Is Your Marketing a Cost or an Investment?
We know that to grow our business we need to market effectively to generate new customers, however, as soon as business slows, one of the first things to go is the marketing budget! Why is that?
One of the main reasons for the marketing budget being cut as soon as money becomes a little tighter is because very few business owners actually understand whether their marketing is working for them or not. Unfortunately, some professionals, such as accountants and bank managers will often tell business owners that their marketing is an expense and when cash flow becomes tight, they recommend that expenses are cut.
What if we could really understand our marketing strategies and be able to measure them in such a way that we knew with certainty which strategies were generating excellent leads that are in turn generating profitable sales. When our marketing budget generates profitable sales regularly, then our marketing budget stops being an expense and becomes an investment.
So where do we start to convert our marketing budget from an expense into an investment?
The place to start is with an effective marketing plan that is built on sound market research and involves a clear understanding of who our ideal clients are for each market. Once we have this plan in place, we must also include a process for measuring each strategy that we use so that we are able to quickly measure if the strategy is working or not.
Measuring market strategies always seems to be a big challenge for the business owners I meet as they all seem to believe that measuring their marketing is very difficult, if not impossible. In all the years I have been teaching marketing principles, I have yet to find a strategy that cannot be measured. One of the keys to being able to effectively measure marketing strategies, is to make sure that all members of your team are involved with the marketing plan and that they fully understand why each of the processes are important. In the majority of businesses we come across, any marketing strategy seems to often be a spur of the moment decision by the boss and very few other members of the team seem to even be aware of the strategy, so any measurement process becomes hit and miss which feeds the belief that measuring marketing is very difficult. When the team are involved with the marketing plan and each of the strategies in the plan, it is considerably easier for them to understand why it is necessary for them to ask new prospects how they heard about the company and to record the results. One of the reasons why measuring new leads is very difficult for many businesses is the fact that very few even have an enquiry form for team members to complete, most of them just use a book or any scrap of paper lying around. When building a marketing plan for your business, it is vital that you have an enquiry form that has all your various marketing strategies on it to remind team members to ask the question and to record the answer.
Once we have the front end measuring process in place, we can then design how we trace enquiries through the business so that we allocate and measure sales against each of the strategies we employ. At first reading, this may seem very difficult to do in your business, but I have found that in the majority of cases a simple solution can be found by just making a few easy changes to the current process you are using.
Some of you reading this may be wondering if it is really worthwhile making all these changes to your current sales process just to measure the various marketing strategies you have in place. To answer this question, just stop and think about how much money you have invested in the many marketing strategies you have put in place over the years and then ask yourself how many of these strategies could you hand on heart say really generated profit for your business? So many business owners have invested thousands on a strategy without knowing if this strategy was generating any business for them or not. On the other hand, I worked with a business owner who cancelled an advert they had been running because they thought it had become old and stale. Within two months their sales had started dropping off at an alarming rate, so we put the advert back with a measuring process in place and sales started streaming in again, measurement showed that this advert costing just £200 per month was generating 19 sales per month with an average margin of £60 per order, a return of £1140 of profit against an investment of £200.
Once you are measuring your marketing strategies you are in a powerful position of being able to use your marketing investment wisely. At a glance you can tell which strategies are working and which need to be changed or withdrawn. At this point your marketing budget has moved from being a cost into being an investment as you can measure the returns. While you are running marketing strategies without knowing whether they are working or not, you are just throwing your hard earned profit at opportunities without measuring the return, the same profit that you have had to work really hard to earn.
But just think of this, if all your marketing strategies are working well and generating profitable sales, what is your marketing budget? Every time you invest £500 into your marketing it is making considerably more than this in gross profit off all of those sales you are generating. At this point, your marketing budget becomes self funding as whatever you invest generates considerable return for you.
Marketing your business successfully is one of the key points in any business to master if you are looking to take it to another level of success, but it is absolutely vital that you understand and measure your marketing activities so that they do not become a huge expense on your profit and loss account.
Build your understanding on how to market successfully, measure every marketing activity you engage in, keep the ones that generate profit, change or get rid of those that don’t and soon your marketing budget will become an investment that helps your business grow profitably.