Sunday, May 29, 2005

*** Step 2. MP - "Embellishing Your 70% for Growth"

This is step two for small business owners in the MP (Marketing Plan) series of posts. If you haven't already read step one, please do so here before you move onto step two. The previous post described how we can improve the return on our marketing investment by concentrating most of our marketing dollars in what we know is already working for us. 70% should be spent on what we already know works, while only 30% should be left up to experimentation and / or speculation. The left-overs should be allocated to what you know didn't work. ;-)

It kills me to see people who spend more money the following year on something that didn't do diddily-squat for their company the year before - in hopes that by spending more money, "they will come." Face it. If your business isn't cut for advertising on the web, don't invest more money into your website. If your business doesn't do well through television advertising, don't buy another commercial!

It is true however, that sometimes these areas could be explored and presented in a different manor or demeanor, resulting in a change in customer response - but this should be limited to part of your 30% speculative marketing expense budget.

Now that you have decided which part of your marketing plan worked the best for you last year, you can see where to allocate more funds this year.

If you haven't decided on an amount of money you will be putting towards marketing this year, do so now. You will need to know this information to follow through with the next steps.

Remember, we only want to spend 70% of our total budget on what we know works.

Lets break up our 70% into smaller categories. We'll call this the 40-20-10 strategy. (Add the numbers up and they should equal 70%) The idea here is to diversify your marketing budget to insure growth (by concentrating on what works), while reducing risk (by not placing all your eggs in one basket.)

First, list what worked and with what percentage increase did it bring your business in customer response or sales growth. If you don't have this information because you didn't keep track and follow up with your customers - don't make that mistake again. More about tracking results in a later post.

Second, Starting with the marketing technique that contributed your largest area of growth, allocate 40% of your total marketing budget to this area. For example, If you saw explosive growth through your website last year, you may want to continue funding the website with the most of your marketing budget. Then take the next technique that provided the second largest amount of growth (in either customers or sales) and allocate 20% of your overall budget in this area for this years marketing campaign. Continue with your final 10% in deciding which technique provided the third largest amount of growth.

Now what's left over is 30% of your total original budget marketing budget. This is what we will use to explore new target market areas, groups, or methods that we aren't sure work for our business yet.

Read Step 3 now.


Post a Comment

<< Home