New business is the lifeblood of all commercial enterprises.
Without a continuous influx of new clients and customers, every company will go out of business in relatively short order. This is axiomatic because of attrition. You can be the “best in the business” and, unless you replace them, all of your current customers will eventually go away for a myriad of reasons.
Invest in the surest investment of all – your own team!
Why do all the most successful firms – those with top market share – always use sharp, crisp, custom images and elegantly produced written and video content? Why do they pump money into all those creative services when customers just want great service and quality products? After all, beautifying your image doesn’t add any value to your end product but instead adds costs that your customers must ultimately pay for. Why not keep your marketing spending as lean as can be and just focus on better customer experiences?
The smart companies that lead their markets also show the most respect for their industries and represent them the best they can – both internally and publically.
Market leaders don’t skimp on the vital stuff such as how well they communicate. Good business communications do not include kid’s stuff graphic design, even if it’s your own kid’s! Your text must be written clearly and professionally, understood precisely at the first skim of your readers’ eyes. It must come from an experienced perspective. Going amateur on content is a big mistake for your brand and will hurt your selling efforts as well.
An industrial titan once remarked. “Trying to save money by cutting advertising is like trying to save time by stopping the clock.” Time marches on and so do your competitors who agree with this idea. You can go ahead and save some marketing money while the competition woos your prospects and customers away with innovative ideas, compelling value propositions and yes, really sharp looking promotions.
If you’re fighting upstream to gain market share or bigger clients, you can at least look as good as your best competitors with a little investment in the quality of your marketing communications. There’s more instant credibility given to the company or brand that invests in itself to sustain growth. This includes consistent professionalism in all of its communications: websites, social pages, brochures, packaging, brand-product design, email, print, signage… It all has to sing the same quality tune so your potential customers will feel more confident about giving you their business.
What’s the right budget that will give your company the marketing and business development lift it needs to stay competitive and gain market share?
According to a Google furnished statistic, “The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you’re doing less than $5 million a year in sales and your net profit margin — after all expenses — is in the 10 percent to 12 percent range.” That number is calculated from an average across a diverse range of business categories, so it’s too simple to assume that it would apply to your small or medium sized business. However, it may be an eye-opening benchmark number indicating that businesses need to spend a significant amount on marketing to keep revenues flowing.
Every business should calculate how much to budget for marketing based on the about of profit each customer brings in and how much of that it’s willing to spend to keep bringing in new ones.
Forbes offers a great piece on how various kinds of small businesses should calculate their budgets based on their own realities.
Most publically traded companies spend a lot more than 7 or 8 percent on marketing, and the total average for companies in the under $25 million segment is roughly 11 percent according to The CMO Survey published by World Market Watch.
Whatever size your business is and whatever industry you’re in, I hope this article provides you insight on the right budget range for your business. For example, let’s say you have a small business with $2 million in revenues, and you budget something like $50,000 a year for marketing. Can you now see that you’re potentially limiting your growth opportunities?
Most companies in the $2 million revenue range should be spending $150,000 or more annually on marketing. A $5 million company should be spending more than double that. Going in the reverse direction, a $250,000 a year business should budget $20,000 or more for marketing services. Do these figures sound reasonable? If not, it might be important for you to figure out how to tie your spending to sales in a way that covers the expense and continually fuels an effective marketing effort.
Is a limited budget limiting your growth and keeping you from getting better sales opportunities?
For the record, I currently invest the equivalent of about 15% of my business revenue in marketing and sales programs which include my website, blogging, email marketing, social media, networking and a little advertising. It’s been working for over 5 years now and my plan is to increase it next year in order to reach my goals.
If you’re in a competitive market and struggling to figure out how to grow without spending more on generating quality leads, you might need to think differently about what “competition” really means. Maybe you need to double or triple your marketing efforts just to get into the same arena with the top brands in your industry. This will give your competitors’ customers a chance get familiar with your name and consider you a good option when it’s time for them to make a change.