially if yours is a new business.
Pick the right company to work with
Chances are that marketing isn’t your strong point and you don’t have the budget to employ someone full-time. This is where you need to bring in the experts. Don’t be seduced by fancy offices with fish-tanks or companies whose websites promise the world but with little evidence of demonstrable results. Thoroughly research who’s out there. When looking at a company find out what they’ve done, who they’ve worked with, what track-record the staff have, what their experience is, what other people say about them. The right marketing company will also offer other services such as general business consultancy or interim management options. It’s a fairly big project putting it all together and seeing it through but never underestimate the power of great marketing, it is one of the few business pursuits that is proven to get results.