As 2019 draws to a close and 2020 beckons, it’s only natural that many of us will be taking stock of the past year and making plans and resolutions for the one still to come. Are you doing the same for your business and, specifically, for your marketing? Cain & Company helps prepare marketing strategy for the manufacturing industry and other businesses, so you can make the most of your marketing spend in the year ahead.
You’re probably wondering how much you should be spending on marketing. The rule of thumb is typically 20% of revenue, but we’ve seen suggestions from as low as one percent of total revenue and as high as up to 50%. It may be better to start with a series of questions rather than hard-and-fast rules.
The higher end of the scale mentioned above is where high-visibility and high-competition businesses typically fall. Retail and consumer products are both highly competitive, and those businesses typically set aside a much higher percentage of revenue for their marketing.
This does not mean that your business will necessarily track with what your market segment as a whole is doing. A business that’s more specialized is targeting a much smaller market, which calls for a more focused approach to marketing. Fortunately, it also often allows for a somewhat smaller budget. You won’t be targeting everyone you can reach within a certain geographic area the way that, say, your local big box store would; in fields like manufacturing, the goal is more often to reach a much narrower range of decision makers.
This phase can, admittedly, be a matter of guesswork. Our competitors tend to be opaque about their businesses, so it’s not as though you’re going to find a marketing blueprint with their name on it. That’s not to say you can’t make some highly educated guesses. Searching your industry on Google will often show if they’re spending on Google AdWords. Check them out on social media, and you’ll see the kinds of posts they’re writing — and with Facebook being what it is, you’ll likely see their ads in your feed if they’re advertising there. You won’t want to be a carbon copy of your competition, but you’re likely to get some actionable ideas during this phase of your research.
A newer business faces a unique set of challenges. You don’t have the same name recognition as your better-established and higher-funded competitors. You may not have the same depth of marketing expertise to draw on. And you’re going to be spending at least as much time establishing your identity and brand among your target audience. Similar considerations are in play if you’re an established business spinning off a new division, introducing a new product, or entering a new market. We’ll have more to say about this below.
Budgeting matters. On the one hand, you don’t want your marketing to be ineffective because you weren’t able or willing to spend enough to make it stick; many marketing strategies that might otherwise have succeeded fall short because they’re under-resourced. On the other hand, we understand that your marketing budget is finite. Tailoring your budget must take your margins and revenue into consideration but should also consider the channels that will drive the best results. You are not obligated to use every channel at your disposal; choose (and spend) judiciously!
Having answered those questions, it’s time to get down to the nuts and bolts of what you need your marketing to accomplish. This will often result in revisiting those questions so that you can fine-tune your approach. In general, growth is more expensive than maintenance. That means a new business, or a new product from an existing business, will call for a marketing spend of 15 to 20% of revenue to build awareness and grow. However, if you’re well established and simply keeping your business top-of-mind, a lower marketing budget will still allow for that.
Up to this point, we’ve offered as many questions as answers. There’s one more question to be answered: “How do we know this is working?"
Your marketing efforts need to be trackable, and the more systematic your tracking is, the better. Investing in a customer relationship management (CRM) suite or using tools that give you visibility into the customer lifecycle from lead acquisition to closing will help you do this. Over time, you’ll gain insight into what’s working so that you can move your money in that direction and away from things that don’t work. While most manufacturers find the web and their mailing lists convert best and provide a great bang for their buck, your metrics will help you gain insight into even better ways to use those channels. You’ll also find out whether other marketing strategies — trade shows, print ads, and direct mail among them — are giving you enough ROI that they justify the effort.
All of this comes with a caveat: much of the marketing advice you’ll find online is, by necessity, the lowest common denominator. When you’re marketing for the manufacturing industry, as Cain & Company has done for more than four decades, you understand that a different approach is necessary. The questions we’ve raised don’t always lend themselves to easy answers, but we can help you find them over the course of a consultation, so you put your marketing budget to best use.