Friday, February 27, 2015

Striking the Right Balance on a Marketing Budget

Small business owners are universally confronted with the formidable challenge of deciding how much to budget for advertising and promotion.  There are many opinions but there is a general consensus that one size does not fit all.

I'm of the school of thought that 5-10% of sales revenue is a good target for a marketing budget.  The figure can be reduced if there is already great word-of-mouth and very respectable customer traffic, but we all know that is an uncommon reality!

Is more worth it?  There are good reasons to consider exceeding 10% if the business is aggressively building brand, top-of-mind awareness, or promoting an important new product or service.  BUT (yes, in all caps) I never advise throwing money at the marketing.  Expenses should be thoughtful: does the channel deliver promise of good ROI, low cost-per-thousand, or some other measure of effectiveness?  Does the channel typically make sense for a small business?

Can the business tighten up and save money?  Absolutely.  BUT (again, all caps) a strong effort must be made to get the business name out in front with the best tools available, such as strong networking, B2B, social media, and the like.  But keep in mind that you get what you pay for.  If the small business is too parsimonious customer growth could suffer greviously.

What's the strategy?  Set a budget target and then work from there, adjusting up or down depending on realistic assessments of current efforts and prospects, and experience.  Make seasonal variations as necessary.  Above all, think carefully about every dollar.

No comments:

Post a Comment