All successful businesses have a strong marketing plan.
It’s pretty amazing to me that when I ask a company what their marketing plan is that 9 times out of 10 they stare back at me with the “deer in the headlights” look. It’s really no wonder today that companies tend to be very skeptical about investing in marketing. When you don’t know your business, who your customers are, who your target market is and what your marketing budget is, it is almost impossible to develop a marketing plan that will bring about positive results.
Companies today are basically throwing marketing ideas at the wall and hoping that maybe one of them sticks. When results are negative, they take on the attitude that marketing does not work. This is not the way to develop an effective marketing plan for your business. Before you even begin developing a marketing plan there are certain questions that need to be asked and answered:
Who is your target market?
Without knowing who you are trying to target, it is impossible to develop an effective marketing plan. For example, if your specialty is restoring classic cars, your marketing message isn’t going to be that you are just a car repair shop. You’ll end up attracting a young kid who ran his 1997 Chevy Corsica into the ground. You need to hone in on who you want to attract, their age, their location, their sex, and yes, in some businesses even their ethnic background. Until you know who your client is how are you going to know how to reach out to them on their level?
Which products provide you with your highest margins?
We are all in business to make money. It’s just good business to try and sell the product that makes you the most money with the least amount of overhead involved. Would you rather have to sell 100 widgets at $10 or 1 widget at $1000?
What is your current customer base and what percentage of your business is repeat business vs. new business?
Again I am amazed when I ask clients how many customers they currently have and who they are, that usually the resounding answer is something like: “ummm I’ll have to have my secretary check in on that.” Marketing to your own book of business gives you a great opportunity to cross-sell your products, grow by referral and maintain retention. It is also important to know how much of your revenue is coming from repeat customers and how much is coming from new customers. This will help you in determining which group you should be targeting, which will help solidify your marketing plan.
What will a lifelong client mean to your business?
We always say that marketing shouldn’t cost, it should pay. If you gain one new client through your marketing efforts, whether that be acquiring them through your website, a direct mailer that you sent out or a customer referral program that you put in place, the lifelong profit that that client brings could not only pay for your entire marketing budget but also make you a profit.
Where do you want your business to go?
What are your short and long term goals? Do you want your business to grow in certain areas over others? How much do you want to expand in one year? If you don’t know where you want to end with your business how are you going to map the directions to get there? I cannot stress how important it is to sit down on a monthly basis and track your sales goals, look at your leads, see what is still pending and what needs to be revisited. It is incredible what you will be able to find when you look at it and with that clarity you are able to put together an actual marketing plan to get you to where you want to go.
What is your marketing budget?
This is arguably the most frustrating of aspect of creating a marketing plan. Determining a budget for your strategy can be a bit difficult. There are a few strategies that you can use to help you get started and then as you operate with that budget throughout the year you can adjust your spending accordingly:
Use a Percentage of Your Revenue
For small businesses this percentage is usually around 20%, for small to medium size businesses the percentage is around 10-15%, large companies and corporations usually set this percentage between 2-5%. Depending on the size of your business and your goals you can set your budget within these benchmarks.
Look at what your Competition is Doing
If using the previous strategy is not accurate enough for you, another strategy that is used is to benchmark what your competition is doing and then set the bar a bit higher. By doing this you are able to stay in line with industry set budgets but you are getting your name and message out to a greater degree than your competitors.
What Does a New Client Cost?
While the first two options are a good way to benchmark your budget, if you are looking for more accuracy in determining your marketing budget, what you need to do is to first determine how much you want to increase your customer base for the year. The first step is to determine the acquisition cost of a new customer, then you multiply that cost by the number of new customers that you want to acquire. For example if it costs $1000 in service, paperwork, and time to acquire a new client and your goal is to grow by 25 clients in a year, then your marketing budget should be $25,000 a year.
These three strategies to determine your budget are only projections and should be reviewed on a regular basis to determine if they are in line with your sales and marketing goals. The real benefit is that you have goals in place to bring awareness to your brand as well as a measurable marketing plan to do so.
If the marketing company that you have been working with is not reviewing this information with you then they are not doing their job. Give us a call today to receive a free consultation on your marketing goals; we would be more than happy to help develop a marketing plan that works for your business. You can contact us at 973-998-5742 or visit us online at www.KrausMarketing.com.