Marketing is vital for every business, no matter what the size, and what the sector. Your marketing informs people about the services you offer and the products you sell. It drives engagement, generating sales from new customers and securing repeat business from existing ones. It builds awareness of your brand and promotes sales. When wondering how much you should invest in marketing, you should know that although it’s difficult to pinpoint exactly there are a few things you need to know that can help.
Try the 5% Rule
In the marketing industry, there is one rule by which many professionals stand by. This is known as the 5% rule. But what is the 5% rule? To keep it short, it is the rule that you should, in general, aim to spend around 5% of your entire sales revenue on marketing.
This rule has been used to ensure that companies don’t spend excessive amounts on marketing, as well as not spending enough.
However, although this should apply to most years, this isn’t a hard and fast rule. For example, if you are a startup and are just getting started in the industry you will need to invest more to get your name out there. As well as this, you will most likely have extra expenses such as CRM software, website set-up and things like that. After a few years, this rule should come into effect.
Again, it’s often a good idea to decide on your marketing budget based on the average budget in your industry. For example, the marketing budget in the retail industry is much higher than the marketing budget for the construction industry.
Look at Your Return on Investment (ROI)
Although, we’ve already established a good rule of thumb is around 5% of revenue, return on investment (ROI) is a good indicator for knowing how much to invest in marketing. Many businesses increase that to 10% or more when wanting to increase their market share, or when launching a new product or service. By looking at the potential return on investment that you may receive by marketing, you should budget accordingly.
For example, if you have a new product out you will need to vastly increase your budget to cater for more people finding out about the new product, compared to if you are trying to boost an old and established product. If you’ve hit a rich seam of sales through a marketing campaign, don’t be frightened to invest a little more, then review!
Think about Mobile Marketing
When you start planning your marketing budget you need to think about all the different types of marketing strategies to target your audience and not just the most conventional ones. One area in particular where it would be good to focus on is the ever-growing mobile marketplace.
For some years, more people have accessed the internet via their mobile than on desktop. With more customers than ever using their mobile predominantly for their daily surfing and buying needs, you will need to have quality mobile marketing to reach these customers.
A simple (and relatively cheap) action is to optimise your website to make it more mobile-friendly; many small businesses think they’ve got everything covered when their website looks great – on desktop! You could also go the whole hog and create a mobile app and market it accordingly to get new customers. This is a much more expensive marketing avenue then website optimisation, but in a time where there’s an app for everything, this could provide a major source of revenue.
Final Thoughts
Take all this into account when coming up with a marketing budget to ensure you don’t spend too much or too little when it comes to effectively marketing your business. If you’re a small business owner looking for ways to generate extra income to boost your marketing efforts, then head over to thebitqtapp.com/de