The greatest return on the investments you make in your company is to market effectively. Effective marketing, done properly can deliver powerful results across your business. You attract the right types of customers or leads. You sell more easily. And you give yourself the opportunity to create and deliver your products and services more efficiently. As a result, your customer care activities will support your marketing rather than just work to solve problems.
One of the critical elements that supports effective marketing is correct budgeting. Not setting up a proper budget is one of the biggest mistakes we see small business owners make. Rather than setting a budget at the start of the year, many businesses operate “on the fly” throughout the year with no true regard for how much to spend, where to spend it, and why to spend it at all. The other mistake we see is that if a small businesses has started to budget, they include as many line items in their marketing budget as they can think of. This often happens for two main reasons:
- Your business is run by non-marketers, so you believe you have “to get the word out as far and wide as possible”.
- Your business is a start-up, so you may believe that it is essential to establish a big footprint as soon as possible.
Line items should be added to a marketing budget because each item “earns its place” and not simply because it exists. The marketing budget serves a purpose, and the line items you include in your marketing budget will enable that purpose.
How Do I Set a Marketing Budget?
You set a budget according to the clear and agreed marketing purpose. Marketing’s purpose is to make it easier to sell what you offer, and to make it easier for your customers and clients to buy what you offer. This demands you know nine things:
- Who your ideal customers are.
- What your ideal customers want.
- Why they want it.
- How they, typically, learn about what you want them to buy.
- How you can best connect with your ideal customers.
- Where, in the buying process, you want to connect with them.
- How you can best lead them through that process so they buy from you.
- How you can encourage them to continue to buy from you.
- How you can encourage them to tell others to buy from you.
From here, you can set your marketing budget accordingly. When you are on top of the nine bullet points above, you can move on to your line items.
Marketing Budget: 5 Primary Categories
There are, literally, hundreds of specific line items to which you can allocate a budget. They fall under one of these primary categories. Focus your team’s efforts on these, and clarify everyone’s ideas. Link them to the stage in marketing process you are, and to the next stage you want to get to. That exercise will enable you to expand on each of the five, below.
- Market research. This may be your primary line item until you are very clear about those nine bullet points.
- Outbound Marketing. Your research will tell you whether your ideal customers are more likely to respond to traditional advertising, televesion, radio, or billboard ads, or coupon offers (to name a few), .
- Inbound Marketing. Your research will also tell you if you are likely to get better results by engaging your ideal customers in informative communications where they can make contact with you, because they want to, to get a free report, white paper, introductory price on a product or service you have educated them about, etc. This may also include social media outreach, blogging, pay-per-click ads on particular search engines and social media sites, etc.
- Results Testing. An important line item is to invest in testing your marketing activities. If you know the results of local ads in papers, on different social media channels, etc, you will know where to spend and where not to.
- Specialist Advice and Contractor Support. If you are hiring a web design team, writer, freelancer, or marketing agency to support your marketing objectives, be sure to identify the cost in your budget.
Your budget line items reduce to these five, and they support the nine bullet points you use to develop your marketing budget as a whole. Stay true to your marketing purpose, focus on your ideal customers, and the right line items will appear. Your marketing money will be well spent.