How much should I spend on marketing
This is a little bit of a ‘How long is a piece of string’ type of question as there are no rules.
However, your budget should always be a consideration of your gross revenue. As every business is different and has different goals the budget will always be different.
What are your business and marketing plans?
We all have different plans and how we achieve those plans is very different for every business owner. This includes maintaining your current level of business – You can’t just sit back and hope everything stays the same.
Here are some VERY generalised figures and you need to remember that there are MANY variables it is not one size fits all.
- Maintain your current level of business – 5% of revenue
- Grow your business – 7-10% of revenue
- Gain accelerated growth – 15-20% of revenue
What are your variables?
- How much competition is there
- What are you currently doing
- How old is your business
- Are you in a difficult market
- How broad is your reach – local, state, national, international
- What is your competition doing
- What are your goals
- How much can you afford and for how long
- What do we need to do ASAP
- Are there things we can do in-house and what can we outsource
Why do we market our businesses?
Constantly marketing your business means that you are not only increasing awareness but you are moving forward as a business.
Your marketing spend gives your business attention and exposure to drive more sales and the end result should be a profitable business.
Marketing is not an expense it is an investment
Without marketing your business
- You may struggle to get enough sales
- You will work with clients that you don’t want to
- Cash flow struggles
- You look to cut costs everywhere
When you stop marketing your business
- Traffic to your website slows
- Your competitors take up the slack you have created
- Enquiries slow down
- Your cost-cutting can damage your business
Your business goals
Every business and its owner/s have different goals. There are many business owners with the mindset that business is running smoothly, why spend money and make changes!
The simple answer is that you want to ensure that your business is strong so that you safeguard your business for the tough times. All businesses go through good times and bad – how strong is your business!
Maintain your current level of business – You are very happy with where your business is and you would like to maintain this level. 5% of your revenue should be invested.
Example: $200,000 revenue = $10,000 per year or $833 per month
Grow your business – A steady growth that is manageable for you and your business is something you are planning. 7-10% of your revenue should be invested.
Example: $200,000 revenue = $20,000 per year or $1666 per month
Gain accelerated growth – Fast growth for your business and you plan to invest as much as you can for as long as you can to grow your business. 15-20% and potentially more should be invested.
Example: $200,000 revenue = $40,000 per year or $3333 per month
Spending your marketing budget
Remember you are investing in marketing, it is not just an expense and the return is a stronger business. You want your business to be easily found by your ideal clients and not overtaken by your competitors.
The marketing rule of 7 – It is one of the oldest marketing rules and says that it takes an average of 7 interactions, particularly for B2B to arrive at a purchasing decision. What are you doing to ensure your business is being seen?
Of course, there are exceptions to this rule, for example, a low-cost retail product may only take one interaction. Like those social ads for somewhat useless and cheap items.
Average spending percentages by industry
- Finance, Insurance, Banking – 9.2%
- Communications, media – 9%
- Consumer goods – 9.1%
- Consumer services – 18.9%
- Education – 12%
- Energy – 8.3%
- Healthcare – 9%
- Manufacturing – 2.4%
- Mining, Construction – 3%
- Service Consulting – 7.5%
- Retail, Wholesale – 4.4%
- Tech, Software – 9.7%
- Transport – 8.5%
Where to spend your marketing dollar
Are you looking for your business to be in the search results organically when people search online via Google? Your marketing spend should include search engine optimisation (SEO).
Do you want your business to be at the top of Google? Your marketing spend should include Google Ads.
Are you looking to be across social media so you can drive people to your website? Your marketing spend should include social media management and advertising.
While I have mentioned SEO, Google Ads and Social Media there is much more for you to also consider adding to your marketing plans
Add to your marketing plans
Website – Having a great website should go without saying but there are many businesses who still need to get their website up to speed. If you are marketing your business and driving traffic to a website that is not up to what people expect, you will waste your marketing dollars. There are plenty of choices when it comes to website creation. WordPress is the most popular and versatile option however you can also choose Squarespace or WIX for a simple option.
Social Media – If you are going to run paid advertising you need to also have organic posts to your pages. Your pages need to be active and you need to respond when you receive a message or comment on your posts.
Email marketing – Staying in touch with your subscribers, past clients and potential clients with email marketing is still highly relevant. You have a direct link to their inboxes and you can get a great return on your dollar.
Video – For many businesses video is a great way to illustrate a product, share an event and so much more. Make sure it is a consideration within your marketing investment.
Blogging – Creating blogs is the perfect compliment to improve your SEO, provide knowledge to your followers, be entertaining and keep people coming back for more.
Case Studies – Sharing a case study when you can maintain privacy is a wonderful way for people to see what you can offer.
If you need help with any or all of these marketing suggestions, please contact Kelly @ My Sassy Business.