24 Oct DON’T JUST FUDGE IT, BUDGET!
WE ARE TOTALLY READING YOUR MIND RIGHT NOW. Indeed, here we are, sifting through your hopes and desires and…guess what? It looks like you want more business. Imagine that!
Did we just blow your mind? Are you going to tell all your friends about the amazing mind reading agency now?
Probably not. Because everyone knows that the goal of virtually every business ever is to grow and keep growing. Of course, you’re welcome to keep on believing in our psychic powers, if you prefer. While you’re at it, you might just as well expect growth to just happen without a solid plan or a marketing budget in place.
Okay, so we can’t read minds, but we can still segue like nobody’s business. And nobody’s business is going to be reaching any growth goals without some realistic planning and budgeting.
What’s realistic? Well, that would depend upon your business and your markets. Everyone is unique, so there is no “one-size-fits-all” answer. In fact, there’s a remarkable amount of variation in what it takes to bring a business to market.
For example, a startup B2C company in a competitive industry may very well find that it takes a marketing budget of 20% or more of revenue just to move the needle. Yet an established B2B company with an existing customer base can get away with 1% of revenue or less. In order to figure out where YOU should be budget-wise, you need to carefully evaluate your markets, your competitors, and your goals.
Are your markets crowded with competitors? How much do they spend on marketing? What kind of marketing are they doing? How aggressive do you want to be in trying to gain market share from them? We’ve already established that we can’t really read minds here, so you’re gonna have to answer those questions on your own.
If you’re not sure, then you’re going to want to be flexible. Let’s say you think 5% of revenue sounds like a good number. You should probably also earmark another 2-3% in reserve, just in case you need to scale up your efforts. This also will give you leeway in developing a marketing strategy.
Which is where an advertising/marketing agency comes in. They’ll ask what your budget is, and then determine an appropriate strategy for applying toward reaching your goals.
Unfortunately, managers who have little experience working with an agency usually don’t like to answer that question. And it’s kind of understandable. After all, isn’t price a big factor in shopping? How much trust would you have in a store if when you asked how much something cost, you were answered with “how much have you got?”
The difference is that you’re not actually shopping when your agency asks you to share your budget. At least, you shouldn’t be. Rather, you should be working with the agency that’s best qualified to help your business, not just the cheapest. If you want your marketing to bring you business, then you need to shop for value, not price.
Try asking your agency how cutting your budget by 20% would impact your results. Feel free to ask them what would happen if you augmented it by 20%, and then together you can work to arrive at a plan that is tailored to both your budget, and your goals.
In fact, the entire marketing process requires complete transparency on all fronts. You need to be honest with your agency about what you have to spend, and they need to be honest with you about where they think you should spend it. And both of you need to honestly evaluate the efficacy of each and every initiative so you can optimize your plan and get the most for every dollar. If you don’t trust your agency, then get one you can trust.
Seriously. You should treat your agency as a partner.
This is why we prefer to work on retainer. It allows us to be as integrated as possible into your enterprise. As your agency partner, we can respond more quickly, and be fully connected to the results of our efforts.
Think of it like this: When you take your alpaca, Earl, to a pet groomer, they will shampoo, comb, and trim his luxurious coat and hooves, just like you would expect a professional to do. However, if your pet groomer happened to live with you, they would likely form a close relationship with Earl, and end up brushing him regularly, perhaps even using your hairbrush because they feel Earl deserves the very best. They might also make recommendations about his diet, like “you shouldn’t feed Earl brussels sprouts, they make him very gassy.”
As you can imagine, the more connected your groomer is to your alpaca, the richer, and more holistic the degree of service they provide becomes. Agencies are like that. We are all basically just alpaca groomers.
So leave a comment below. Tell us what you think of this article, or better yet, what topic you’d like to see us tackle. Come on. Do it. Don’t expect us to read your mind.