Business Basics, Start Up / New to Business, Strategy

How Much Should I Spend On Marketing?

This is a question asked by Sandra Reeves at New Vintage on our facebook page. Thanks Sandra! A great question.

This is always a hard one and one I’ve seen answered by many people. The answer is in some ways ‘how long is a piece of string’?

Firstly, we are by no means ‘marketing experts’, we have some great contacts we can get you in touch with if you are looking for one of those. However, as advisors and business owners ourselves it is a topic we ourselves have had to look into and make decisions about. What we need to do for our business however will differ greatly to what say, Sandra at New Vintage will need to do.

When your business is new a lot of your time and money will be spent on ‘brand awareness’. Getting your brand out so people know about you in whatever areas you are targeting. However, as this builds you will be able to move to more ‘selling’ advertising.

Marketing in 2016 can take many different forms. From traditional advertisements on radio, magazines, through to social media spending, blogging, cold calls, merchandise and other more ‘out of the box’ methods. What works for one business won’t always work for others so you need to get in the habit of ‘test and measure’ for everything. It’s certainly easier said than done.

What’s test and measure?

It’s basically recording every marketing activity you do, what interaction you get and what level of sales you get. You can then work out how much it is costing you for each $ of sales and/or customer. Again, what you measure will depend on your individual business. It’s very different for us as advisors as opposed to a retail type business. It will also depend on the nature of your purchase/customers. Are they mostly ‘one time only’ buyers or will they be ‘repeat buyers’? If they are repeat buyers you would need to work out approximately how much each customer is worth to you. E.g. How much does the average person by from you in a year and what is your average retention rate of clients.

It will take some trial and error to work out what works best for you. This can be a costly phase and you will constantly be tweaking even when you have found something that works. Things can change very quickly so it’s important you are constantly testing other methods so you have a few back-ups. We would recommend you aim for 6-10 legs of marketing running at once in various capacities. A leg of marketing is basically a method. E.g. Facebook dark posts are one leg, blogging would be another, a 3rd could be a radio advertisement and attending networking events a 4th.

The biggest mistake we see when a business is struggling is the first thing owners do is cut the marketing budget, because sometimes there is nothing else they are able to cut. This is usually a massive mistake, especially if that marketing was working. The most advisable thing to do is to review your marketing and ensure you know how much a customer is costing and where you are getting the biggest ‘bang for your buck’. If you need to ditch some legs that are costing too much that is fine, but you need to keep the marketing that is successfully bringing in customers.

So to answer the question regarding how much to spend. It depends on your budget and industry (sorry for the vague answer). Make sure you ‘Test and Measure’ everything to work out where you get the best conversion rates.

A final shout out to Sandra at New Vintage. Sandra has a passion for teaching people how to use various paints such as milk, chalk and mineral paint to transform their old furniture into beautiful pieces they can proudly display. She stocks a range of paint and accessories including Sweet Pickens Milk Paint. Pop over and check out her website www.newvintage.com.au

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