The amount that a company should spend on marketing varies according to several factors, including stage of growth, speed of growth, industry, resources available, and more. Needless to say, no two business budgets are alike. However, there are some important considerations that affect the formation of every marketing budget. Below are some key considerations to ensure that you create a marketing budget that works for your business.
When you think of marketing budget, you immediately think of promotional items like your website, advertisements, and printed brochures. However, keep in mind that there are many non promotional marketing activities that require resources, that are just as important. These may include:
To determine an effective marketing budget, think about the non promotional activities that pertain to your small business growth that require resources.
There are many factors that can impact your marketing budget. Some are unexpected or intermittent, but many are predictable such as holidays, seasons, and major recurring events. For example, online advertising gets more expensive during the holidays, then drops significantly right after. During years when there is a Presidential Election, the cost of TV advertising goes up.
To make your marketing budget accurate and effective, keep national and even local trends and events in mind. Set an annual budget and monthly budgets, adjusted according to these trends.
Today you have access to a wide range of tools to be able to save money on your marketing or do it on your own. However, if you aren’t able to quickly learn these tools, efficiently use them, or leverage all of their features, what you save in money will not be worth what you lose in time. Time you need for other tasks related to, a part of, or relying on your budget.
When setting your marketing budget, accurately account for what each item will cost by assessing your experience with the associated tools and tasks. In some instances, paying for a tool or service will yield better results in that area and free up your time to focus on your strong areas. Spending money or time on a workshop or course might mean the difference between spending 8 hours a week on a platform, versus three, or getting three times as much output for the same amount of input.
Taking a look at your level of experience in each channel of your marketing will help you determine how to balance your investment of time and money into each one.
Marketing focuses on obtaining new customers as well as retaining existing ones. Customer retention is important because it strengthens your client base, increases your credibility, and builds brand loyalty. It is also typically less expensive to retain existing customers than it is to obtain new ones. To determine an effective marketing budget that yields sustained growth, be sure to allocate resources to maintaining communication and satisfaction of your existing clients. Keep in mind also that long time customers turn into loyal customers, who will become marketers for you.
Like a marketing plan, your marketing budget is not a final or finite document. It is more of a fluid guide that will change and evolve over time. You’ll want to remove items from your budget that don’t produce results, or adjust your spend in each area according to performance. However, keep in mind that results take time. Don’t eliminate or change things before they have a chance to show their value. By tying items in your budget to specific marketing goals and measurable results, you can ensure that you are giving the different items in your budget the time each requires in order to accurately show their value.
Determining your marketing budget is an ongoing process that takes multiple factors into account. It will change as your business grows and as you see results. However, a carefully determined accurate budget and plan will require less adjustments and changes. Keep these considerations in mind so that you can set an effective marketing budget that stays as stable and consistent as possible.