This post is the third in a four-part series about creating a new entrepreneurship program, the Missouri Women’s Business Center, while simultaneously helping entrepreneurs...
The rumor on the Internet is that 95 percent of diets fail. Strangely, the reasons diets fail are eerily close to the reasons businesses fail in their marketing.
Local experts — Erica Pefferman, president of The Business Times Company, and Mark Mills, of Cumulus Media — tell us why failing to budget can mean failing to reach marketing goals (and maybe your diet goals, too).
It’s unrealistic to lose 20 pounds in a day, and it’s just as unrealistic to grow your company by 50 percent without adjusting your marketing budget. “Your goals and your budget need to be in line,” Pefferman explains. “If you have aggressive goals and the same budget as last year, the campaign won’t be a success.”
Mills agrees. “There is a minimum on any medium, be it traditional or new. If you can’t afford to reach the minimum, then you need to rethink the entire plan. Don’t spend a little bit just to spend a little bit.”
Your marketing budget is based on how fast you want to grow your company.
“Some businesses plan for 3 to 5 percent of gross sales as their advertising budget, while others invest far more,” Pefferman says. “A commonly made mistake is to take 5 percent of your current revenue. The budget needs to be 5 percent of where you want to be, not where you are now.”
Mark often deals with a 3 to 12 percent advertising budget. He also sees business owners who look at the income and expenses of running a business, then take a percentage of the remainder for their advertising budget. “There’s no magic, specific formula for budgeting. In fact, if a business has a budget, they’re four to five steps ahead of their competitors already,” Mills says.
Successful dieters tackle weight loss in stages, establishing a permanent lifestyle change, like one glass of water at a time. Pefferman affirms: “The biggest problem is that businesses try to do too many things with too little budget. It’s easy to do too little or too much. Concentrate and dominate.”
Mills helps people understand the bucket theory: “You have several different buckets representing advertising opportunities. Pick a few buckets and fill them as full you can, instead of putting a little in each.”
Your marketing plan will vary based on your budget. “If you don’t have very much money to spend, you may have to invest your time and choose marketing activities you can do on your own,” Pefferman says. “If you have money, but not much time to invest, you can look at mediums that require a bigger monetary investment, but little time. If you can’t make the equation work either way, your goals may not be realistic.”
In the marketing world, “running an ad and expecting customers to walk through the door immediately isn’t a realistic expectation,” Mills explains.
Mills says the most important part of marketing is consistency — not just advertising for a month or two. “The best advertisers run 52 weeks per year. They’re out there as frequently as their budget allows, and they’re doing it consistently.”
Pefferman relates a ‘social experiment’ conducted by a past client of hers who intentionally canceled all of his traditional marketing. “He did well for a while, but then sales started to drop off, and he realized he needed to bring marketing back,” she says. “But he had to build sales back up to where it was before. It didn’t just jump back as soon as he started advertising again.”
A Fitbit is an investment to track your fitness goals. It’s important to evaluate the money you’re spending in your marketing budget, too, yet many businesses don’t track the success of their marketing.
When tracking a campaign’s success, Mills says setting expectations is the most important conversation an advertiser and a client can have. “Even if there is not a specific return on investment, there should be an expectation of things happening,” Mills says. “It’s important everyone is on the same page. It’s a marathon, not a sprint.”
Pefferman is adamant about tracking. “If you’re not tracking it, you’re wasting it,” she emphasizes.
Don’t be a statistic. Tackle your goals by setting a realistic marketing plan and budget. Focus on a few core mediums that meet your target market and do them well. Then sit back and work your plan. Track, tweak and grow.