You want to grow your business and know you need to market your products and services more, but you’re just not sure how much money you should be allocating to your marketing budget. And, you are also not sure where to spend those dollars, because the world of marketing has changed so much.
This is a fairly common problem for today’s small business owners. But a couple of things are fairly certain...the amount of money you think you need to spend is probably a lot higher and where you need to spend it (the internet) is totally foreign to you. The majority of business owners do not allocate sufficient financial resources to achieve the business goals they want, and they typically spend whatever budget they do have in randomly sporadic places. Typically, this approach results in very poor returns on their investment and frustration that their business is stagnating and they don’t know what to do next!
Products and services don’t sell themselves! No matter how great your new product is, if people can’t find you, they won't buy from you. A company can no longer rely solely on the more traditional marketing channels to generate leads, such as word of mouth, trade shows, direct mail, and trade magazines. They need a specific inbound marketing strategy . If they don’t develop a strategic inbound team and plan, how are they going to generate new leads?
The process of an inbound marketing strategy is to develop a strategic plan, based on your business goals and centered on the following:
- Mapping Content to Buyer Personas and The Buyers Journey: Buyer Personas are representations of your ideal customers, and the Buyers Journey are the steps that they most often take when researching, considering and ultimately buying your products and services from you. Specific content needs to be generated that appeals to your buyer personas and moves them through the buying process. Many businesses purchase a blogging package to target the content at a specific buying persona.
- Awareness: All that content needs to get in front of your buyers, how will you do that? What channels and approaches are best for reaching them?
- Conversion: How will you convert these new potential buyers? What tactics will you use to optimize lead conversion rates?
- Lead Management: You now have leads, but are they ready to buy? How will you know who is ready to buy and who is not?
- Success: What does success look like? Have your goals and key performance indicators (KPI’s) been met? What are KPI's and why do you need them? In order to measure success you need to know what which metrics are important.
What should my marketing budget be?
Here’s the tough part for most business owners, “You have to spend money to make money!” Nothing changes, if nothing changes. Doing the same thing year after year and hoping for a different result, well, we all know what that means! Most businesses typically allocate 2-3% of projected gross revenues towards their marketing budget, whereas a brand new start–up business will typically allocate 3-5% of projected gross revenues. As a general rule, small businesses need to allocate the following amounts towards their marketing budgets:
|Less than $5 million||7–8%|
|More than $300 million||3-4%|
These numbers can change based on industry, size of company and the growth stage of the business. But as you can see from the graph below, which was formulated in a recent U.S. Digital Marketing Spending Survey study by Gartner, companies are spending larger amounts on their marketing budgets and allocating a greater percentage of that budget to digital marketing.
Marketing Operating Budgets as a Percentage of Company Revenue
Digital Operating Budgets as a Percentage of Company Revenue
According to the survey, companies spend 2.5% of their total marketing budget on digital marketing. This averages out to 25% of their total marketing spend, and in some cases a total digital marketing spend of 50% is not uncommon. So, if your company generates annual revenues of $3 million, you would likely spend $75,000 on your digital marketing alone.
Where should I spend it?
To be successful at inbound marketing, you need to have the right software and the right team. We are a Certified Hubspot Partner, so we love Hubspot and its platform. It has all the right tools to get you started and advanced features to ensure your future success. If you have enough on-site staff that are experts in marketing strategies, web design, social media experts, graphic design, content writing, copy writing and marketing analysis, then you are in luck. If you do not, or cannot afford to have a full-time team dedicated to inbound marketing, then you need a qualified inbound certified agency, like InTouch Marketing.
It’s also much more cost effective for your business. Hiring several peeople to accomplish all these tasks would end up costing you potentially hundreds of thousands of dollars. You can outsource your digital marketing for a fraction of the cost.
If you are looking to grow your business or have a 5 to 7 year exit strategy and need more revenue, you need to review your digital marketing budget and know how to spend it wisely. Check out 5 reasons to use a retainer agreements to see how this will protect you in the long run. Times have changed and the world of marketing has changed, also. You have to change with it, if you want to grow.
Can inbound marketing help you reach your business goals? There’s only one way to find out...
Bill is the CEO and Founder of InTouch Marketing. Bill drives the vision and direction of InTouch except when England's playing in a soccer tournament, because everything stops!