An impressive product is half the manufacturing battle. The other half is letting your prospects know just how good it is. Which is where you come in. But marketing campaigns require money and being asked to do too big a job on too small a budget is a recipe for failure. This post shows how a small marketing budget will prevent your manufacturing business from reaching its full potential and gives you the tools to get your budget right.
How much budget is enough?
To establish your marketing cost requirements, you need to understand what your business plans to do and what different marketing tactics are likely to cost.
Austin Powers’ Dr Evil is a case in point. Having emerged from being cryogenically frozen (it’s a long story), he proposes to hold the world ransom for $1 million. Of course, this laughably small amount is nowhere near enough to achieve his goal, so he increases his demand to a more suitable $1 hundred billion.
While you’re (probably) not planning world domination, there’s a lesson here for marketers. Consider your budget carefully to ensure it’s capable of delivering the business’ goals. Increasing last year’s budget by inflation isn’t going to cut it if your business plans significant new growth. Get your marketing budget wrong and you could have your very own Dr Evil moment. And no-one wants that.
A good rule of thumb is:
- 1 – 2% of your gross revenue will enable you to commit to engaging and retaining current customers with straightforward tools and strategies. Fine if you want to maintain market position.
- 3 – 4% of gross revenue means you can attract new prospects and retain current customers with advanced tools and plans. This will help you increase market share and supports moderate growth goals of 10-15% in the year.
- 5% or more of gross revenue allows you to accelerate your results by applying more resources to generate leads, conversion rates and sales. Using complex marketing strategies and cutting-edge tools you could achieve ambitious growth plans of 20% or more and increased market share in a year.
However, every business is different. Some companies, like Salesforce, go as far as investing 53% of revenue into their marketing. And, if you are planning world domination, then you’ll likely need a much larger budget.
What Your Manufacturing Competitors Are Doing
Hennik Research’s 2016 Annual Manufacturing Report shows that UK Manufacturers are more positive about the future of the British economy than they have been for some time, with some reservations about Brexit. And confidence means only one thing; growth.
This is backed by research which shows that, in 2016, manufacturing marketing budgets enjoyed the largest increase in spending across all departments. And your competitors are using this money to promote new products, improve customer relations and increase exploitation of sales opportunities. If your budget doesn’t measure up, you run the risk of all your beautiful products sitting in boxes in your warehouse or not being made at all.
Why Your Competitors Have Increased their Marketing Budgets
In the not so distant past, marketing was sometimes described as fluffy. However, new marketing strategies have turned marketing’s reputation around. In particular, inbound marketing is renowned for its low cost and ability to track its effectiveness in areas critical to growth, such as lead generation and increased conversion rates. The technology at inbound’s core means marketers can track the impact of their campaigns and demonstrate clear ROI at the touch of a report-generating button.
And having a marketing strategy in place with demonstrable ROI creates a self-fulfilling budget pot. HubSpot research shows that delivering a marketing strategy that enables you to calculate ROI means you are 1.6 times more likely to receive increased budgets. And, with a sufficient pot, you can take decisions more quickly which will make your company more agile and competitive.
Haven’t got a marketing strategy in place? Check out our previous article for help.
Need Help Setting Your Marketing Budget?
Whatever your goals, it’s clear your budget needs to be suitably sized so you can deliver what you’ve promised. Running out of money halfway through the year won’t only be disappointing for you and your team, it will impact your company’s bottom line too.