WARR & CO ACCOUNTANCY BLOG
Whether you’ve decided 2017 is the year you’re jumping into the world of self-employment or you’ve been living the gig lifestyle for a while now, 2017 is the year that you should set aside a marketing budget, and we’ll explore why in this blog.
There’s no denying, it takes money to make money, and no matter what your selling; services, products, consultancy, you need to market effectively to your customers. While traditional channels, such as print, radio and TV are generally becoming less effective, digital channels are taking over – and the great news is, they’re cheaper!
Top digital marketing channels for 2017
- Email marketing
- SEO (Search engine optimisation)
- Content/Inbound marketing
- PPC (Pay per click)
- Social media
Of course, to be effective online with any marketing strategy, you’ll need a solid website, read our blog ‘5 Reasons Your Small Business Needs a Competitive Website’ here. Your digital marketing efforts rely on the cornerstone that is your website.
The two big questions are, how much should you set aside for your marketing each year and which areas should you focus on? Unfortunately there’s no one-size-fits-all solution. So let’s look at these separately below…
How much should you set aside as an annual marketing budget?
As a rule-of-thumb, companies spend a minimum of 5% of their annual gross revenue on marketing. It’s common to spend between 7 – 10% if you’re looking for growth, rather than maintenance.
Your annual marketing budget should cover your website and digital running costs – if you already have any. This could include your domain name fees and hosting charges for your website as a minimum, on top of this you’ll need to consider how often you need to pay for updates/necessary changes to your website. As a rule of thumb, a website is out-of-date if left unchanged for 2 years or longer – so consider a budget to allow your developer to make regular small changes and avoid a complete re-build every few years.
Now that the essential costs are calculated, anything left over can be spent on digital marketing activity.
Remember, it’s vitally important to try to track ROI of your marketing activities, this is not always an easy thing to do and may require a little thinking outside-of-the-box to be able to attribute a figure to each activity. Keep a spread sheet of your monthly activities and sales/new customer enquiries. If certain activities produce a better ROI than others, consider diverting more time and money to those to improve your overall performance.
TIP: Your ROI accuracy relies on you knowing how much money a ‘sale’ or an average new customer will bring into your business. Work this out first.
Where should you focus your marketing activity?
The answer to this question will vary from business to business. The place to begin forming your own individual answer to this question is to analyse your customers, create a customer profile; are they likely to be on LinkedIn, can you attract them by writing blogs using your professional knowledge, is email the best way to reach them, are they searching Google for your services?
Once you have answered a few of these questions, you’re on your way to selecting the best channels for your business.
If your business is new to digital marketing, there will be a certain amount of trial and error, you may be surprised at some of the best channels for to market your business.
Now that you know the how and the how much, it’s time to fit your planned activities into a budget and set out a marketing strategy. Don’t be tempted to just undertake marketing activities without a clear goal. If your aim is to get 10 new customers this year, then set that as a goal and work back from it to decide what milestones you must hit to reach that goal.
As a quick example, we’ll look at business ‘Example Ltd’. This example business rely solely on their website for new customer enquiries without any supportive marketing strategy.
At Example, the website attracts 300 visits per month. They receive 3 enquiries per month and have a 33.3
% success rate in signing up a new customer. Each new customer brings in an average of £500 per year for Example.
So Example are currently winning 1 customer per month without putting in a significant marketing spend and growing by a little each month. They currently generate around £200,000 in gross revenue each year and only spend around £2000 on keeping their website updated and running.
Example‘s CEO wants to boost the company’s growth by bringing 5 customers on-board each month. Let’s see what must be done to make this happen…
If we assume the 33.3% success rate remains stable and is unlikely to change, the company must look at increasing it’s targeted and relevant website visitor numbers. Currently 300 visitors bring 3 enquiries and 1 customer. If we work backwards we can see that for 5 new customers, they will need 15 enquiries and 1,500 website visits per month. So what the company really needs is an increase of 1,200 targeted website visits.
To do this, the company could allocate 7% of their revenue towards marketing. They currently spend 1% (£2,000) on the running and updating of the website, leaving £12,000 available for other marketing activities throughout the year.
In this example the company may decide to attract these new targeted website visits via one or several methods such as PPC, SEO, Social or Content Marketing. But bringing up the website visit numbers is the key.
Investing in marketing can seem like a scary leap for your small business to take, but done carefully, it will set you on the path to accelerated growth. Consider finding a freelance marketing professional or a small agency to help get you onto the marketing ladder.