Effective marketing strategies play a key role in whether small and mid-sized businesses grow at a sustainable rate or fail to attract enough customers to keep the doors open. Making the most of your small business marketing budget requires careful planning and an understanding of what choices can yield the best ROI for your market sector. Approximately 50 percent of small businesses (SMBs) have only $300 to spend monthly on marketing, so it’s critical that they’re getting as much as possible out of these resources. This could be up to eight percent of their revenue.
- What percentage of the pie do small businesses typically spend on marketing?
- What do small businesses do with their marketing budget?
- Why do small businesses focus on digital marketing?
- Why is investing in SEO worth the cost?
- How do you start building your marketing budget?
- A marketing budget is an ever evolving project…
What percentage of the pie do small businesses typically spend on marketing?
The U.S. Small Business Administration reports that three factors have major influence on how much small businesses spend on marketing:
- What market sector and vertical your business operates in
- How large the business is
- What stage of growth the business is in
Blue Corona found that 62 percent of small businesses put 4 percent of their revenue aside for marketing efforts. If you’re in the start-up stages or want to expand your operations rapidly, a 7 to 8 percent marketing rate may better suit your needs.
Basing your marketing budget on your overall revenue builds scaling into your strategy right from the start. As you become more successful, your marketing resources naturally grow larger and all you may need to do is tweak the percentage over time.
What do small businesses do with their marketing budget?
You have your budget – now what should you do with it? According to Blue Corona the three most common marketing components of SMB strategies are:
- Develop a website
- Build a social media presence
- Email marketing
Search Engine Land also found that if small business owners weren’t limited by a low budget, they would spend more money on search engine optimization, PPC (pay-per-click advertising) and customer relationship management tools.
Why do small businesses focus on digital marketing?
While offline advertising has its place for many SMBs, online advertising usually provides a higher ROI. When you’re trying to get the biggest impact out of the money you have available, it makes sense to focus more on tactics that are relatively easy to quantify and analyze.
It’s a safe bet that your customers – current and potential – can be found online. In 2016, 88% of adults in the United States used the internet, and that number is projected to keep rising.
Digital channels are also more forgiving for the 71 percent of business owners who do their own marketing, reports Review Squirrel. If you botch a blog post on your website, you lose a few hours. If a direct mailer campaign doesn’t get the results you expected, it’s much more difficult to take back (if you can at all) and the experience may feel like a major loss to the budget.
Why is investing in SEO worth the cost?
One of the first things many consumers do when they learn about a new business is look it up online. If they can’t find any trace of a company on the internet, they may have a hard time trusting it. SEO (search engine optimization) is what can get a company to show up at the top of the results pages when someone searches on the internet for that type of business.
It’s important to consider SEO strategies at the very beginning of the marketing process so that any pages, profiles, sites or other pieces of a company’s digital presence are optimized from the start.
Once the web presence is set up (usually the website and social profiles) it’s time to invest in boosting the website’s rankings and PPC. Both of these tactics build brand awareness and drive direct revenue, but the complexity and associated costs are well worth seeing your company’s name at the top of a Google search. On average, 47 percent of the online marketing budget is allocated for SEO and search engine marketing efforts.
How do you start building your marketing budget?
You need to plan out your marketing budget before you start on your campaigns. When you have an idea of how much money is available for your efforts, you can choose the most cost-efficient tactics for your needs.
Know Your Customers
Start by learning where your customers spend their time online and offline. You don’t need to establish yourself on every single marketing channel available. In fact, you’re sabotaging your company if you do that. You don’t have endless resources to allocate to areas that don’t fit your target audience at all. Narrow your focus to a handful of places that have the greatest opportunities to reach your audience.
Understand Your Sales Process
When your customers buy a product or service from you, does it take place online or offline? Are they making impulse purchases, or have they spent months working with your company to find the best solution? Your marketing campaigns must be built around how the sales process happens so customers get directed to the right place at the right time.
What’s the overall marketing budget for your small business?
Before you put together your marketing campaigns, you need to start from the end. How much money does your company have to spend on these efforts, and what are the expected end results? Once you have this information in place, you can build plans that work toward a unified goal rather than using an ad-hoc approach.
A marketing budget is an ever evolving project…
Testing and marketing analytics aren’t just for enterprises. In fact, it’s even more important for your SMB to optimize its strategies since you need to do more with much less than the big companies.
Take a proactive approach to evaluating everything your marketing team does. You can identify tactics that deliver a high ROI and are scalable, as well as campaigns that simply fell flat. Set up a schedule for yourself that includes a regular review of your marketing efforts to see what’s working and what’s not and pre-schedule time to make adjustments to the strategy.
You have a lot to consider when you’re looking at your marketing budget options. Keep in mind that this is an area where “one-size-fits-all” doesn’t really exist. You’ll hone in on the right amount to keep your company growing without taking money away from other vital business operations.