Many businesses really struggle with finding the right marketing budget. Often this is from a lack of upfront planning, where marketing is dealt with in an ad-hoc manner across the year. So, to tackle this let’s look at what you should be investing in your marketing.
A general rule of thumb for allocating your budget – look at your annual revenue, and then attribute 6% to 12% of that figure to marketing.
It can depend on your marketing, your competitors and also your own goals in terms of growth….. But let’s go with 10% as a good, happy medium. If your company is earning $10million in revenue annually, then you should be spending $1million on marketing.
And if you are a startup, or going through a name change and need to build recognition quickly then you may need to invest more, somewhere between 12 and 20%.
The best place to start is to look at all of your new clients/customers from the past year. Where did they come from? Make a list of the top influencing touchpoints and make them a priority in your new budget allocation. You need to make sure you don’t spread yourself too thinly – if you allocate across your high priorities first you can then see what you have left for other activities.
A good rule of thumb is the 70/30 rule. 70% of your marketing budget should be allocated to activities you know generate the results you need. The 30% is where you can have a bit more fun – try new platforms, technologies, approaches. Some might not take off, but it’s how you discover some of your new 70% allocation for future years.
It’s also really important to build on successful campaign ideas or creative. You don’t want to change, simply for the sake of change. Often you can become fatigued by something when you are exposed to it all the time (being IN the business). But you have to remember you are not the target audience, and they most likely haven’t noticed yet (sorry, but it’s true). Taking a successful idea, and improving it further from past learnings is really powerful.
Another consideration is that your potential customers are on a journey – from unaware to ready to purchase – you need to add value throughout those stages and not be weighted too heavily in one area.
Ensuring you take everything into account means no unexpected surprises as the year progresses.
Apart from the day to day marketing, from time to time you will need to invest in larger bodies of work such as a rebrand, or a website redesign. Ideally these investments are viewed as assets and can be earmarked for funds outside of the marketing budget.
Is there any low hanging fruit you could be benefiting from right now? Building a strong brand is a long term activity but often there are small steps that can be taken to create growth with a small cost or investment of time. For example:
If your website is receiving decent amounts of traffic what could you do to increase data capture? Is there something of value you could offer visitors if they sign up?
If you have an ecommerce site are you advertising via Google Shopping Feed? It’s a great way to capture people ready to buy. Do you have a cart abandonment email strategy? One email can have a 10% conversion rate, but three cart abandonment emails can bring in close to 70% more revenue than a single email.
Do you have inactive clients you could make contact with? Send a special offer to?
Are you leveraging your staff? The reach on social networks of your staff is in most cases exponentially bigger than that of your business. Consider how you can engage your staff to help increase the visibility of your brand.
Earmarking your monthly marketing budget, and prioritising the right activities, means you can feel positive about your marketing spend. Rather than costs catching you by surprise and creating resentment you can feel confident, and pro-active, about creating growth for your business.
If you would like some personalised advice about growing your business please contact us.