You aren’t spending enough on marketing because you are still thinking of marketing as an expense, rather than the investment that it is. How do I know this if I don’t know your business?
I know because I have worked in and supported B2B manufacturing for nearly 25 years. I have seen marketing budgets of every type and size. And I am here to tell you that if you are a growing, $5-million company with a $7000 marketing budget – you are not spending enough. It’s scalable too: you can be a $200-million dollar company with an $800,000 marketing budget – and not spending enough.
What does not “spending enough” mean? It means your sales team doesn’t have the resources needed to close sales and consistently support leads with effective processes. It means your customer service staff is making due and making things up. It means your customers are not having an integrated brand experience because your brand is fragmented by employees struggling to create something quickly for a customer’s urgent need. It means your website isn’t bringing your team qualified leads. It means your whole sales and customer-facing team is working harder, not smarter.
I know this because I have seen it. Among the thousands of businesses I have encountered, very few see marketing as anything other than an expense, at worst, and a sales lever at best. I regularly speak with owners, CXOs, Sales & Marketing VPs, Business Development Directors – and all of them speak of what they spend on marketing as an expense. I hear very little brand strategy and a lot of sales goals.
Sales goals are part of how I measure the success of marketing activities and campaigns. If you want to base your marketing spend on your sales goals, you can. But, if you are growing the business you must tie the success of those marketing efforts to an appropriately strategic upspend the following year. (And recognize in advance that marketing is typically a 12-18 month push, not instant sales results. Even though some marketing “levers”, such as email campaigns and digital ads can offer quick-turn traffic.) So if your business grew sales by 20%, then to continue that growth your marketing budget for the next year should increase 20% too.
How your marketing budget is planned is grounded in how you want to manage your company’s resources. Have you set a budget for marketing? How do you determine what to spend? Typically I see marketing budgets fall into a couple of buckets.
No marketing budget. This means your sales staff is working overtime on education and chasing leads. And your website is an expensive brochure, not a lead magnet.
Random acts of marketing, the most expensive and least effective application of marketing activities. Just because you push a boat in one direction, doesn’t mean it will stay the course down the river without support – there are currents and rocks to consider. There is a reason that boats have rudders; marketing strategy is the rudder of your sales boat.
Table stakes – aka industry-expected activities with low ROI. This type of spend is an investment in brand, but it may not be the most strategic choice if you are trying to grow sales. When you do what you have always done, you can’t expect different results.
Marketing spend allocated by percentage of sales. If your number is under 10%, you are in maintenance mode, not growth mode. (I’ve seen CPG and healthcare marketing budgets top 20% of sales for growth years.) If sales fall and you contract marketing spend, you will see sales continue to fall. It is well known that maintaining market share requires visibility. If you have to cut back, there are ways to do it strategically.
Based on prior year. Often I see the marketing budget assigned as “same as last year,” despite sales increases (or decreases.) In the best cases, this method involves a complete review of the prior year success and failure rate – activities, leads generated, number of closed sales and percent of leads closed – and assigns more effort around activities that drove qualified leads or made the sales process more effective.
There are a lot of ways to spend money in marketing. Trade shows, print ads (industry magazines, typically), digital ads, product launches, website development and improvement, mailings, social media, brochures, trademark protection, employer branding items, sales sheets. The “trick” to marketing is to spend the money in a way that continues to communicate your solution to people who need it. And for that, you need a plan and a budget.
Marketing is an investment. No different than new equipment or your monthly payroll. And just as you will buy new equipment as the business needs it or hire more staff as the business grows, the budget for marketing will need to grow as your business grows.
Alexandria Trusov is the Global Marketing Director at Alpha Resources and a B2B marketing consultant to manufacturers and other B2B companies. Contact her at [email protected] or visit www.truinsightsconsulting.com.