Marketing budgeting requires a leap of faith. There's just no other way to say it. You usually have to spend money upfront, without knowing your ROI until later.
In budgeting your company, marketing requires a leap of faith. There's just no other way to say it. You usually have to spend money upfront, without really knowing if you will get an ROI until later. Look, it makes everyone nervous, even us. But, there are some guidelines that can increase your chances of success. We want to share a story about a client Elena.
Elena has a successful salon. In her first few years, she grew rapidly and expanded to a new area. She was concerned about her second location as it was having the same growth as her first. He first salon was maxed out. She really didn't have the ability to add more clients. Her second salon was growing but her overall growth had slowed down. She was concerned. The second location was doing slightly better than breaking even, which meant her profit growth had stalled.
The good news was this wasn't a flaw in her business plan, she was fine from a financial standpoint. Instead, her issue was with marketing planning and budget, and specifically the marketing budget for her 2nd location. She had the choice to do it herself, but she chose to work with us instead.
For starters, it's good to have a rule of thumb for how much you should invest in marketing. The U.S. Small Business Administration (SBA) recommends spending 7-8% of gross sales on marketing if you're sales are < $5M a year. Our rule of thumb is 10% because it's simpler.
So, back to Elena. Elena's goal was simple. Drive more' appointments' at her 2nd location. That's clear. But not SMART. For goals to be as effective as possible they should be SMART: Specific, Measurable, Attainable, Relevant, and Time-bound.
Elena's goal was specific but was it specific enough? Would 1 appointment more be sufficient? 10? 100? It's hard to know what you should do unless you are crystal clear on what you need to attain. That was the first step. We decided on an additional 10 appointments/week within the next six months as our SMART goal.
We can't share Elena's exact financials, but we agreed to use our 10% of gross sales as our rule of thumb. This gave us plenty of money with which to budget a solid marketing plan. This is a salon business, so visual media were key. In deciding on our marketing mix, we focused on social media, website enhancements, e-mail, Google My Business, and yes, old-school, direct mail. More on that in a minute.
Elena is an Instagram genius. She built her brand predominately from Instagram. It's the perfect medium for her work. It not only built her following, but it also helped her in local search. However, this became a problem because, since both locations had the same name & account, all the Instagram work was being attributed to her primary location. This was what we had to fix.
The new plan was to:
You're probably thinking, what? Mail? Really? Well, the truth was about 10-15% of Elena's clients actually lived closer to her 2nd location, but only came to her first. They just didn't know or were afraid to try a new stylist. So, we did a combo of e-mail and direct mail to let them and their neighbors know that there was a more convenient option for them. In those mailers, we provide discounts at the new location. We also held events at the new location where the top stylists would there as "guests".
This worked beautifully for Elena. We hit the 10 appointments/week goal within 4 months instead of 6. This was an inexpensive plan, which was easy to implement and measure. Now, Elena's business is able to grow and she is doing better than before at both of her locations, all thanks to an improved marketing budget.
At ProStrategix, we know you have concerns. We're designed to help give you the marketing support you need so you can focus on doing what you love. If you would like to learn about how we might be able to help you, please contact us.
Brian Cairns, CEO of Prostrategix Consulting. Over 25 years of business experience as a corporate executive, entrepreneur, and small business owner. For more information, please visit my LinkenIn profile
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