Your company has already created a spectacular new product or service that everyone wants–now the most important task remains: how can you most effectively market your product or service? More importantly, how much is all of this promotion going to cost?
Marketing is invaluable to take into account, especially when creating initial financial projections. Ultimately, building a great team & product does not guarantee people will find out about your product or service. In order to scale your business, you will have to implement an effective, well-planned marketing strategy. After all, your shiny new product won’t go far if nobody even knows why it’s so great.
First off, your budget spend should be dictated by what you hope to achieve, and also by what you can realistically afford. Regardless of what you choose, it’s important to have a goal in mind for when you go off and start marketing.
You will need to customize your marketing spend based on your startup’s short and long-term goals. SMART goals are Specific, Measurable, Attainable, Relevant, and Timely. A goal could be to reach $35,000 in revenue per month or 400 new customers per month. Some goals might be to get sign-ups for an event. Others might be purely about brand awareness.
No matter what your goal is, it is vital to stay consistent and measure the success of your marketing activities. For example, if your goal is 400 subscriptions or customers per month, you should focus on whatever the indicators of success are. This might be a number of eBook downloads, newsletter subscriptions, or number of website visits. If 25% of people who download your eBook become customers, then the number of eBook downloads would be a good metric for assessing your revenue goals.
Any marketing initiative can grow your awareness, but you should at least be able to estimate how many leads you are gaining from each marketing activity and the dollars they are generating for your business.
It’s too easy to go ahead and answer the budget question as, “I don’t know what the budget is.” or “not a lot”, or even “there is none.”. Of course, this kind of thinking isn’t sustainable since you need to use the budget to focus and prioritize the most important marketing activities.
There are a few tiers of spending that you can use as guidelines.
1. Less than $1,000 per month – New, bootstrapped startups usually have little to spend on marketing, so creativity utilizing the time spent on marketing will be important. Early on, acquiring customers will be the top priority, and your startup may be looking at spending 20-25% of its time on marketing (10 hours if you work a 50 hour week). It’s a good idea to test out different ideas to see what works before structuring your budget. More on that later.
2. $1,000 – $5,000 per month – This range allows you to create a more comprehensive strategy. Once you have a logo and brand that you are proud of, a strong web presence is the next essential. This begins with your company website, which is usually the first impression that your customers have of your company. The design should be user-friendly and responsive so that it looks great on computer screens, smartphones, and other web browsers. A good website allows you to convert visitors to leads by compelling them to provide their information through a form.
Social media marketing is the second crucial piece. You should focus on the platforms where your customers spend the most time – in other words, do not waste your time and money trying to be on every social platform. For instance, if you are developing a mobile app targeting men who love fitness, Pinterest is not your best bet as it is largely skewed towards females. Check out the best times to post on each channel before creating a social media schedule.
A blog is the third piece of the puzzle that you can use to connect with potential customers and drive them to your website. Your goal should be to publish great, helpful content at the right time to the right people. Be sure to include social sharing buttons on your blog content to increase its reach.
After experimenting with your website, social media marketing, and a company blog, you can try different activities. For example, you could host a networking event one month.
3. Over $5,000 per month – Once you are spending over $5,000, you can make the decision to hire an in-house marketer or a marketing agency. There are advantages and disadvantages to each option. If your team grows quickly, and you have 50 or so dedicated salespeople, you may want to look into hiring a full-time senior marketing professional. Many companies still hire an outside agency to support their sales and marketing efforts to get a deeper bench. The most significant benefit of hiring an agency is that you get a team of combined specialists from designers, developers, and marketing strategists all in one as opposed to hiring one marketing professional with a more general skillset.
Keep in mind that there may be unanticipated costs such as employee time. This might mean adding a new employee or intern to handle the marketing side. You will want to consider these additional costs when coming up with a dollar amount.
After you define your goals and budget, it’s time to plan out which channels and platforms will be the most effective.
By having an overall plan tied to your marketing activities, you will know what your results mean when you go to measure how well each marketing activity is performing. A specific goal will give you a baseline and discourage you from taking the easy and ineffective approach to putting whatever money is left over towards marketing. Whenever possible, you need to align your marketing plan to your startup’s purpose. I like to use this basic grid to start my decision-making process:
When you organize your marketing plan this way, you know exactly what you need to do to achieve your goals, and how you’ll measure the success (or failure) of these activities! (p.s. if you want an editable version of this table, just email us!). While this is all well and good, how do we determine what objectives are going to help us with our goals? Enter testing.
This is where the creative makes it or breaks it.
The key to a successful marketing campaign is to test and experiment at first to find out what generates qualified leads and paying users. A qualified lead is someone who is likely to become a customer based on information you have collected about them – they are a decision maker with the money and need for your product.
There is no need to commit a ton of money and resources right away – test out different marketing channels with a small amount of your marketing budget. There are countless messages, marketing platforms and channels, images, content, copy, and more that you can play around with to see what works for your specific company and what doesn’t. One easy way to test ideas is to use Google Adwords, you can break your budget down into a few small tests. Using ads, you can throw some light paid traffic at some of your creative ideas to see what sticks. Analyze the results, and refine your messaging.
It is difficult to measure ROI, but startups can focus on the cost of the marketing activity compared to the resulting revenues. If it costs $26 to run a targeted Facebook ad, and 7 people who clicked on the ad spent a total of $230, you can calculate the cost to revenue. Focus on the channels and methods that you’re seeing the maximum return from while using small-scale testing on emerging platforms of interest.
Once you know what works and what doesn’t, it’s time to get to the big leagues. Your marketing budget should not be a fixed and permanent number. Your marketing budget should be scalable. It should grow in tandem with your business. As you start to see a real financial return on your marketing efforts, you can slowly increase the budget.
Not sure exactly what to try first? Here are some ideas to try in your initial marketing plan.
Ideas for productive ways to spend marketing dollars without blowing the bank:
There are countless platforms and channels and guerrilla marketing techniques that you can try! There is certainly no cookie cutter formula for how you should be spending your marketing budget. Just remember to have fun and get creative (while staying within budget, of course!).
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