How much are you going to spend on marketing this month? This can be a tricky question to answer. On the one hand you want your promotional message to reach the maximum number of people and on the other hand you want to make sure that you don’t end up overspending on marketing. The good news is that reaching the right target audience is not directly proportional to the amount spent on marketing. There are three simple steps that you can follow to optimize your marketing budget.
- Allocate: How much is the total disposable money that you are willing to invest in your business this month? If your business objective is aggressive growth you may be willing to put in some of your savings in addition to your net disposable business income. However, if you want to be prudent and conservative, then you plough back only a small proportion of your net disposable income into your business. Hence, the total amount you set aside will depend on your risk appetite. When deciding on your total budget allocation, do set aside an amount for unplanned contingencies. There are usually some expenses that you cannot predict so be prepared for the unexpected. This buffer in your budget allocation is intended to avoid you going bankrupt due to a cash flow problem. Once you have your total budget amount sorted, you need to allocate this amount across your different departments. This allocation depends on your business objective. For example, if you want to open a new branch, then staffing and HR will consume a larger proportion of your total budget with relatively little left over for Marketing. Hence, you need to clear about your business goal when allocating your budget amongst competing uses. Be realistic in your expectations of outcome. For example, if you are setting aside a very small amount for Marketing, then don’t expect extraordinary market share growth.
- Evaluate: Once you have allocated your marketing budget, you need to evaluate it in order to optimize it. You do not have to wait till the end of your marketing campaign to start assessing its impact. You can use call tracking reports to determine the effectiveness of a campaign even while it is running. The Pareto Principle (also known as the 80:20 rule) usually holds true when evaluating marketing effort. The principle states that 80 percent of your productive leads come from 20% of your marketing channels. Hence, it is a good idea to start on a relatively small scale and determine what works best before you invest more. This approach allows you to experiment and allocate resources optimally. At this stage you can also use call recordings to determine exactly why a potential sale did not materialize. After listening to the recordings you may discover that there were several missed sales opportunities. In this case you can re-target these potential customers with a personalized offering that closes the sale.
- Optimize: You can determine which promotional channel is getting you the most productive leads through call tracking reports and then reallocate your marketing budget to the channel that gets you the most sales. Concentrated marketing gets you much better results than randomly dispersed messages which are lost in a crowd. For example, if you are using social media marketing then you need to choose the two or three channels that your customers are on. Trying to market everywhere is like crossing a road blind-folded. You may get lucky and actually manage to cross once but repeated attempts will get you in trouble. So why not get the knowledge you need beforehand to ensure that your message is right on track. Not only can you track which campaign and channel works best for you but you can also use keyword level tracking. With keyword analysis you find out exactly which keywords appeal to your target audience. This enables you to match keywords with a differentiated target audience. In this way, your marketing message is right on target every time. However, an important point to remember is that when you are differentiating your message across channels, you need to be very careful about maintaining a consistent brand personality.
All in all, the three step formula is designed to ensure that you can achieve the right results from even a very limited marketing budget. The key is to not waste scarce resources on channels that yield sub-optimal returns but to focus on high return channels with the right keywords.