So You Have a Marketing Budget, Now What?
So many small- to mid-sized companies don’t plan for marketing at all never mind follow any general rule of thumb in allocating resources in that direction. You are faced with an overwhelming task… where do you spend those dollars most effectively? How can you be sure you do not “blow” the budget on random acts of marketing that don’t show a return on investment? Well, to borrow one of Stephen Covey’s 7 habits of highly successful people;
“Begin With the End in Mind”
What is it that you want to accomplish, what are your goals? Clearly defining your goals and what you want to see happen should be your jumping off point. All marketing plans should be rooted in clearly defined business goals. And setting clearly defined business goals takes a good deal of hard work and homework!
Traditionally marketing goals are around attracting new business and uncovering leads. This in and of itself is not a goal. Making sure the goal is SMART (specific, measurable, actionable, realistic and timely) is critical.
Here’s an example.
A mid-sized professional services firm has about 200 clients that pay an average annual retainer of $8000 bringing in revenue of $1,600,000. If this company follows the general rule of spending 10% of annual revenue on marketing, their budget should be $160,000 – Yes that’s the rule of thumb…I know, you are choking right now. Bear with me…
After reviewing capacity, they believe they can bring on an additional 60 clients without having to hire additional staff. So they set a sales goal to close 60 new accounts over the next 2 years, and if their pricing remains the same will produce $480,000 in added revenue.
Knowing that their sales cycle is about 30 days and that historically they close 8 out of 10 qualified leads, they can begin to drill down their goal and create a plan. They basically need to see approximately 80 qualified leads to close 60 new accounts. Given their 30 day sales cycle, they would need to have 6-7 qualified prospect meetings per month for the next 11 months. Gut check: make sure this is realistic.
If they use the general rule of thumb and invest the 10% on marketing to help reach this goal, they would be spending $160,000 to make $480,000. Not too bad.
You get the picture. The goals are set, now its time to create the plan to attract those prospects and book those meetings, but how? Do you use social media? Send postcard mailings? Join a new networking group? Advertise on the radio? Use Pay Per Click? Is your head spinning? It should be.
Stop Thinking About the Marketing Options
Here’s the key component. Get to know your buyer, not the boring, off the cuff, definition of your target market or ideal client but a very deep understanding of what triggers them to make a purchase and the way they make decisions. Invest time and resources to identify your buyer persona(s) and uncover such things as:
- What happens in your buyer’s world to trigger their need to purchase your service or product?
- What results are they looking for when making this purchase?
- What would make a buyer chose to purchase the same product or service from someone else and not you?
- How your buyer makes his/her final decision and what criteria do they use to compare you to your competition?
- What resources or people do your buyer turn to for assistance in evaluating and decision-making?
Armed with deep insights about your buyers, you can now investigate the most appropriate ways to attract them. You now have the data that can help determine your marketing plan. Take the time to investigate and educate yourself on the options and vet the most appropriate strategy to help reach your goals. Marketing should be a line item and marketing should drive revenue. To learn more about buyer personas, how they can benefit your company, and how you can start developing your own buyer persona, take a look at our Buyer Persona Guide.