No matter the size of your business, if you do any marketing whatsoever, you’ve probably asked yourself how much money you should spend. While there are “free” marketing channels, your time is not free, so nothing is truly free. That said, there are many different types of marketing, and the costs range widely.
Before we get into the actual dollars of what you should plan to spend, the first thing you need to do is identify your marketing goals. Are you aiming to acquire new customers, obtain repeat business from former/current customers, fundraise, or do you want brand/name recognition?
Your goal matters because that serves as the base for determining your marketing spend. For example, if you are looking to acquire new customers, you’d start by looking at how many new customers you gain in an average month or year and then calculate their average spend. If you know how much money you spent to acquire those customers (aka customer acquisition cost or CAC), even better!
From there, if your goal is to add 10% more customers, you can easily determine how many customers you want to get and what revenue you’d expect to bring in from them. You can even use that customer data to build a profile of your customer and work with a data specialist (shameless plug for our incredible team at Kirkwood Direct who do just this!) to find others that match the profile to market to.
Keeping with that example, you’ll want to look to spend anywhere from 2-10% of your expected revenue on your marketing. The range varies based on the media you choose. Social media advertising, for example, can be costly if you’re highly targeting and looking for clicks, while direct mail can range from inexpensive for a simple yet impactful postcard to more costly if you go for a high-end package.
You can also budget marketing spending based on your annual revenue and plan to spend roughly 6-8% of your gross revenue on your overall marketing for the year. What qualifies as marketing? Anything that gets dollars in the door for you, no matter what your business or organization does. Even non-profit organizations have to market heavily to solicit donations, and they are not immune to CAC. Think about the helpful or fun add-ons you get before you make a donation with some organizations; address stickers, gift tags, keychains, magnets, etc. Those cost the organization money but are part of the cost to acquire donors, and research has shown they work well.
But what about those people who you hear spent “nothing” on marketing? Didn’t our grandmothers tell us there’s no such thing as a free lunch? They were right. Marketing is never free, no matter what you may hear. Even the trending videos that so many people create to get eyes on their product cost money. Creators (even as business owners) have a cost. Time is money, and if you’re spending time building content for your business, that’s costing you time that you’re not working on other activities and should be factored into marketing budgets.
At the end of the day, there are three big things to remember when you’re trying to make cents of your marketing dollars… start with a goal, know your costs, and be reasonable. Marketing needs to be measurable, work for your budget, and be impactful. You don’t need to be an expert, either. Find a partner who can assist you so you can get back to focusing on what you do best, bringing in those dollars.
Kirkwood Direct’s expert services include marketing strategy, marketing plan consulting, graphic design for print and the web, printing, direct mail, and fulfillment. Let us help you make cents for your marketing, and spend those dollars wisely. Contact us today by giving us a call or filling out an online contact form.