What if I told you that many businesses, including many of your competitors, are simply striving to maintain the status quo? That they are actively leaving the door wide open for someone to come in and rob them of market share and opportunities at growth? What if I told you that your business might be stuck in that category as well?
The traditional idea of marketing spend often pigeonholes businesses directly in the league of those merely try to prevent loss of market share and maintain the status quo. The common idea of the 5% marketing budget is causing businesses to miss out on the opportunity for growth including an increase in market share. At Bash Foo we don’t settle for “status quo.” We lead businesses to smart marketing budgets that shake away the status quo by selecting the road towards growth.
Understanding Your Marketing Budget
Your marketing spend is much more strategic than just throwing money at magazine ads and social media campaigns. In order to correctly allocate your budget, you must understand marketing spend as an investment to the current and future profitability and growth of your company. Applied strategically towards your company’s goals, you can leverage marketing spend to specifically invest in your future. Marketing doesn’t drive expense; it drives profit.
Additionally, you must understand the goals that you want to achieve before establishing a marketing budget. Are you striving for simple visibility or are you looking to drive growth and market share? Breaking your goals down into the practical pieces that it will take to achieve them allows you to clearly see the realistic cost associated with reaching each one.
Achieving Growth through Marketing Spend
First, let’s break down this idea of status quo. If a 5% (of gross revenue) marketing budget allows you to gain a relatively equal amount of business each year that you lose through attrition, you’ve got to start spending at least 5-10% to get ahead of the competition and achieve growth. But how does this take place, and why does marketing spend play such a large role? First of all, your marketing budget acts like compound interest – your ROI will build upon itself as you wisely apply your marketing spend. As mentioned previously, marketing is an investment that only produces results relative to what you put into it. Regular and strategic marketing spend leads to growth.
Secondly, to achieve growth in market share, you either have to take a client/customer off the sidelines who has never purchased your product/service before, or it has to come away from one of your competitors. Fortunately, many of your competitors have likely given you an open opportunity by sticking to the status quo marketing spend of 5%. You can outperform these companies with a smart increase in your marketing spend in strategic areas. Think of it as flexing your muscle into areas they have failed to provide proper defense.
Smart Marketing Spend
So you’re ready to take the jump towards growth and bump your marketing spend? Great! But you’re less likely to succeed if you just start throwing your money at everything that will promote your brand. Your marketing agency should be ensuring that your spend is maximized to the greatest benefit for you. Hiring your own marketing members to your team can be quite an expensive endeavor and a quick sap of the marketing budget. Outsourcing to a marketing agency gives you a team of people at your disposal at all times. In this way, you get the most effective use of your marketing budget from experts that are poised to help your business.
At first glance, upping your marketing budget can seem like a very large expense to your organization. Often, business owners must dig deep to eliminate costs in other areas of their operations (like that one guy in accounting that you always find in the breakroom) to obtain the capital necessary to post up to this marketing effort. What they find is that the return is well worth the investment, especially if you have any chance of beating out the competition and growing your market share.
Want to see some examples? Click here to see the marketing budgets of publicly traded companies. Many of them reach upwards of 50%. Are you a CMO needing to convince the powers-that-be about the benefits of increased marketing budget? Here are eleven studies that show the proof of increased ROI.
Have no fear – you’re not in this alone! Bash Foo serves to help customers grow and wisely spend their marketing budgets. Reach out and let us know that you’re ready to start your journey towards growth.
Also published on Medium.