The question we get asked all the time is, “how much should I spend on marketing in 2021”. The answer to this comes from the answer to these three questions.
1. What is your revenue goal for 2021?
The reason this question is important is because it sets the table for how we go about getting that result. If a business owner launches a $1,000/month budget on their $500,000/year business, and the business grows to $550,000 that year, would the business owner call that a success? We don’t know unless we ask.
If the growth goal of that same business owner was to hit $800,000, a $300,000 increase, a $12,000 annual budget would seem too small. The answer is, what does success look like, and then work backwards from there. A business owner with a high-growth mindset spends between 7% and 20% of their desired annual revenue on local advertising. Where a maintenance or not-so aggressive budget would look like a 5%-7% budget locally.
No one ever complains that they spent too much on advertising if it brings large growth above the expense, however some may complain if they spent too little and experience little growth. Be on the same page with your agency and set benchmarks to review as your move throughout the year.
2. Are you going to be a part of the solution or part of the problem?
Try asking a business owner if they are going to be a part of the solution or the problem and see how long they stay on the phone but they really do hold the keys to success.
When running a retail business, the #1 key to success is customer service and the #2 is local social content. If the Business owner has a staff of rude, head-down-in-phone staff, or too small over-worked crew to deliver great customer service, than all the marketing in the world will not help this location. More door swings in a business does not translate into more business 1 for 1.
You the business owner are in control of the environment you lead in and support. Marketing is gasoline on the word-of-mouth momentum of the business. That starts with you, the business owner. If you are not allowing your staff to get creative with local in-location social posts, you’re contradicting your entire business. You rely on this staff to essentially be the brand to every single customer interaction, but you won’t let them tell the world about your brand on a Facebook post or Instagram story?
You can’t have the one without the other. Your advertiser should take your great local content and get that in front of the local audience to engage and be persuaded to be your next door-swing.
3. When you experience growth, stop asking how they ‘heard’ about you
Being in the local advertising world for going on 8 years, we would be millionaires if we got a dollar for every time we heard, “yes, my business is up since hiring you but I don’t know where it’s coming from. I can’t necessarily say it’s all you.” The ‘old way’ of knowing if your marketing was working was by asking your customers, “how did you hear about us”.
This is a fine question to inquire but if you think this is telling on what part of your diverse marketing strategy ‘got a new customer’ you’re missing the point. No one, and I mean, no one wants to admit to you that “you got them”. Consumers love spending their money, but no one wants to be, well, “sold”.
I can’t remember the last time I told a business I bought from them because of a Facebook post of theirs, or their YouTube video that made me laugh, or their charity sponsorship, or their great product or their great prices I found online. Your marketing should be diverse, and you should stop worrying what advertising platform is your magic bullet.
Lean into your marketing with more dollars as your momentum grows. Increase your ad spend when you see success to test if it’s working rather than cut a tactic and see if your sales decrease. Bet on success not the other way.
In summary: Work backwards from your 1 year revenue goal to determine a strong budget, lead a team that is word-of-mouth worthy, and thank your advertiser when you see success. They work their tails off to be worth their weight, acknowledge the success and move forward together as you break records together.