Marketing Budgets aren’t just for the Fortune 500
Every small business owner needs to know how to build a marketing budget. The irony is that no one really teaches it or explains it. The first thing for small business owners is to understand that marketing and advertising are two different things.
Advertising is great for familiarity or on the spot purchases. The placement of chewing gum at the supermarket checkout is a form of advertising. Real estate agents putting their faces on bus stops is advertising. Advertising is simply the placement of an Ad.
For most businesses advertising has no real benefit. Since most real estate agents put a ten year old picture on their bus stop ads, or over photo shop the ad, they have zero value. Advertising is great if your ad image appears at the right place at the right time. A Coca Cola® ad just a half mile before a McDonalds® can trigger a desire to buy a Coke at McDonalds.
If you have a cupcake store, an ad for you cupcakes in the free home magazine might work. If it is a magazine that a realtor posts outside an office four blocks away from your cupcake store. Generally speaking, it won’t.
Coupons – Real Trackable Advertising
Coupons are probably one of the best forms of advertising. People love a deal. Better yet a good coupon is stuck on the refrigerator or somewhere visible. Great ads take at least 16 impressions to stick. One coupon can get you that. A page of coupons maybe not.
The biggest benefit to coupons is that they are about the only advertising you can track. One yoga studio coupon we created has a different code at the bottom right of each one. This way we know where the people came from. We know exactly how many people each ad brought in.
Better yet, in the yoga studio software we could code which coupon people used, and then find out which ones stayed as members and which ones left. The goal of a coupon is customer retention. If one ad brings in half as many people but 90% sign on as customers vs the other ad where only 10% sign on as members, which ad do you think we will repeat?
You Can’t Fix It If You Don’t Measure It.
I am amazed at how many business owners act like millennials. They base their value on likes and reviews. Since when does a like or review put money in the cash register. Better yet is when they call and say that some online review company is going to charge a crazy amount of money for better reviews because 80% of the time the business makes more money.
Say what? The only thing that puts money in the register is customers. Maybe you have heard of the 80/20 rule? The old Italian guy Paretto figured out that 80% of our benefits come from 20% of our efforts. So why spend 80% of your marketing budget to earn 20% of your business?
The Customers Vote With Money
There are two things that we measure for our clients at the Bourquin Group, and two things only. 1. The number of new customers in the door and 2. The number of customers that come back. If you own a restaurant, we’ll add 3. How often they come back
If you have a line out the door and get bad reviews, do you care? Ironically, if you have the line out the door, people want to be a positive part of that and write positive reviews. It doesn’t work the other way around.
Our overall cost per new client can be 30 to 70% less than other companies because we focus on getting customers and keeping customers.
It All Comes Down To Marketing for Small Business
Marketing is different than advertising. Marketing is actively engaging your potential new customers and past customers. Great email campaigns with a coupon pushes out of advertising and into marketing if it is done right.
When you build a marketing budget for small business the numbers can get muddy. Are coupons and free giveaways part of that budget? You bet. Is employee training part of it? It should be. Your employees are the number one factor in customer retention. The funny thing to me is how little time owners spend training employees.
The second factor in customer retention is good marketing. We live in a world that moves fast and our attention is getting shorter. Personally I lean towards high ADHD. This means I am always moving. Sounds like your customers right?
Great marketing for small business keeps your customers connected and reminded that you and your business are there for them. Marketing Automation tools are one way to do that.
Creating a Budget for Small Business Marketing
When I am asked how to create a budget for small business marketing, the answer is easy. I like the 30,30,30,10 rule. 30% for sales costs, 30% for Marketing Costs, 30% for overhead, and 10% for growth investments.
Now I can hear you asking “how do I make money then?”. The answer is that the owner pays themselves out of one of those budgets. If you own the building, you pay your self rent out of the overhead budget. If you deal with customers directly, you might be in the marketing budget.
One place that many small business owners get wrong is doing the work. If you are a Lawyer, Doctor or Dentist, you must do some of the work. Then your income is a cost of services sold. If you are a baker and you do all the baking, your income comes from the cost of the cupcakes. Cupcakes aren’t just flour, water and sugar. Cupcakes also take labor and machinery. That is part of how you get to a $12 Cupcake.
Know Your Costs
If you don’t know your costs, you can’t know if you are making a profit. More importantly, you won’t know how much your margin is, and therefore how to build a proper marketing budget. If you don’t like all of this marketing and budgeting stuff, call us. We can help.