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Methods of Creating a Marketing Budget

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Budget is a core component of your strategic marketing plan.

As a portion of our strategic planning process, Mediastead helps clients develop their annual marketing budget. We use three methods depending on the client.

The three marketing budget methods are:

  • Flat Budget Amount
  • Percentage of Revenue
  • Percentage of Margin

The method we apply least frequently is the flat budget method. Generally, this is only used in the first year of business when it’s difficult to estimate revenue or margin without any history.

There are two advantages to the flat budget method.

  1. If your business is seasonal, by spending a flat amount on your marketing you can gauge the impact of seasonality.
  2. Companies that have a preestablished block of capital earmarked for marketing. This can be useful information where understanding ROI is more important than growth.

These are both rare circumstances.

The most common method is Percentage of Revenue. Examine your history of marketing spending versus total revenue. Calculate the ROI of marketing dollars for each quarter individually. Use this percentage to set your quarterly marketing budget based on target revenue goals.

Comparing the results to the same quarter of last year should indicate whether growth of marketing budget directly correlates to revenue growth. Most businesses have some effect seasonality, therefore benchmarking same quarter numbers is more accurate.

For some companies, we recommend the Percentage of Margin method. This can be particularly useful when costs of goods or services is a relatively stable percentage of total sales. Use the same method as percentage of revenue, except your budget based on profit margin.

Some marketing techniques benefit from efficiency of scale, and as you grow using percentage of margin method will increase this impact.

Budget annually and adjust quarterly.

Create an annual marketing budget, but adjust the budget up or down each quarter depending on your results. If you’re having a better than predicted year, you may want to increase marketing to keep momentum up. Or, you may also want to trim marketing for improved profits on initial sales targets. Conversely, if you aren’t meeting your sales goals, it may be necessary to boost the percentage of marketing money.

Some companies may wish to adjust more frequently if some outside parameter has significant influence. Particularly lucrative holidays, revenue influenced by weather, or industry conferences or events may encourage business owners to adjust their budget to react.

Identifying the amount of your total marketing budget is important, but equally important is your methodology for tracking expenses accurately. In our next issue of Keeping Pace, we will examine how to accurately track the marketing dollars invested.

Solidify or Simplify?

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Are you in control of your business processes? Do they control you?

Ultimately every business can be divided down into a series of processes. Ordering inventory is a process. Payroll is a process. Recruiting, hiring and training is a process. Shipping and receiving is a process. And yes, building your website is definitely a process. Each of these are simply a series of steps.

Some things that are essential for business are more difficult to put in a process. Abstract concepts like communication, innovation, design, and management are more difficult to fit nicely in these boxes we call processes.

How much is too much? How much is not enough?

Let’s look at a simple illustration. Grocery shopping is a process. But even within that process, there can be many smaller processes.

Let’s go deeper. The process of traveling to and from the grocery store.

Too little

You’re in a new town. The future’s bright. You feel like a young entrepreneur with unlimited potential. Now, you’re hungry.

If you don’t know how to get to a grocery store, you could spend an extraordinary amount of time finding one as you wander through the town.

When you arrive, you have no idea whether this grocery store is better, worse, closer or further from your home than other options or, for that matter, whether other options even exist. You spent $100. Did you get a good deal?

Now that you found the grocery store, you have to find your way home. Is the path you took the most direct? Are there shortcuts to your destination?

Too much

You need a tool for this process. Perhaps, a GPS. Perhaps, a state-of-the-art GPS. Now there is very little uncertainty.

Not only is the state-of-the-art GPS able to give you the shortest path between you and the grocery store. It provides you with lots of other data. It provides you a detailed path up and down every aisle. It can give you detailed information about how to get from your automobile to the refrigerator in your home.

This may be perfect.

Unfortunately the process this involved require specialized system and specialized tools. You had to purchase the GPS from another company for $200. Now the cost of your grocery store trip has tripled.

Yes, you can reuse the GPS next time you go to the grocery store, but after a trip or two, you’ll know the path by heart. Now you have a $200 paperweight.

Just right

I would go to Google maps and search grocery stores near my home. My wife would go to Facebook and get input from other local grocery shoppers.

Between the two of us, we would find the best store and closest store. Now we have great information, clear direction, and no extra expense.

The best part is, this simple concise process can be used anywhere in any town. We can take the process and teach anyone to use it with a little or no training.

A Bigger Picture

Now your trip to the grocery store is a military supply chain. A full battalion of soldiers depends on getting a supply convoy back and forth. The convoy must move through hostile territory and an enemy mine field.

Suddenly you need a process that includes satellite imagery, aircraft reconnaissance, well-trained infantry and vehicles that can resist enemy fire.

Now your grocery store trip costs $1.5 million, but it’s critical that every step of the process be extremely detailed. Furthermore, the process must be implemented flawlessly.

A trip to the market or a military operation?

Chances are your business isn’t as simple as a trip to the market nor as complicated as a life-and-death military operation.

Look at your business and your processes. Ask yourself these questions?

Where in your business are wandering without direction? Can you create a process for clarity?

Where in your business are the processes slowing efficiency, hurting productivity, or increasing costs? Can you simplify the process?

What business processes are essential for your success? What business processes don’t add significant value? What business processes protect you from risk?

Solidify or Simplify?

There are no right and wrong answers. An accounting firm, a restaurant, a manufacturer, and the medical practice are going to have very different answers to these questions.

Your most important processes need to be solid. Look at ways to solidify these critical roadmaps and systems.

Lesser important processes need to be simple. Make them as simple as possible. Focus on working the process rather than the process itself.

Take a quick snapshot of each element of your business and ask yourself, solidify or simplify?

Three Ways to Make Money with Your Website

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Every business wants their website to increase their revenue, but for many businesses, your website can actually become a new source of revenue.

There are three ways to monetize your website, whether it’s a simple blog, a business promotion website, or a robust social platform.

Advertising and Sponsorship

The easiest money online is advertising. Placing automated ads on your website generates revenue proportional to your traffic. It’s ideal for blogs or for businesses that have regular visitors to their website.

Some business websites prefer not to advertise other products for fear it will cannibalize existing shoppers. Actually, however, eBay and Amazon have both studied the practice and found it can be very lucrative. In fact, affiliate revenue can sometimes have better margins than stocking products and selling them yourself.

Two types of websites can generate significant revenue.

  • High-traffic websites and/or those with an intensely loyal user base
  • Highly specialized demographics such as a geographic location or a niche industry

Online Store

If your business sells product, you should sell your products online as well. This is ideal for local businesses who want to sell nationally or even internationally. It’s also a great way to subsidize a service company’s revenue. Hair salons for example often carry inventories of hair care products. Having a convenient way to reorder online can create additional revenue streams.

Two types of stores generate solid revenue.

  • Extremely unique products (that can be shipped easily)
  • Products that are purchased repeatedly. Supplies you use or food you eat can be a source of recurring income.

Information Products and Software As a Service.

Service businesses can monetize using their proprietary knowledge. Whatever service you provide can be translated into products. A divorce attorney writes an e-book about winning custody of your dog. A landlord can teach others how to purchase property. A college professor can sell videos of their lectures on pay-per-view. A Photoshop expert can sell their custom filters and textures.

Two types of websites can benefit from e-products.

  • Experts in virtually any field can package their knowledge. The more niche the field the better.
  • Any task that can be done using a computer can be turned into online software, and those that can solve a recurring problem will thrive.

Mediastead has built websites that create extra revenue for many types of business and professions.

Call us for a free evaluation to learn how to turn your products, services, or knowledge into a moneymaking website.

 

Three Reasons You Hate Your Web Designer

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Most small businesses already have a website.  Fortunately for us, many of those small business owners also have stories of how they were let down by their web designer.

The three most common complaints about web designers are:

  1. Our web guy builds nice websites but doesn’t understand our business.
  2. They built a good website, then disappear when we need updates.
  3. We aren’t getting new business from our website.  It must be bad SEO.

We started Mediastead with these three complaints in the back of our minds and made a conscience effort to learn from the mistakes of others.

Understanding Your Business

Freelance web designers often can build great tech, but fail to take the time to truly understand your business and your customer base.  Branding your business can be as important as functionality.

Other web designers excel at creating highly artistic multimedia websites, but struggle when it comes to making your website useful as a customer service tool or shopping experience.

At Mediastead we take a team approach that starts with your marketing plan.  We identify your specific goals, and examine how your website should fit into the big picture of sales, marketing and PR.

Next we assemble the specialists, the team of geeks and artists that will work in tandem to make this vision of a web presence a reality.

Finally, we build a plan to put the website into action.  With some businesses, that means hands-on training to get the most out of your staff resources.  With other businesses, our team takes over the ongoing electronic marketing campaigns.

At Mediastead, we pride ourselves on building more than websites.  At Mediastead, we build relationships.

The Disappearing Webmaster

Many freelancers will build you a $1500 website.  Later, they tell you “Call anytime.  Updates are only $75 per hour.”

In theory, this works.  In reality, it doesn’t.  If you build $1500 websites, you have to crank out two of them per month just to pay the rent.  When you aren’t cranking out websites, you have to be selling like crazy to get two more clients for next month.  Doing tiny updates for $75 per hour, usually billing 15 minutes at a time seems like wasted energy.

Conversely, giving your customers great service means that new projects get slowed down and marketing ceases.

The result is the same.  Some freelancers simply ignore their past customers, while others just go out of business.

At Mediastead, we know there has to be balance.  Good websites are constantly evolving.  We strive to find customers that want to use their website and update it frequently.  And we build our business model around providing support just as much as bringing in new customers and new projects.

New customers feed our growth, and our existing clients create a solid foundation for long term stability.  We want to be the last web company your business ever hires.

Your SEO Isn’t Broken, Your Website Is.

“We have a really nice website. Unfortunately, the designer promised good SEO, but we haven’t gotten any new business.”

Search engine optimization (SEO) was the cool catch phrase of the past decade.  Web designers made promises that SEO would deliver customers out of thin air.  The truth is the SEO can bring more business, but only if your developer has a crystal clear understanding of your customers, and even then, good SEO is a long term process.

Additionally, good SEO focuses on the quality of customer as much, if not more, than the quantity of customers.

Good websites build relationships between your business and your customer.  First, your business must have a good relationship with your web team.

At Mediastead, we treat SEO as an ongoing strategy.  SEO is a journey, not a destination.

Mediastead – Marketing. Technology. Profit.

Our slogan “Marketing. Technology. Profit.” Speaks to our core philosophies.  We begin with a solid plan based on your business’ marketing needs.  We build the technology around the functionality you need and the resources you have.  The bottom line is, well, the bottom line.  Every business large or small needs profits, growth, and productivity to survive in our rapidly evolving world.  Mediastead would be proud to build a relationship with your company. Call us today at 215-253-3737 to get started.

Sales Tips for People Who Don’t Like Selling

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Many of our clients are what I like to call, “warm fuzzy businesses”. These businesses are focused on making people feel better. Veterinary offices care for pets, but also families. Home health agencies care for people aging or infirm. Massage therapists ease our stress and aching muscles. Restaurants make our bellies full and our hearts warm.

So whether you’re a veterinarian, a nurse, a massage therapist or chef, at the heart of your business is service, not making money. Profitability, however, is critical to succeeding in your mission.

The challenge is that many warm fuzzy business owners don’t like being a salesperson or even asking for money. People motivated by service tend to be selfless, an admirable quality, but not necessarily good fiscal policy.

Sales tips for people who don’t like selling:

Focus on value — we define business as “the exchange of goods and services of equal value.” Focus on creating value and the pressure to ask for a fair price will subside.

Make buying enjoyable — Your customers, in most cases, enjoy being customers. Let them. Find products and services that make the experience more enjoyable. Little things like the decor in your waiting room, pleasant aromas and sending thank you notes add to the experience for any service business.

Ask for the business — Your marketing materials and website provide information about your products and services, but do they actually ask the customer to purchase? Imagine an infomercial with 30 minutes about a rotisserie chicken maker, that never bothers to ask people to buy it. It wouldn’t be very effective. The same is true for your business.

Tell them how to buy — People have already determined whether your company is right for them or not. Once they are ready to buy, give them very precise instructions. “Schedule an appointment”, “download this app”, or “call us today” are just a few examples of precision calls to action.

Say “thank you” — Ironically, business owners who are embarrassed to ask for money also have difficulty thanking people. However, a sincere “thank you for letting us serve you” make your customers feel good. Make sure they know that by purchasing services they also are helping you continue to serve others in your community. The money you received today goes to support your service in the future.

Warm fuzzy businesses tend to attract extremely loyal customers. Be comfortable asking and accepting money for your services, and your customers will be comfortable continuing to purchase.

Speaking of paying the bills… Mediastead will make sure all your marketing materials have strong calls to action. We also offer one-on-one sales training, or team training. Call us at 215-253-3737 to learn more.

Three Pillars of a Successful Pet Service

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Veterinary services and other pet care companies have three principal functions. Unfortunately, many of these small companies struggle to find and keep the balance.

The three pillars are:

  • Marketing
  • Management
  • Service Delivery

Most business owners tend to favor one of the three pillars. In the other two areas, they may lack knowledge, experience and even motivation.

Veterinary Practice Business Model

As your company grows, make sure your hiring decisions balance your business.

A vet may be very good at service delivery or even customer service, but they should hire talented people to manage the office and develop their marketing.

Another owner may run an efficient practice and manage staff well, but needs help when it comes to delivering for their customers.

Finally, a great sales or marketing person can bring in customers, but making sure the business is profitable and the customers are happy is another challenge.

As an owner, you can’t wear every hat and expect your company to grow. At the earliest stages, try to identify your strengths. Rather than try to improve areas of weakness, consider hiring new talent or even outsourcing.

Many business functions can be managed by specialists. Hire a marketing team to promote your business. Hire payroll companies and recruiters to staff your business. Hire financial experts to streamline profits. Finally, bring the staff you need to keep customers coming back for more.

Smart owners don’t do it all. Smart owners find people to get everything done.

Well balanced business sets the stage for unlimited growth.