You may have often thought of the following questions when setting aside funds for marketing efforts:
- How much money should I spend on marketing?
- What percentage of my turnover should I put into the marketing budget or spend on marketing?
I had a very interesting meeting with a manufacturing client. They sell their products directly on their own website to customers all over the world, exporting British goods to North America, Europe and other countries.
We had a conversation about their marketing budgets and I discovered that their approach to marketing is to break even; they weren’t looking for marketing to make them huge amounts of money. By doing this, the marketing is paid for by customers.
Whilst growing a customer base, this method also allows increasing visibility for a company in relevant industries. This also positively affects the amount of referrals and would also increase the number of glowing customer reviews. More potential clients are being signposted to products by word of mouth and website traffic is expanding rapidly. Google rankings are reaching the top and many other benefits that come with marketing are cropping up.
Now in answer to the question, “how much should I spend on marketing?”, the typical answer would normally be around 5%. Many accountants I have encountered will probably tell you not to spend any money on marketing at all.
Normally, the figure is 5% of your turnover. However, in a number of businesses I’ve been involved with, the spend on marketing has been as high as 35%. Therefore, it depends on your ambition, growth rates and available cash flow. Do as much as you can realistically afford to do if you wish to see growth with your business. Personally, I would rather take less business out of the company and reinvest more in marketing – this will build the value of the company and grow the customer base over time.
JDR Groups is committed to providing quality marketing campaigns for you and your company to reach success. Why not give us a call to see how marketing can bring a big impact to your company’s success story? We believe in the power of content to draw customers to you – invest in us and reap the benefits.
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