By STEPHANIE WOODCOCK
The average B2B company spends between 6 percent to 7 percent of its overall revenue on marketing costs. According to a study conducted by Deloitte and Duke University’s Fuqua School of Business, each industry varies based on different growth strategies. The energy industry, for instance, spends 3 percent of its total revenue on marketing and the construction industry spends 2 percent.
Based on these numbers, a small construction company with an annual revenue of 3 million dollars should be spending $60,000 on marketing.
To determine our own 2022 marketing budget, we need to know our growth objectives. Let’s start with what we have in common:
We all want qualified leads, repeat clients, better cross selling, greater market share, market recognition and brand loyalty.
For those of us who want to grow in 2022, a quick overview of our numbers helps. What is our annual recurring revenue? And by what amount do we want to increase that revenue? The difference is the growth delta.
Typically, a company will spend 40 percent of that growth delta in effective marketing to achieve certain goals. Isn’t that fascinating? Many of the companies I see who want to grow miss the big picture. They buy more equipment, onboard an expensive CRM program, get better computers but neglect to realize their website has a slow load speed, is not optimized for mobile, is not SEO friendly and has no value proposition to set them apart from their competition.
Companies typically spend money on items that count the money rather than make the money because it’s easier to measure than make.
I was recently asked in a new client meeting, “How do you measure ROI (return on investment)?” Great question.
ROI is based on whether you meet your key performance indicators (KPIs) with your marketing strategy and implementation.
You can’t determine your KPIs until you know your marketing objectives. A KPI of 4 new clients a month may be good for one company but not good for a firm that wants to increase market share with 10 product lines.
What is your KPI? How do you want marketing to move the needle for your business?
Here’s where so many company owners differ, stating:
I want to grow my company XX amount.
I want to increase my brand presence and enhance my company image.
I want to grow the company through more product lines or services.
I want to increase customer loyalty.
I want to impress existing customers with technology enhancements.
Your marketing budget should be based on determining your objectives and putting real numbers to those objectives. Finding the right strategy and a good workable budget depends on which of these objective(s) you want to meet.
Now the good part. How do we get in front of those new clients? What’s our strategy?
We find the events where they are. We use the marketing channels they pay attention to. We get in front of them with inbound and outbound marketing.
Measuring the ROI is no easy task because our key performance indicators are so dependent on the quality and accuracy of our strategy.
I once had a client who spent the bulk of his budget being a platinum sponsor in a customer-rich association. He attended every meeting, spent beyond his annual platinum sponsorship and knew the value of each customer attained through that association. Event marketing was his main strategy to reach his KPIs.
I had another client who needed website leads nationwide. He had a new product on the cusp of an emerging market but needed brand recognition. His marketing budget was devoted to revamping his website, optimizing it for higher Google rankings and investing in paid search.
I have another client who writes articles and sends them out in press releases, magazines and online newsletters. She creates her own tribe of followers through thought leadership articles and can charge top dollar for her services because she has personally helped construct its value.
We can be successful with a variety of strategies. The key is to BE where the customers are or where they are going to be.
Your marketing team’s focus should not be on improving the measurables to prove their own success and better measure ROI. Rather, they should be focusing on tactics that will make an impact.
We can become so consumed with trying to measure the data and determine ROI that we forget to use common sense and our instincts. Marketing in this industry takes instinct. Our buyers take a long time to become customers.
It’s easier for me to measure the ROI of an email marketing campaign than it is to measure the value of an event sponsorship or a print ad. The three work together, so which strategy gets the marketing credit?
Together we learn how to carefully curate the best value for our customers with the right marketing channels.
My favorite strategies for the construction industry are content, email and event marketing. Content marketing delivers 3 times the leads versus tradition advertising. It also has a longer sales cycle because you’re often developing brand awareness with customers before they are “now” buyers. Traditional advertising works as well strategically in the right environment.
The research backs me up. In a 2019 survey of 1,000 senior-level B2B marketers, the most effective B2B marketing channels were reported as:
1.) In Person Events (41 percent)
2.) Content Marketing (27 percent)
3.) Email Marketing (14 percent)
4.) Paid Social and Search (6 percent)
5.) Organic Social and Search (3 percent)
But I’m getting ahead of myself. Once you answer some of the questions above and find a budget line for marketing, contact me to discuss strategy and ROI.
Stephanie Woodcock is president of Too Creative, a St. Louis-based design and marketing agency. She can be reached at email@example.com.