How much should businesses reinvest into marketing? Running a successful business comes with sacrifice and the ability to make the right decisions at the right time.
As a business owner, one of the toughest decisions you need to make is about reinvesting to take your business to the next level.
In short, you will need to know how much of your takings should be reinvested back into the company.
In particular, many businesses are unsure as to how much they should be putting back into their marketing and advertising efforts. At times, this is a challenging decision to make for business owners.
Nowadays, business marketing doesn’t have to cost a fortune. Actually, marketing is all about targeting the right audience and having the right marketing tools to help you deliver.
So, if you’re struggling to determine how much your company should be putting back into marketing, below you’ll discover a few general guidelines you can follow.
What is the average amount you should put back into marketing?
The actual amount your business should put back into its marketing strategy will depend upon numerous factors.
However, the general guideline is that a business which is doing OK, should put 5%-8% of its profits back into its marketing.
Ideally, you need to think about your current needs. Previous marketing budgets aren’t going to be relevant if you need to make pretty large changes.
Things to consider when working it out
So, what factors should you consider when working out how much your marketing budget should be? What are the marketing budget mistakes businesses should avoid? Well, ideally, you’ll want to look at the following factors:
- The conversion rate of each average customer
- How established the business is
- Overall profits
It’s useful to work out what the average conversion rate of each customer is. This will give you a good idea of how valuable marketing is. You’ll want to focus on putting money into the marketing channels which result in the highest conversion rates.
How established your business is will also make a big difference. For example, if you’re a smaller business that is just starting out, you’ll need to invest more into your marketing strategy than a more established business in order to build up your presence.
Then finally, your overall profits will also determine how much you can set aside for marketing. Which types of marketing should you focus on?
So what type of marketing should you be focusing on?
So, now you know how to work out how much you should be saving, the question is what type of marketing should you be focusing on? Ideally, you’ll want to spend money on both offline and online marketing.
A lot of businesses forget that offline marketing such as leaflet dropping from a company like Leafletdrop, is still important. Digital marketing may have taken over, but it hasn’t fully killed off traditional marketing techniques.
So, if you’re looking to improve your marketing, it can help to follow the advice above. Working out how much to put back into your marketing account can be challenging, but typically, 5%-8%, unless you are a start-up, is considered a good figure to aim for.