Marketing, unfortunately, has a perception of being largely esoteric and unmeasurable and as such is often viewed as a cost centre.
It is imperative that metrics are developed for marketing activities. Consideration needs to be given to short-term initiatives, like sales campaigns, as well as activities that generate a return over a longer term, such as hosting events or attending exhibitions.
What should I set for my budget?
Research studies and surveys tend to indicate that a business will allocate around 5% to 10% of its revenue to marketing activities. These figures are a guide and would depend on the level of competition, the attributes of your products and services and the potential target markets.
Consider how customers reach you
When setting a marketing budget you should begin by understanding how customers currently reach you.
If your website is a critical entry point, then consider how you can bolster traffic to your site, through search engine optimisation and online advertisements. Key metrics, include the conversion ratio, between visitors and people that make online purchases or an enquiry. If the conversion rate is low, you need to explore how people navigate through your website, whether the sales process is easy to undertake and whether the offer is compelling.
If you operate a retail presence, you need to ensure that your store encourages customers to enter, and that sales staff are able to encourage purchases. Measure how many people visit your store and how many become customers. If the conversion rate is low, you could undertake sales training for staff, or potentially revitalise stock, or the store layout.
If you rely heavily on word of mouth recommendations, explore initiatives that can bolster referrals. Would a regular newsletter remind people of your services? Or could you undertake refer a friend initiative or other competitions? Provide a method of acknowledging key customers and the support they have provided.
Understanding how customers are reaching you, allows you to prioritise your marketing budget so you can consider where you can best allocate your resources.
Ensure you can measure outcomes
You also need to consider the outcomes you want to achieve, and then the activities that are likely to generate this return.
For example, conference presentations can be useful in reinforcing expertise, but are likely to generate return over the longer term. How many enquiries would you want from this activity and how do you capture the details of prospective customers?
Other initiatives such as promotions and specials are likely to result in shorter-term gains. You should consider the required number of customers you need to ensure that these specials remain economical.
If you utilise brochures and off-line marketing, then it is important to be able to measure the success rate of these tools.
There is an incorrect assumption that off-line advertising is less measurable than online. While it may be easier to automate online metrics, through the use of Google Analytics and website tracking, you can also measure off-line advertising.
Investing in a unique telephone number can allow to measure enquiries, or alternatively you could include a unique website address that lets you track responses. Referral and discount codes can also provide a method of tracking the effectiveness of off-line advertising.
Be aware of other costs
While budgets are primarily concerned with financial expenditure, it is imperative that you consider the people that are required to undertake the identified activities. Does your staff have the right mix of skills and are the right people allocated to these tasks?
Training may be required to provide the skills required, or you may need to introduce external expertise to complement these initiatives. Furthermore, you need to ensure that staff have sufficient time to undertake the required tasks, particularly if they are not part of their core duties.
There is an opportunity cost when requiring staff to perform activities outside of their core duties. it is important to consider how this will be managed, or whether external support would be required.
You also need to consider whether equipment or supplies are required to perform the required activities. For example, trade shows will require marketing materials and it is imperative that printing costs are factored into this activity.
Marketing can be measurable
Marketing, when it is undertaken effectively, can be measured, enabling the ability to set targets and to evaluate performance. Start by considering how customers reach you and the activities that can be undertaken to increase effectiveness within these channels.
Also consider, staff time and the other resources that are required for implementation, so that you can have an accurate understanding of the value you are receiving from your marketing activities.