Marketing – cost or investment?
When a company cannot see beyond the cost of marketing, it does frustrate me. Clearly you can associate a “cost” to all aspects of running a business but many parts deliver a huge amount of value and marketing is certainly in that camp when undertaken correctly.
A manufacturer can be far more amenable to the idea of spending on new equipment and yet see marketing as a bit of an “add on”. Even the smallest of operators should embrace some aspects of marketing into their daily work, otherwise it's a little like opening a new shop and just hoping that people will understand who you are and come in to buy things. It's rarely that straight forward.
The value of communication
Taking just one element of marketing; communications. The potential (financial) value of building your profile and reminding your target audience about your business can be huge. One of our clients recently had an enquiry for a very large project from a single email campaign. So, what is more significant, the cost of the email being produced (which was not a great deal) or the opportunity to win a rather large project worth many thousands of pounds?
If your target audience doesn’t know who you are, where you are, what you do or how you can help them, you cannot blame them for ignoring you and talking to your competition instead. Whilst in many industries, marketing communication work can have a long fuse on it, the results can ultimately be worth immensely more than the initial work of the cost in undertaking it.
Marketing at the right level
Granted, not all businesses have deep pockets and marketing, plus many other business activities, often have to be undertaken on a tight budget. The joy of marketing is that it is flexible enough to deliver results at many levels. The most important thing is to develop a budget that you're prepared to sustainably apportion to your marketing and ensure that you are working it as hard as you possibly can.
There are many ways to determine a suitable marketing budget. Some might do it as a percentage of sales, but the irony is you might need to spend more to build your sales in the first place! For example, we are currently working with a fairly new business and their commitment to comprehensive marketing at this early stage is admirable. It is already starting to pay off for them as awareness builds and they develop a faster-growing number of long term customers.
Other methods of determining that marketing budget include an objective and task approach; clarifying what you need to do and budgeting for it. Other businesses might work on historical spend and gut feel. For many, it's a combination of many such approaches – there is no exact formula.
The cost of not marketing sufficiently
We started by talking about the cost of marketing. Have you considered the cost of not carrying out any marketing? For example, if you don't build your profile and talk to your target audience, you're leaving the door wide open to your competition. Let's say they win a customer that could have been yours from their marketing efforts. Let's just pause and think about the lifetime value of that customer…let's multiply that a few times for the other customers that you lose out on. Suddenly, the cost of undertaking some modest marketing doesn't seem so bad.
Looking at the bigger picture is always a useful thing to do and marketing is certainly one of those times when you should do it. Yes, there are certain areas of marketing such as pay per click where you can fairly easily quantify your return (though not all of it actually) and yes there are aspects such as public relations and advertising that can be harder to assess.
One of our clients was recently at a trade show. Someone went up to their stand and commended them on their marketing (which they have only been fully carrying out for a year) saying that he'd read much about them recently and better understood who they were and what they did. The conversation flowed and no doubt it will continue beyond the event. That simple example demonstrates just how immensely valuable your marketing can actually be.