Setting a marketing budget can be a complex and intimidating task for any small business owner. There are several factors to consider, such as the target market (B2B or B2C), the level of competition in your market, the time you have been in business, and the value of the products or services you are selling. Generally, start-ups must spend a higher percentage of revenue to get new customers on board. Similarly, operating in a competitive market may also require you to spend more to be able to compete.
Besides a budget, the time it will take to reach your target audience should be considered. Effective marketing drives revenue. If your ambition is to grow your revenue fast, your monthly marketing budget should support that ambition.
So how much should you be spending?
Unfortunately, this is not a simple question to answer. In a recent study conducted by Duke University, marketing budget as a percentage of company revenue ranges between 6 and 11% but averages vary greatly depending on the industry and target market demographics. As an example, companies providing consumer services spent as much as 19%. On the other end, manufacturing businesses spend as little as 2.4%
Ultimately, every business will have a limited budget and desire to get the best Return on Investment.
Here are our 10 top tips to get the most from your (limited) marketing budget.
1. Leverage your existing assets.
If you have an established business, you should have a customer list in a CRM system or other electronic format. Depending on your product or service, re-selling or up-selling to existing clients can be a good revenue stream. It will surely cost less than acquiring new customers.
For example: A carefully targeted e-mail campaign to your existing clients can be a cheap form of marketing and yield excellent results. If you run Facebook ad campaigns, you can use your existing client database to find more people with a similar profile by constructing a lookalike audience
2. Ensure measurability
Setting clear targets and KPI’s for marketing campaigns and tracking results accurately will make it easier to set budgets with confidence. It can easily transform what may feel like a grudge purchase into a growth purchase.
Tracking and measuring ROI for traditional marketing media, like print, can be hard. On the flipside, digital platforms, like Google Ads and Google Analytics offer toolsets to track and report on results accurately. Knowing the exact level of engagement for a specific campaign can also be leveraged effectively for re-marketing. Not all customers buy immediately but knowing who watched 50, 75 or 100 percent of a video can be powerful information to help turn a prospect into a buyer.
3. Pay attention to SEO
Achieving a higher website ranking in search engines can drastically increase traffic to your website. A carefully developed SEO plan can help generate leads without having to spend money on ads. Your plan should include the following:
- A Keyword volume analysis: If you are a local business that sells e-bikes, SEO will only yield results if people frequently use Google to search for “e-bikes”
- Optimizing your website in line with SEO best practices
4. Have a carefully crafted strategy
Running ads on an ad-hoc basis will not be as effective as a carefully planned strategy. Imagine you notice an ad in a newspaper from an electronics manufacturer you have never heard of before. The ad offers a brand-new washing machine at a competitive price. What questions are likely to pop into your head? Perhaps “Where does it come from?” or “I wonder if it will last?” Even if you could really use a new washing machine, how likely are you to buy the product straightaway? Probably not very likely.
So, what’s the point?
Well, simply this… A carefully considered strategy with the correct objective and message for the audience can be much more effective in the long run. A well-crafted social media engagement campaign using a video to showcase the new machine’s unique features could be an effective way to introduce the brand. I can also help to create the “know, like & trust” factor needed to acquire a customer and make a sale.
5. E-mail marketing is not dead.
Still one of the most effective and cheapest ways to market. A carefully crafted e-mail can achieve an ROI as high as 700%. All it takes is a bit of thinking and effort to get the right message to the best audience available. Start with those who bought from you before, subscribed to your newsletter, or completed a lead form on your website.
Keep in mind that email campaigns need not be time-consuming manual work and can be automated. Email automation software doesn’t need to break the bank either, Affordable subscription based offerings with powerful features like ActiveCampaign or MailerLite are readily available .
6. Take care of your frequent buyers.
Make sure to raise the perceived value constantly to those loyal customers that support you regularly. A rewards program can be a great way to retain your clients.
Acquiring a customer is conservatively estimated at 7x the cost of retaining a customer. Research by Fred Reiccheld (NPS inventor) claims a 5% increase in retention can increase profits by as much as 95%.
If you have a business with a high Client Lifetime Value (CLV), this becomes a no-brainer. You can keep selling to the same customers repeatedly with practically zero marketing spend. Less overheads = larger profits.
7. Blogging and posting on Social Media
A well-crafted article that is of value to your customer base can be an effective tool to boost your SEO ratings and raise brand awareness. Each time you create a new page, it can be indexed by search engines, increasing the chances of driving traffic to your website.
Sharing valuable information on topics that are relevant to your industry, products, or services will boost your credibility and establish confidence with your audience. People buy from people, and they buy even more from people they trust. Quality content can also be posted on social media platforms like your business’ Facebook page, which will immediately be visible to all your followers. If the quality of the content is relevant and of value, people are also likely to share it, increasing your reach and the possibly of attracting new clients.
8. Test and fine-tune.
So, you created a killer add to the perfect audience… or so you thought… Ads and campaigns don’t always work as well as one would hope and expect. Don’t despair… Digital platforms, like Facebook and Google Ads, have powerful capabilities to test your ad copy, images, and target audiences to help you find the most effective combinations to obtain the best Cost Per Lead (CPL), Cost Per Acquisition (CPA), and ultimately provide the maximum Return on Investment.
Making a small adjustment to your ad copy, for example, can have a significant effect on click-through rates. Similarly, an audience with specific interests or demographics may be more receptive to an offer than another group. Checking, monitoring, and refining your digital campaigns on an ongoing basis will decrease your Cost Per Lead or Cost per Acquisition over time. Make sure your digital agency makes use of these toolsets to ensure the optimal use of your limited budget.
9. Pick the digital platform that’s best for your business.
Not all platforms are created equal, each with their own strengths, weaknesses, and suitability. The cost and effectivity of platforms, like Facebook and Google Ads, for example, can vary greatly among products, services and industries.
Where Facebook makes use of interruption marketing, displaying offers to people not searching for anything specific, users of search engines will have greater intent, generally know exactly what they are looking for, and be ready to pull the trigger when the right offer comes along. Depending on your product or industry, Facebook Ads can be cheaper, whereas leads obtained via Google Ads will typically be better quality. Managed and implemented correctly, both can yield good results, but chances are that one would prove more suitable for your business.
10. Start small & scale.
One of the primary benefits of digital channels is the ability to choose how much you want to spend. You can start with a small daily budget (as low as $10 per day) to test the waters. This also provides an opportunity to test different creatives, target audiences, and your general strategy without risking too much in terms of wasted spend. One can gamble small, fail fast, improve, and move forward at a rapid rate. If your strategy is sound, your offer strong and relevant to your audience, it won’t be long before you have a sustainable campaign you can scale effectively.
