A marketing plan review – How is your marketing plan going? Is it working? Do you even have one?

While I was teaching at the Business Success Conference on Feb. 16 an attendee asked me what I felt was the appropriate amount for setting aside from each sale for marketing. Good question. “It depends,” I told him.

Let me explain why I said that. When I worked in the newspaper industry, I helped some companies that bought directly from manufacturers who offered co-op money for advertising. The money would sometimes be as little as a half of 1 percent to as high as 10 percent that they would give for marketing. Some stipulated that the business needed to pay half of the bill while others would let the company use the money without needing to match it with their own money.

As I worked with these companies, I found that it was the large or high-ticket items that offered the least for co-op, generally. Carpet, vinyl flooring and furniture companies were usually 2 percent or less. Auto companies would sometimes offer big amounts. Other times it would be small amounts. It also varied by auto manufacturer and how much they were putting into the national campaigns.

I have talked to big restaurant chains like McDonalds, Wendy’s, Chili’s, Taco Time and others to see how much the individual franchise owners put out for marketing. It varies by the franchise owners. Some of the McDonalds owners contribute to a fund for statewide buys on TV, radio and other statewide media but don’t do much advertising themselves. Other McDonald’s franchisees work with the statewide advertising but also do a fair amount of advertising locally to keep the regular customers coming back on a local advertising plan. For example: The national and statewide campaign might be about a new sandwich but the local consumers are responding to the $1 drink promotion.

Among the restaurant chains (10 or so) that I asked about this, it varied from 6 percent to 10 percent of all purchases that they invest back into marketing. Some franchised restaurant owners don’t have a choice to contribute or not. The franchise company requires them to pay into a marketing program and the franchise company spends it as they see fit. It’s usually about 8 percent when this happens and many owners complain that the franchise company doesn’t listen to their concerns with where they’re spending it in their market (another article for another day).

The bottom line is that large multi-location companies that are successful year after year put together a marketing budget and then plan where to best use that money. It’s usually done as a percentage of total sales. As the sales increase, so does the money they spend to get people into their business. They are also meticulous at seeing what marketing or advertising programs are giving them the best ROI.

Small and medium-size companies that are locally owned tend not to have an adaptive budget (the more you sell, the more you spend on marketing). In fact, it looks like close to 60 percent of small companies have no budget for marketing. Having no budget or a very limited one is a sure way to struggle and there is a higher rate of failure over the long-term life of the business.

I know that there are business owners out there that say that they have never needed adverting / marketing or they say that “word-of-mouth marketing” is all they need. I have seem many businesses close after 40+ years of this way of thinking. The business just slowly left them because of new companies and the promise of a better price drew their old reliable clients away.

But too many small businesses fail because potential customers don’t know their products or services are available. Word-of-mouth marketing will only get you so far— and usually it’s not far enough. Sometimes it’s all about reminding your past customers to remember you rather than the discount places that are trying to steal your customers away.

What I’m getting at is that it is important that you set aside a little of the revenue from every sale each month to market yourself. Some marketing is very inexpensive or even free, other than the time it takes to set it up and run it on a weekly basis. Don’t jump into something that is expensive or unproven. See what your competitors of similar size are doing to market themselves. If they aren’t doing anything, maybe that’s what is keeping both of you down. Look at the competitors that have grown past your business. See what they are doing.

If you have a plan, you should review it quarterly at least. Make sure you can validate which type of marketing is bringing in your customers. What is your ROI for each type of marketing or advertising?

Want some help with your marketing? My new book “Beyond Hot Air Marketing” provides just that. In fact, the first five chapters are about putting together a marketing plan. I’m offering those chapters to you as a free to download. If you need more help in determining what marketing and advertising is out there and what is best for you, the remainder of the book provides all kinds of help with that.

Get your FREE Download of the first five chapters of “Beyond Hot Air Marketing” by clicking here.

It’s also okay with me if you share this link with everyone you know that needs help with a marketing plan.

Thanks,
Boyd Petersen