It is tempting to skip the marketing and focus on your core business. However, budgeting for marketing is investing in your business for the long term. Deciding what amount to invest is a huge decision and one that needs to be carefully considered. In this blog DMM provides with a starting point for planning your budget for marketing.
Did you plan for marketing?
Your business gets off to a flying start. Your main marketing channels are the people you know, and the people they know. Quickly word of mouth spreads the news about your business, and you are raking in dollars. A few months go by. Business seems to slow, and you wonder why the phones don’t ring. You start thinking about marketing but you aren’t sure where to begin. On top of that, you haven’t planned ahead and put aside a budget for marketing activities. Now you are faced with taking resources from elsewhere to start off your marketing.
Many businesses land in a similar situation. It is worth noting that marketing lead times may be anything from two weeks to six months. It, therefore, makes sense to market your business now to future proof your business in order to avoid slow periods. So how do you decide how to allocate marketing budget, and which amount to allocate?
How to calculate your marketing budget
Marketing with online and offline channels works together to create a complete and timely marketing mix. Offline channels such as television, radio and public relations are historically costly, while some online channels may be less so.
Your marketing included your website, social media, email newsletter, online advertising and offline marketing materials such as sales collateral and newspaper articles. The goal of every marketing channel is to build a client database of loyal customers who will keep returning to your business and who will be ambassadors for your brand in the future. The goal of your advertising should be to lead your prospects to your website, which answers their questions but also captures their information. If they do not become a customer right away, you want to capture their contact details to be able to market to them over time. In this way, you can market to them again and again until they are ready to purchase.
Once you have captured their details, through remarketing and email marketing you can advertise to people who have visited your website. This means you will be in their mind when they come to the purchasing decision. You also want them to follow you on social media for this same reason. This effectively also means the money you initially spent on advertising is optimized with other marketing activities and later converted to a sale. Email and remarketing have the highest ROI, with social media a close second. Thus, it is easy to see why you need to have these channels in place for your business to grow.
It follows that your business model will dictate your marketing spend. It is a universal truth though that email and a great, responsive website definitely are required as part of an effective marketing strategy. Experts can't give you the exact amount that you need to set aside for marketing. It is said that new businesses should spend up to 20% of their gross revenue on marketing, while established businesses should be spending between 6 and 12%. It is thus up to you to make this calculation and come up with the budget.
Where to allocate your marketing budget
Your business model, competition and your target customers will largely decide where your budget is allocated. Where you spend your marketing budget will be entirely driven by the answers to the following ten questions:
- What are your marketing goals?
- Have you developed a strategy and a marketing plan?
- What are your brand guidelines and tone of voice?
- Who will be responsible for marketing actions?
- Where and how are your customers finding their information?
- Are you tracking and capturing your customer information?
- Who are your competitors? What marketing are they doing? Where are they getting their leads from?
- How will you track the success or failure of your marketing efforts?
- How much money will you allocate towards marketing activities? How will you divide this budget between online and offline channels?
- Should you consult a professional marketing company?
Once you have answers to these questions you will have a much clearer picture of how to plan your budget. Some activities will be identified as daily, while others may be weekly or monthly. Planning your marketing budget might be an annual or even quarterly exercise, which might seem like a labour-intensive process. However, it is ultimately true what they say: when you fail to plan, you plan to fail. Once your plan and budget are in place, everything else in marketing will become easier or unnecessary. Once you reach this point, you will start to see the fruits of your labour and enjoy the results.
Need some help with planning your marketing strategy?
