For most small business owners, marketing remains a mystery.
That’s the conclusion of a recent small business survey from marketing technology firm Outbound Engine. The survey — which polled more than 350 small business owners — found that 58 percent of us less spend than five hours a week and five percent of our revenues on our marketing activities. We also complain that we either don’t have enough money, time or know where to best devote our resources.
Sound familiar? It should. I hear this all the time from my clients. I also have similar challenges. But I’ve learned a few things. I’m asking questions that I haven’t asked before; and the answers are helping.
For example, I ask myself how much should I be spending? According to a 2017 study of more than 5,000 corporate Chief Marketing Officers from Deloitte, large corporations can spend anywhere between four to twenty-four percent of their revenues on marketing. The Small Business Administration recommends targeting seven to eight percent of revenues.
Marge Bieler, a Philadelphia marketing consultant, tells her clients with revenues under $5 million to “set aside a minimum of eight percent” and that number can go as high as twelve “to beat out the competition.”
Obviously, your business size, industry and whether you’re B2B or B2C need to be considered, but anywhere from five to ten percent of revenues is a good rule of thumb.
I’ve also been asking myself who is my customer? If you’re going to spend a tenth of your revenues on marketing, you better know who you’re marketing to, right?
David Newman, the founder of Do It! Marketing in Bryn Mawr, agrees. “You need to very clearly define your ideal customer,” he says. “Ask yourself who they are, what they want, what they need, what frustrates them and – most importantly – what problems, heartaches, headaches, challenges, and gaps do they have when it comes to your particular set of products and services.”
Newman says that your messaging, whatever it is, needs to be “all about THEM and THEIR problems, not about YOU and your solutions.”
Which brings me to where. Where should I spend my money? There’s no shortage of places that will be happy to accept my marketing dollars. My job is to figure out what place has the most revenue potential. For example, if I were selling corrugated containers or copper wiring my audience is probably not going to be on Facebook. However, if I was in the business of creating custom furniture, making organic chewing gum or planning parties then Facebook (or Etsy or Instagram) may be where my prospects are. Some of my clients invest heavily in email marketing while others still like to send postcards and mailers.
A number of business owners I know devote their resources to industry conferences or local events. Online advertising has grown significantly over the past few years. Your job and mine is to do the research — ask questions, send surveys, quiz our existing customers — so that we can figure out the best place to find where our prospects are living and then target our resources there.
Once I start spending my money, how do I know I’m spending it wisely? I know this because I’ve learned to measure every dollar. Marketing is about trial and error, and mostly (in my case) error. I’ve spent thousands on campaigns, online ads and marketing experts that have brought me few new customers. I’ve painfully tracked all of my failures in my customer relationship management (CRM) database. You can suffer the same heartache with a simple spreadsheet too.
It’s not fun, but it’s necessary. “Implement on a small scale first,” Newman says. “Test, refine, and then scale up what’s working and kill what’s not. Most companies have not done the hard math to calculate customer acquisition cost versus customer lifetime value but this basic math is critical to your marketing if you want it to be not only effective but profitable.”
Finally, and most importantly I’ve learned to ask myself who’s going to do the work because I’m not the right person for the job! “If you can hire a consultant, do it,” Bieler says. “It’s very difficult to learn how to implement things like online advertising or email campaigns or even determine the best media to buy for your business.” She’s right. Unless you have hours of free time, acknowledge that you don’t know what you need to know and hire an organization that lives and breathes it every day. Mad Men’s Don Draper may be sexy but trust me: marketing is not.
Target audiences need to be determined. Ads or messaging need to be crafted, published or sent. Clicks, responses and phone calls need to be logged. Adjustments have to be made. Results have to be tabulated and discussed. New prospects have to be captured and tracked. Actual spend has to be compared to budgets. This is drudgery! But it’s critical. Who’s going to do all this? You’ll have to hire someone internally or rely on an outside marketing firm.
Many of us just treat our marketing dollars like a chip at an Atlantic City casino: we toss it down and hope for the best. But this is irresponsible. Our budgets are small and our resources are thin. We’ll never eliminate the risk the risk of losing our money but – by asking a few key questions of ourselves – we can certainly minimize it.