Dear Friend,
One of the most frequently asked question asked:
How Big Should My Marketing Budget Be?
With businesses all being of different shapes and sizes, you might be surprised to find the answer is the same for everyone. (at least at a basic level – which is all most business really need)
Let me short cut this learning process by putting the following scenario to you…
If you were to spend $500 on your marketing and you made $2500 return on your investment… how much money would you put in your Marketing Budget?
That’s right – as much money as you could get your hands on – because you know you are going to make $5 for every $1 you spend.
Now I’ll extended the scenario by adding your business has a capacity limit – you can only produce $12,500 worth of product each month.
So, how big does your Marketing Budget need to be to acquire $12,500 worth of new business. (incidentally the correct answer is $2,500 for this example)
When you know what your return on your marketing investment is – you can work out exactly how much you you need to put into your Marketing Budget.
The key is knowing exactly where your clients come from – and how much you’re spending to get those clients.
To get a more accurate picture, this process needs to be complete for each marketing channel you have – ie Website, Networking, Facebook, etc…
This will show you exactly which channels are performing the best – and which channels are just costing you money.
When you know the return on your marketing investment, you can easily work out what your marketing budget should be to meet your capacity. The next question is how do you lower your client acquisition costs.
Make Your Marketing Work Harder
James Hill
PS.