Large companies spend 20 per cent of their turnover on marketing. However, this can be a frightening prospect for small businesses, which is why they put so much time and effort into social media. The challenge being that all of their competitors are there.
Firms that sell services often rely on continuing business from current clients and referrals. The problem with referrals is that they tend to come and go. What is more, there is often no tracking or referral generation system in place.
Whether you sell products or services, you can pay for marketing items as they arise (website hosting, events, etc.); or decide on an arbitrary figure, perhaps following a marketing ideas meeting; or you can think strategically. Organisations that think strategically achieve the best results.
A strategic approach begins by considering where you want to get to. Does your business plan show annual growth of XX per cent this year, next year and the year after? If it does (or, if you are thinking this way and are committed to growth), then you need to have a written marketing plan. When it comes to calculating a marketing budget, this is a better place to start than some arbitrary list of promotional activities.
A key element of your marketing plan comprises market segments (groups of people with shared needs). Marketing revolves around customers and their requirements. Successful enterprises put the customer at the heart of their marketing thinking, not products or services. The plan will help you to consider how you will stand out from the crowd, use time and money effectively and reach new customers.
Another key question is: how do your competitors approach marketing? Where are they spending their money? Which marketing activities do they keep doing, every year? If you take a look at, say, three of your competitors, it is surprising how much information you can find.
Once you have thought through your marketing strategy and, hopefully, worked on a strategic marketing plan, the next step is to create a marketing budget in spreadsheet format. List the expenditure items down the left-hand side of your marketing budget and the months of the year within the spreadsheet’s columns.
In order to ensure that you are making the most of your small business marketing budget, you should measure your results. Which techniques are generating the most website traffic? Where do sales enquiries come from? Why do customers buy from you? Smart enterprises continually ask these questions and put the answers into a feedback loop in order to improve their marketing.
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