As an entrepreneur, you’re likely full of big ideas. You’ve also probably considered acting on these ideas at one time or another, but maybe don’t always know where, or how, to start. That’s where marketing comes into the equation. Marketing is simply the process of promoting your ideas, or products, using a variety of tools that often include market research and advertising, in order to present value to your customers. When understanding how to determine your marketing budget, you need to take into account how much you’re willing to spend, and also incorporate your overall revenue and business goals.
Which marketing strategies and tactics get the best results?
If you’re new to marketing, it’s normal to feel slightly overwhelmed. There are plenty of ways to leverage your brand. Let’s take a look at some of the most popular options that can get you noticeable results.
Social Media Marketing: Social media marketing refers to the practice of promoting your business’s products or services via various social networks, like Facebook, Instagram, and LinkedIn. Not only does social media marketing allow you to engage with your customers directly, but thanks to a range of built-in data analytics tools, you can track and analyze how efficient your marketing efforts are.
Inbound Marketing: Inbound marketing is one of the most successful kinds of marketing, because it uses a highly targeted approach. Inbound marketing is the practice of creating and distributing valuable content to the customer, which increases the likelihood of them actually engaging with your business or brand. For example, if you own a bakery, an effective inbound marketing strategy could be to produce a blog post on how to bake the best chocolate chip cookies.
Outbound Marketing: Unlike inbound marketing, outbound marketing is slightly more disruptive in the sense that you aren’t targeting your audience with specific, niche content. Instead, outbound marketing is the act of pushing your products, services, and messaging to as many customers as possible. Tactics could include cold-calling, newsletters, or paid advertising.
These are just three of the many marketing strategies available. As you identify the needs of your business, you’ll get a better understanding of which option works best for you.
How Can Ownr Help?
An important step in determining your marketing budget is choosing the channels your business will use to reach your target audience. This is where Blueprint can help. Blueprint is Ownr’s free business plan generator, which guides you through 10 different modules related to your business, including selecting which marketing channels you’ll be using. Once complete, not only will all your info be packaged up into a beautiful, professional business plan, but you’ll have a better idea of how to allocate your marketing budget.
How to set a marketing budget for your small business
Creating a perfect marketing budget for your small business isn’t nearly as challenging as it sounds. Follow these simple steps to get started:
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- Define your business strategy: What are your long-term business goals and objectives? What is your plan of action, and how do you hope to achieve the goals of the company? Sometimes, determining your business goals can seem complicated if there are too many ideas on the table. Once you identify the most important objectives, you can develop a strategic plan of action.
- Figure out your current marketing spend: If you’ve never spent any money on marketing strategies, this number will be zero! Marketing spend includes any funds you have ever put towards promoting your business, and can include paid social media advertising, building a website, hiring a social media manager, etc.
- Track your spending: If you’re spending money on marketing, it’s important to track how much you’re spending, how often you’re spending, and where you’re spending. For example, maybe you’d like to allocate $500 per month on targeted Facebook Ads, and another $500 a month towards Instagram for Business. Tracking your spending allows you to calculate your return on investment (ROI). By seeing where your marketing efforts have been successful, you are able to make informed decisions regarding future marketing spend.
- Make necessary adjustments: When necessary, optimize your marketing plan to achieve your best results. For example, if you spent advertising dollars on a paid social media campaign, but your engagement levels were too low, you might consider switching to a new marketing platform.
- Monitor your marketing budget: Keep an eye on future trends and make it a habit to track your spending, whether on a monthly, quarterly, or annual basis. It’s also a good idea to monitor emerging marketing trends and optimize your marketing strategy when necessary. Digital marketing trends are always changing and you don’t want to get left behind! For example, cold-calling and keyword stuffing were once perfectly fine tactics, but now, those have both been replaced by savvier alternatives.
Why do I need a small marketing budget for my business?
Most business owners recognize that they need to grow their business, but, often, it’s the financial aspect of marketing that keeps them from making the leap.
There’s an old saying that asserts you have to spend money to make money, and as cliche as it sounds, it’s absolutely true! Businesses can only go so far through organic growth. Word of mouth marketing (when a friend of a friend spreads the word about your amazing products or services,), for example, is a great tool to use in the beginning. But as you start to develop genuine business goals and set monthly KPIs, setting aside a small marketing budget is the logical next step.
A small marketing budget is helpful because it allows you to scale your business and spend more effectively. By putting your funds towards marketing initiatives that will grow your existing customer base and explore new channels, you have the potential to achieve smarter results.
Sales cycle and sales funnel
In marketing, two of the most common terms you’ll likely hear are the sales cycle and the sales funnel. While they may seem similar, they’re actually quite different. Let’s take a closer look at the two terms.
The sales cycle, explained
The sales cycle refers to a strategic, repeating process that salespeople use in order to successfully close a business deal. Sales cycles are tactical and precise, and they allow you to effectively evaluate the success of your marketing efforts.
As a business owner, having a sales cycle is important, because it’s essentially a roadmap for your team that helps them better understand each other’s roles, and what must be done to secure the sale.
A sales cycle also provides the basic infrastructure needed by your team to determine what stage of the buyer’s journey your customers are currently in. In turn, this will better help you, or them, more effectively close leads faster and more efficiently.
What is the sales funnel?
The sales funnel refers to the journey that your customer goes on prior to purchasing your products. For this reason, the sales funnel is often known as the buyer’s journey in marketing. Just like an actual funnel, a typical sales funnel is composed of a top, middle, and bottom. These sections of the funnel represent the various stages and steps in the buyer’s journey.
The top of the sales funnel is dedicated to creating awareness and helping potential customers discover your business. This is where you will begin to qualify any new leads that result from your marketing efforts. The middle of the sales funnel is reserved for evaluation and intent. This is where you will make an offer, or negotiate a contract, or deal.
Finally, the bottom of the sales funnel is where conversion and sales come in. At this stage, you’ve likely persuaded your customers, negotiated a deal, and now it’s time to close that deal and make the sale. At the end of the sales funnel, it’s important to always practice loyalty. Follow up with your new clients after their purchase, and keep a record of the capacity in which they use your products, so you can better suggest new products or an additional level of service in the near future.
How much to allocate for a marketing budget in 2024
Figuring out your marketing budget involves some basic marketing math. Your marketing budget should be a small percentage of your total revenue.
Whatever you decide to spend on marketing should always reflect your current revenue and take into account which customers you are trying to reach. Generally speaking, B2B and B2C businesses have different spending margins when it comes to marketing. B2B companies, for example, should expect to spend anywhere from two to five per cent of their annual revenue, while B2C companies can spend between five and ten per cent.
However, the size of your company can also influence your marketing spend. Businesses with fewer employees, for example, might spend less than large corporations that have more overhead. When it comes to allocating a marketing budget, when in doubt, a good rule of thumb is to research your direct competitors to find a common ground within the industry.
Marketing mistakes to avoid
With so many businesses competing for the attention of consumers, it may sometimes seem easier to take a quick shortcut when it comes to marketing your products and services. Unfortunately, cutting corners can be costly. Let’s take a look at some of the most common marketing mistakes and how to avoid them:
- Don’t assume: Never assume that you know what a new customer wants. With so many competitors in the marketplace, making assumptions can result in your potential customers taking their business elsewhere. Take advantage of the many free tools available to you, such as surveys, polls, and even social listening to better understand what your clients want and need.
- Don’t overdeliver: Trust is key to securing loyal customers. If you make empty promises, or offers that are actually not attainable, you risk tarnishing your business and brand. Instead, focus on perfecting what you do best!
- Don’t ignore your customers: Always respond to reviews of your business, especially the negative ones. While your first instinct may be to avoid these comments for fear of further angering the customer, one of the smartest moves is to engage. Responding to negative reviews in a timely fashion shows the customer that you are listening and care about their overall experience with your business. If appropriate, offer to rectify the situation with a discount on future services, or invite the customer to share what could have made their experience better.
- Don’t overspend on campaigns: Before launching your advertising campaign, it should be airtight with a strategic approach and solid end goals. When you don’t put enough thought and market research into your campaign, it’s more than likely you won’t see the results you hope for. You might then decide to extend the campaign, and pour more revenue into it. Instead, set a daily or monthly budget and make a point to check in on the campaign to see what’s working, and, if something is misaligned, adjust where needed. Also, always remember to set an end date for your campaign to avoid additional spend.
- Don’t go after the wrong crowd: As a small business owner, you want to spread the word about your products and services to everyone. But, that doesn’t necessarily mean that everyone is the right customer for you. Blasting your marketing campaign to the masses, without doing proper research, is often met with little success. Instead, take the time to create individual buyer personas, and adjust your messaging strategy for each. Remember, tailored content is much more likely to resonate with customers than a one-size-fits-all approach!
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.