How much should you spend on marketing?

It can often be difficult for a small business to allocate any budget towards marketing, and indeed there are many things you can do to market your business that won’t cost a penny.  Most marketing campaigns, however, are likely to cost you money.  And those that don't will almost certainly cost you time, which might be better spent focusing on your core business.

 

We're often asked whether print marketing is outdated, given the rise of social media and the many opportunities they provide for business owners to advertise.  For small businesses with retail locations we'd argue that print marketing is as important as it's ever been.  Local newspapers and publications are a great way of reaching potential new customers with a 'scattergun' approach for reasonable costs.  But a small advert placed one week and then nothing for months is unlikely to have a significant impact.  For best results you need a campaign of several ads, reinforcing your message and building familiarity.  Consider working with your suppliers to make your advertising budget go further.  Avoid the classified sections of any media, there's too much going on and you'll be drowned out by the noise.  Ignore the rate card prices offered.  Accept this as a starting point for negotiation, in our experience very few publications will be firm and not open to negotiation.  And once you have negotiated a good price, ask about where your ad will be placed, and ask for editorial coverage to support your advert.

 

When you are considering spending anything on a marketing campaign, you should check that it allows you to measure the results.  Facebook campaigns offer metrics in terms of follower increase, reach and impressions, but these don’t necessarily equate to more money in the till, so keep a close track of when the campaigns run and monitor sales with a comparison to a baseline period.  With newspaper, print and leaflet campaigns you can include a coupon or voucher or even just a word that customers will need to say to obtain an offer.  Make sure you keep a record of response and measure it.

 

If you gauge the success of any campaign based on its immediate results you are likely to get disheartened and be put off the cost of future campaigns, which is why it’s important to look at sales for wider periods and monitor overall trends than specific day performances.  It’s worth taking into account how much a new customer is worth to your business in the long term.  This is called Customer Lifetime Value (CLV).  You can estimate your CLV using wikipedia’s calculator, but rather than worry too much about the maths and intricate detail, just bear in mind that as long as you keep your new customer happy and they don’t move away, they’ll be adding to your turnover for years to come.

 

With this in mind it becomes more acceptable to fund an advertising campaign that would generate one new customer for every £50 invested, even if their initial transaction was only £30.

 

Whatever your marketing plans are, it is crucial to measure as many metrics as you possibly can.  The more data you have from previous campaigns, the stronger your plans can be for the next campaign.

Marketing for Independent Retailers

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