Marketing can mobilize an existing audience, build an engaged community, and create new revenue streams that drive consistent growth.
Whether you’re reaching people with social media, email, or a highly optimized website, effective marketing can really be priceless. But as a business owner, how do you know your marketing dollars are money well spent?
Should you write off your marketing expenses as an obligatory cost, or should you treat them as a strategic investment in your company’s future?
The answer depends on your approach. In this post, we break down the difference between cost vs. investment when it comes to your marketing spend.
Cost vs. Investment: How To Tell the Difference:
Tracking ROI turns marketing from a cost into an investment. By collecting data, assessing performance, and comparing results of your various marketing efforts, you can make informed decisions about your budget on a monthly basis, rather than running blind. You can adjust, pivot, try different strategies to see what works best – and what doesn’t work at all.
Consider our earlier example of the medical office. Instead of assuming where new patients are coming from, ask them: Did you find us via Google search? Facebook ad? Email campaign? Referral? Chart the responses. Then, you can calculate how much money you’re making from each new patient visit and compare that data to how much you spent to bring them in.
Tying marketing spend to ROI can completely transform how you go about developing a budget for your business.
Common Sense Tips for Developing a Marketing Budget
Marketing isn’t always an exact science in which every dollar spent can be traced to a dollar earned. But if you treat marketing as an investment, taking an analytic, data-driven approach to your budget, you can make informed decisions that steer your business out of “survival mode” and toward achieving your long-term goals.
Not sure where to start? You’re in the right place! Follow these simple tips to create a marketing budget that truly invests in your future.
- Take a Top-Down Approach – Start with the results you need and work backward. For example, how many new patient visits are necessary to meet your revenue goals? How much do you need to spend to get those results?
- Keep It Fluid – Resist the urge to assign a hard-and-fast number to your marketing spend. Don’t tie your marketing budget to a specific percentage of revenue. Instead, plan to adjust your spend according to trends as you notice them.
- Track Everything – Data collection is essential to a smart marketing budget. Many business owners gauge marketing success by the number of website visits or social media followers, but is that enough? Develop an interview process for new clients to determine how they found you. Create a spreadsheet and track these insights. What trends can you spot? Which marketing “bucket” has been most successful in attracting customers? Invest money in areas that are working and pull back or strategize in areas that aren’t.
- Consult an Expert – If you’re unsure how to track your marketing ROI, that’s OK. Help is available; you just need to know where to find it. Accounting firms typically give you a Profit & Loss statement and advise you where to cut spend, many times without context. What you really need is someone who can dig into your data and calculate your marketing ROI. You need someone to help figure out which marketing campaigns are working, which aren’t, and why.
TAKE ACTION TODAY!
At Accounted4 LLC, we go beyond the standard Profit & Loss analysis to help business owners collect and assess all the data that impacts their bottom line. We apply context to the numbers so you can understand what is happening with your money, why it’s happening, and how you might want to adjust your plan. Our experts uncover the story your financials are telling, then empower you to write a successful next chapter.
Marketing will always cost money, but with effective tracking and simple analytics, your marketing spend can be a very wise investment. Contact us to learn how we can help!
