5 Essentials That Absolutely Need To Be In Your Marketing Budget
Small businesses are killing it in today’s economy. The SBA states that a small business starts every minute. Yup, every minute. That means that two or three businesses will start before you even finish reading this post. What does that mean for you? It means another competitor that you will have to outthink and outmaneuver just entered the market.
The 2015 CMO Survey, a report which compiles and disseminates the opinions of top marketers, states that 77% of marketers are expecting a more intense rivalry for customers this year. With more and more businesses entering the market space every minute, how much should you spend on marketing to be competitive and grow?
Keep in mind, outthink and outmaneuver doesn’t necessary have to mean outspend. Small businesses aren’t killing it in today’s economy because they are better advertised than their corporate competitors. It’s because they are able to delivering a genuinely great product or valuable service to people who are willing to pay for it. Don’t get me wrong, marketing is not cheap and you will only be doing your company a disservice if you don’t invest in your own company. Small businesses and start-ups tend to have smaller budgets and less resources than than larger, more established competitors. This makes it tough to gain visibility in what is most likely an already crowded space. When funds and resources are limited it is extremely important to be strategic on how much you need to spend and what essentials you should spend it on.
How Much Should You Spend on Marketing?
Many small business, especially new ones, estimate their sales revenues, cost-of-goods, overhead and salaries first. Anything left is used for marketing. Not really the best idea, although when needed we are guilty of using this approach ourselves. A fairly new competitor in a marketspace (a company less than 5 years old) should be much more aggressive in the beginning to gain any market share.
Aside from how long you have been in business, another factor to consider is if you are B2B or B2C. According to CMO, B2B companies selling services should expect to spend 5.9% of their total revenue while B2B companies that sell products comes in a bit higher at 6.2%. B2C companies are looking at a total of 5.3% for services and 10.4% for products. Looking for a bare minimum? McKinsey and Company recommends that a company spends no less than 5% of its gross revenue on marketing. If you are an emerging brand, your initial investment should be closer to 15-20% of gross revenue.
Businesses in their infancy and early stages usually have a hard enough time just keeping the lights on, let alone laying out cash for anything creative. But if you don’t spend the cash on items like branding and marketing then you will be missing out on growing the company by standing out from your competitors. If you want to compete you have play the game. Knowing how much you should spend is the first step.
What Should You Spend it On?
Like I said before, marketing isn’t cheap, but knowing the potential value it can bring will help you determine the best place to invest your dollars. Remember, emerging brands are going to have to spend a greater amount in the beginning in order to develop the brand.
If you haven’t defined who you are or figured out exactly to whom you are selling to, you will end up shooting arrows in the air in the hopes that one or two may stick. This is where branding comes in and why it is so necessary. Taking the time to research and develop targeted strategies in segmented markets in the beginning will ensure that when you do spend dollars on advertising, those dollars will be used to direct the right message to the appropriate audience. When the budget is tight, this is where you can get the most bang for your buck.
Five Essential Costs to Consider
If you plan on making any type of impact you will have to plan for the essentials. If you try to cut corners in the beginning and only opt to partake in a few of the essential practices your overall message will be lost and it will take you much, much longer to grow. Your five essentials are:
3. Social Media
Defining your brand sets you off on a business self-discovery journey where you will determine who you are, why you are different, what value you can bring to the table and how you will present it. You will dig deep to uncover your true purpose and how you compare to your competitors. Then you can map out a plan to execute a consistent message that showcases your value to a very specific audience.
For most business, your revenue will be mainly be derived from online sales or from offline transactions that resulted from online marketing efforts. It will act as your virtual storefront and possibly serve as your virtual base of operations. The better the system, the more efficient your processes become.
3. Social Media
Social media isn’t about selling. It’s about creating a conversation. Your presence should be more about delivering valuable and relevant information and less about selling a product or service. In a “World is Flat” society we have moved into the age where authenticity and value truly matters. When done right, social media is where you can shine, globally. Those who are successful on social media create a connection with their customers, listen to what their needs are, then redefine their products and services to best fit their customer’s needs while still staying true to their core values.
Long gone are the days you can create a website and let it just sit there in the hopes it will attract customers. If you have any hopes of dominating the search engines you will need a continuous stream of relevant and useful content. Showing potential customers why you are awesome with blog posts, white papers, case studies and tip sheets will put the right information in front of them while they are conducting their research or trying to fill a need for knowledge. This is the reason why 76% marketers from the CMO survey plan to increase the amount of content they produce in 2016.
People that have the courage and drive to start a business are usually some of the most passionate people you will ever meet. If you are reading this article you are probably one of these people. Sometimes we get lost in glitz and glamor of advertising and forget why we started doing this in the first place. This is where good ol’ fashion networking comes into play. Don’t forget about the traditional methods of strutting your stuff and get out of the office to meet potential customers face to face. Trade shows and events are great places where you can bring marketing your business back the purest form. Just remember the problems you were trying to solve when you started your business and go out there ask “How can I help”.
When determining how to spend your dollars just remember to be deliberate and plan. Be true to your company and your customers and make sure you aren’t falling short of making an impact by not allocating enough funds in the right places. And always remember, with a new business starting every minute you can’t afford to let your marketing guard down.