You know you have to spend money to make money, but when it comes to marketing your business spending more doesn’t necessarily equate to a bigger return. Spending smart does, however, which is why it’s critical you learn how to prioritize your marketing investment.
Remember that word: “investment.” Every marketing dollar spent should be considered an investment with an expected return. The following offers tips for investing wisely, developing priorities, and earning greater returns from your marketing investment.
Establish (and rank) goals
The first step toward prioritizing your marketing investment is to establish goals. Start with general goals, then get specific. Example broad goals might be:
To earn more repeat business
To attract new customers
To increase profits
To increase per-sale revenues
These are all reasonable goals, but they’re also very broad – pretty much every company shares these goals. Now, it’s time to get specific. For example:
To increase repeat business by 25%
To grow customer base by 10%
To increase profits by 15%
To increase per-sale revenues by 10%
You can get even more specific; for example, “to increase follow-up purchases of PRODUCT B by buyers of PRODUCT A by 10 percent.”
The more specific you get, the better, as being specific will help you make sound decisions regarding your marketing campaigns. Do you remember working out the least common denominator in basic algebra? The process is similar here: keep working on your goals until you’ve broken them down as far as you possibly can.
So, for example, you might have:
Increase follow-up purchases of PRODUCT B by buyers of PRODUCT A by 10%
Grow female customer base for DEPARTMENT A by 10%
Increase profits 15% with improved market targeting
Decrease per-sale marketing investment to increase per-sale revenues by 10%
Next, you need to rank your marketing goals by priority. Your priorities will depend on multiple factors, including your current customer base and profit margins. Let’s say you operate ABC Salon, and your goals are to:
Increase follow-up purchases of eyebrow waxing for hair style customers by 10%
Grow your high-school aged female customer base by 10%
Increase profits by 15% with improved market targeting
Decrease per-sale marketing investment to increase per-sale revenues by 10%
And, let’s assume:
You have a healthy repeat customer base
The new salon across town is popular with teenage girls
In this scenario, you’re not in danger of losing current customers – you’re in danger of losing future customers. So, you might prioritize your marketing goals as such:
Grow your high-school aged female customer base by 10%
Increase follow-up purchases of eyebrow waxing for hair style customers by 10%
Increase profits by 15% with improved market targeting
Decrease per-sale marketing investment to increase per-sale revenues by 10%
Now, you have clearly-defined goals, ranked by priority. However, you might notice that some of your goals can overlap. For example, improved market targeting and decreased per-sale marketing investment can be applied to any marketing campaign, regardless of the investment.
So, for ABC Hair Salon, you know your number one priority is attracting more teenage girls; and your second priority is increasing follow-up purchases of eyebrow waxing for hair style customers.
Commit your marketing budget
The next step is to commit your marketing budget, and that begins with determining how much you should spend on marketing. For our purposes, let’s say you have a $2,000 per month marketing budget, or $24,000 per year.
Take a look at your prioritized list of goals, and determine how much of your budget to commit to each. Determine how much of your marketing investment should be given to each priority on your list. We’ll say ABC Hair Salon is going to devote 60 percent of its marketing investment to its top-ranked goal, and 40 percent to its second-ranked goal.
ABC Hair Salon Marketing Goal Priorities and Investments
Grow high-school aged female customer base by 10% | 60% of budget | $14,400
Increase follow-up purchases of eyebrow waxing for hair style customers by 10% | 40% of budget | $9,600
Now, you have established marketing goals and committed specific investments toward each. The third and final step is to select your marketing channels.
Choose your marketing channels
The best way to pick your marketing channels is to:
Define your audience
Determine the best way to reach that audience
Again, using our ABC Hair Salon example, we might define our audiences as:
High-school aged females in a 5-mile radius
Current hair style customers
Now, you can consult case studies and conduct research – plus use a bit of common sense and intuition – to determine the best ways to reach each audience.
For example, reaching high-school aged females in a 5-mile radius might involve social media marketing, mobile marketing, and direct-mail marketing (in fact, research suggests younger audiences respond better to direct-mail marketing than digital marketing).
Reaching current hair style customers takes less guesswork: you can make sure each customer goes home with a flyer (and coupon) or brochure about your eyebrow waxing services. You also have their names and addresses if you’d like to sell a hair style/wax package by sending a direct-mail postcard with coupon. Email marketing would be another good option.
Now, you can rank your marketing channels for each audience according to what you believe will work best; if you’re not sure, you might divide your budget evenly across each channel:
High-school aged females in a 5-mile radius
$14,400 marketing budget
Channels
Social media marketing: $4,800
Mobile marketing: $4,800
Direct-mail postcard marketing: $4,800
Current hair style customers
$9,600 marketing budget
Channels
Takeaway brochure (45%): $4,320
Direct-mail postcard (45%): $4,320
Email (10%): $960
Now, you have a specific dollar spend for each marketing channel under each audience to achieve each goal you’ve set – all within your marketing budget. This is how you prioritize your marketing investment.
Review and track
Even though we recommend a commitment to your budget, it’s also important to understand your marketing investment is fluid. If you find a strategy that works well, it makes sense to invest more in it; if you find a strategy underperforms, it makes sense to drop it – although you should always make sure you’ve done a good job of optimizing your campaigns for success before you give up.
Review your marketing strategy at least quarterly, and monthly at possible; always track response whenever possible, and use real data to help you make sound marketing decisions moving forward.
Business owners are fond of saying half their marketing works, they just don’t know which half. However, everything from today’s sophisticated online analytics to simple printed coupons and coupon codes make it easy to track the majority of your marketing response rate.
With dedication, testing, and time, you can learn where to prioritize your marketing investment based on what nets real results. In the meantime, prioritize your investment based on goal achievement, and you’ll take the first step toward intelligent budgeting for successful marketing campaigns.