Are you creating a marketing plan for 2021 and are wondering how much you should spend on your small business marketing budget? If so, we're here to help. It's standard that about 7-8% of your company's revenue should be allocated to your marketing budget.
To learn more about how to craft a successful marketing budget and how to allocate costs, keep reading. In this guide, we will give you some simple steps that you can apply to your own unique business to determine your marketing efforts.
Analyze Your Marketing Strategies
The first step to figuring out how much to spend on marketing is to review your past marketing methods. If you are a new small business and don't have past data to refer to, you will want to create a marketing strategy. Create this year's marketing strategy before deciding how much you spend on each effort.
To do so, start determining what your company goals are. Think about what goals you want to accomplish through your marketing efforts. While the obvious answer may be to increase sales, you will want to get more specific so that you can build a strategy that will yield results.
An example of a more specific marketing goal may be generating more website leads, or to boost your engagement on social platforms. After you've determined your main goals, you will want to think about your customer. You need to think about your target audience so that you can figure out how to best reach them and convert them into paying customers.
To do so, conduct some market research or perform some surveys with your current customer. Figure out what they like about your company as well as areas that they feel could use some improvement. Gather information such as their demographics as well as their interests.
You should also ask how the customer found you as well as what platforms they use that you can market on. This will help you determine your key marketing distribution channels. Knowing more about your target audience will allow you to determine what channels you should distribute your marketing dollars to.
Lastly, analyze your data to measure your past efforts and their effectiveness. Use analytics to see what efforts are generating leads and which ones aren't working as well. You can then adjust your marketing strategy and how much you spend on certain efforts accordingly.
Calculate How Much You Can Spend on Marketing This Year
Now that you've determined your marketing strategy, you can determine how much this strategy will cost you. Many companies examine their gross revenues and base their marketing budget off a percentage of these earnings. This way, your marketing budget goes up as your sales do.
However, marketing is the tool businesses use to generate sales. So if you are a startup, you will allocate more expenses towards your marketing budget.
Track Your Results
Unlike some of the other areas of your business, a marketing plan and budget are easy to adjust. Once you've developed a plan and budget, it doesn't have to be fixed. It's important to stay on top of your marketing efforts and track your results to tweak and optimize your strategies along the way.
You can test out new marketing strategies, revise them, and revisit your marketing plan at any time. This allows you to increase your budget during times where you want to capitalize on great timing, or you can lower your budget during times where you're budget it tight. It's important to make sure that your marketing dollars are being well spent to reach your goals.
If certain platforms are providing you with a positive return on investment, you may consider increasing the marketing dollars allocated to those channels. If a platform is providing disappointing results, you can eliminate it from your marketing plan and put those dollars towards areas that are generating leads. However, it's important to note that areas like content marketing will not reflect RIO's because they focus on brand building rather than conversions.
Marketing methods like SEO are also important to monitor but it's also best to remember that this kind of method takes time to grow and produce results. It's important to stay patient when following up with your marketing efforts. Review your marketing strategy by keeping both your short-term and long-term goals in mind.
For example, if you only look at your marketing efforts and their results on an annual basis, you may miss seasonal trends or market changes. However, only looking at your marketing strategy on a month to month basis will not allow you to see the big picture such as industry trends. Review your strategies both quarterly and annually to examine your long-term and short-term goals.
This will be especially helpful if you are using marketing channels that have different cost types. For example, your email marketing campaign platform may have a fixed monthly or annual price, whereas your social media ad dollars may be changing weekly. This will allow you to assess how well different channels are giving you a return on investment.
Developing a Small Business Marketing Budget
If you're wondering how to develop your small business marketing budget this year, keep this guide in mind. Go through these steps to develop an effective marketing plan and budget, and work to optimize it along the way for the best results.
Are you looking for a team of experts to help you with your digital marketing strategies?
Schedule a call with us today to get started on achieving your company goals.