On average, businesses spend anywhere from 11% to 13% of their total budget on marketing. Those numbers seem to be true no matter who you are. Even if you are a multi-billion dollar company, you use about the same percentage of your budget for marketing as a small business.
Fine. That’s what you’ll do. Allocate about 12% of your budget and be done, right? Not so fast.
Marketing isn’t an all-inclusive, one and done deal. You need to delve into that 12% and divide it up. How do you know where all that money is going? How do you know you won’t spend more than that 12% accidentally because your social media guy wants to try something new to advertise business on Google?
This is where you need to sit back and take stock. I’ll guide you through it and we’ll look at how you can easily create a marketing budget for your small business.
1. Set Your Marketing Goals
Drive more sales. Expand market share. These are the things you need to do in order to survive. These things don’t automatically arrive at your doorstep. They’re earned.
In order to arrive at your final marketing goals, you need to be smart. We’re not talking about nerds here. We’re talking about goals.
SMART stands for “specific, measurable, attainable, realistic, and timely.” If you are smart about your goals, you’ll be more likely to achieve them.
Broad goals seem nice. Increase your revenue by 2021. Great! Does that mean ten dollars? Probably not in your head now, but a goal of “increase revenue” could easily mean ten dollars.
Making your goal specific avoids wiggle room. If you’re setting a revenue goal, then remove the wiggle room.
Even “increase revenue by 10%” might be a little vague. What will how will you increase by 10%? Instead maybe, “increase latte sales by 50%” which would represent 10% of your current revenue if completed.
In marketing, we measure success through our KPIs or key performance indicators. The problem with many KPIs is they aren’t specific and they aren’t always measurable (even though we like to pretend they are).
How do you really measure client or visitor loyalty?
But taking your revenue and your usual KPIs and matching them together will help you create a measurable goal. For example, increase latte sales by 50% will be measured in number of lattes irl. But what marketing kpi would attach? Maybe the number of people who fall into your latte coupon funnel? Or number of people who download and use your loyalty app and buy lattes through such?
Now you must ask yourself, “is it possible to increase latte sales by 50%?” Are there enough people in your town or enough tourists to warrant such a goal? If the answer is no, stop here and go back three steps.
If you can’t attain the number of sales, you’re certain to fail. You don’t want to fail. It must be truly possible to increase your latte sales by 50% before you take on the challenge of doing so.
Can your team make that many lattes in a year? Will your cafe sustain that kind of traffic?
Maybe you made a goal of writing a certain number of blogs in a year to increase traffic to your website. Do you have the time to write all of those blogs? Would you be better off paying someone else?
To keep you and your team from running out of steam, you need to set a deadline. Again, that deadline must be realistic and attainable.
If you are going to supersede your deadline, maybe the scope of your goal is too broad. Or maybe it’s not as realistic or attainable as you thought. Time to reevaluate.
Reduce the scale of your goal. And possibly reduce the timeframe. If you accomplish smaller goals, you will be more likely to achieve a larger goal.
2. Look at Marketing as an Investment
When you invest in something, you gain on top of what you buy. A house is an investment because it (theoretically) gains value over time. A car is not an investment because it depreciates over time.
Your business is an investment. You invest in your company and eventually it will be worth something more than what you put into it. You’ll likely sell it at that point.
Marketing is similar. If you hire an SEO content expert to write your blog, you should earn more money than you paid through increased traffic and leads and sales.
If an SEO content expert sold their services for the worth of your potential earnings from their work, you would probably not pay for such services. Fortunately for you, the writer undersells his work so you can afford it and they can have work.
Thus, when you invest in marketing, you should know what you expect to earn from it. Do your research about each marketing mode you choose and know how much you’ll earn back. Base your budget on this.
3. Research Trends
You can rely on old standbys such as PPC and marketing funnels. Please continue to do so. But the marketer who doesn’t stay ahead of the curve is the one who loses out.
When setting your marketing budget, it’s important to explore different technologies. The industry is constantly changing.
Consider email marketing for example. Ten years ago you didn’t have to worry about promotion and social tabs in Gmail. You also didn’t have the luxury of email tracking and email scheduling and contact insights either.
On the other hand, don’t react to current trends or fads too readily. If they aren’t backed by market research, then don’t jump for them unless you have an excess in your budget you want to risk on risky marketing.