How much money should I be spending on marketing? This is a question business owners often only ask when puzzling over why their business isn’t growing.
Are you a sales or marketing led organisation?
For B2B organisations, sales teams are often the ‘go-to’ growth driver.
After all, it’s easy to measure the impact of a sales team and spending time on the phone and in meetings with prospects and customers feels tangible.
You know exactly how much each salesperson costs, and you can directly attribute revenue to each one of them.
When hiring new sales staff they will often bring their network and relationships with them making it easy for your business to rapidly open doors to new customers.
But how scalable is this approach? And what if your business model doesn’t support it?
The impact of marketing on sales
As someone who has overseen marketing across a portfolio of brands, I have seen first hand the impact marketing can have on various sales team’s ability to succeed.
Take two hypothetical salespeople who each put a sales call in to the same customer. One salesperson represents a brand which has a high level of brand awareness within the sector. The other brand is new and unheard of.
Both individuals are selling exactly the same product in terms of features, price, quality etc. The only difference is that the customer has ‘heard’ of one of them. They may not recall where they have heard of them, but the brand name is familiar.
Empirical evidence suggests that the salesperson from the familiar sounding brand will have a much higher likelihood of having a positive conversation and ultimately closing a sale than the salesperson calling from a company that the customer has never heard of. So much so that brand awareness can also have a significant impact on a company’s ability to hire sales people.
If you’re an SME, you may be thinking: “this sounds expensive”.
After all, how many startups and SMEs have budget for TV and radio? Well here’s the trick. You don’t need TV and radio.
Is being ‘famous’ the key to sales and marketing success?
You don’t need to be ‘universally famous’. You only need to be ‘famous’ in your niche, and if you’re a B2B business, your niche should be relatively small. If it isn’t, you need to pick a segment to focus on.
Look for some initial evidence of success, demand or interest from a particular sector and start there.
Do you know who your customers are?
Your next step is to create an ‘ideal customer profile’ or ICP (also known as ‘avatar’ or ‘persona’) to help you develop a clear picture of who your target customer is. Write down the typical job title, geography, company size, sector as well as typical age, hobbies, interests etc of your ideal customer.
Once you have done this, you can start to develop a marketing plan that enables you to focus your targeting and advertising specifically on this type of customer. You need to start thinking about where they ‘hang out’ and how you can get your message in front of them.
By being narrow with your targeting you are maximising the impact of every marketing £ spent and over time you can develop targeted awareness amongst this audience. They will see your adverts, your white papers; and your articles on the websites and magazines they read. They may see you at industry events. In the mind of the customer you will start to become a ‘leading brand’, or ‘famous’.
Because your efforts are focussed you should also be able to attribute any subsequent increase in new business back to the campaign.
How much money should I spend on marketing?
So to the original question, how much should you be spending on marketing?
Data from the Gartner CMO spend survey shows that marketing budget allocations tend to trend at 11% of company revenue.
The survey is based on Gartner’s 2020 CMO Spend Survey of 432 marketing executives in North America, the U.K., France and Germany at companies with $500 million to $20 billion or more annual revenue.
There’s no reason however why this should be different for companies with a much smaller turnover.
Marketing budgets by industry sector
As you might expect budgets behind mass consumer goods are very high as a percentage of revenue with 24% of revenue spent on marketing. At the other end of the scale you have energy, manufacturing and transportation. Being essential services that people can’t do without, not much marketing is required and budgets come in at 4-8% of revenue.
B2B type services like service consulting (12%) and tech software (15%) including B2B SAAS come in a little above the average of 11%.
How CMOs allocate marketing budget
The highest expense tends to be that classed as ‘direct expenses of marketing’. Typically this is advertising costs such as Google. Social media and employee costs come in not far behind.
The common pitfalls relating to marketing budgets
The big mistake many CEOs and CFOs make is to consider marketing a luxury; a budget line that they can afford to reduce or eliminate altogether, especially when business is tough.
But it’s times like this that business leaders should be doubling down on their marketing spend and ensuring they have marketing leadership in place that has the ability to think creatively beyond traditional marketing channels and techniques.
Quality, experienced marketing leadership will focus relentlessly on maximising your bang for your marketing buck and ensure spend is allocated into areas focused on relentlessly hunting down and funneling new customers into your business. Why would you turn the dials on this down when times are tough?
Should I reduce my marketing budget?
In times of economic hardship, many companies look to reduce spend. This makes sense if the demand for the types of products or services you offer reduces. But whether it does or it doesn’t, it’s an excellent time to gain market share. Many of your competitors will be reducing budgets giving you the opportunity to gain ground in a less crowded market. Every pound you spend on marketing will go that much further without your competitors around.
Not all companies are able to do this. But for those that have the resources, this contrarian approach can be too good an opportunity to miss. Of course wasting advertising budget on a disinterested audience doesn’t make sense. But in the digital sphere where you are only paying for ‘clicks’ from active/interested buyers – maintaining or increasing budgets when your competitors are reducing them is smart.
If you need help putting together a B2B marketing budget get in touch. We’ve done it hundreds of times for various types of businesses and it’s one of the key building blocks in launching a successful marketing strategy.
Established businesses often fall into a certain level of routine. Repeating a range of tasks and activities that have worked in the past on the assumption they will continue to work in the future.
If you ask the person responsible for marketing why they do something a particular way and they say: “because that’s how we’ve always done it”, then it’s a sure sign that there is an opportunity to shake things up.
Growth marketing is an approach whereby you challenge all existing assumptions and take the view that the business is only scraping the surface of a much bigger opportunity.
What is a growth marketing consultant?
Armed with cutting edge knowledge of the latest marketing tools and techniques, a growth marketing expert can help with the following:
take a fresh look at your business performance from a marketing perspective.
establish realistic growth goals based on historic data and market opportunity analysis.
develop an aggressive growth marketing plan to deliver on growth targets within budget constraints.
train you or your team on how to execute the plan, or do so on your behalf.
What does a growth marketing consultant do?
True growth marketers will be unconstrained in their thinking around which methods can be utilised in order to deliver on your growth targets. They will ensure all appropriate conventional channels are in place then examine the potential for more unconventional approaches.
As long as they are legal and ethical, they are considered!
A growth marker will think relentlessly about who the target customer is and how to effectively identify and connect with them.
Much of the skill will be around their experience and understanding of the latest technologies and techniques that can be used to generate new business.
What does a growth marketing plan look like?
A growth marketing plan should start with an unfiltered list of opportunities.
Some examples of opportunities a growth marketing plan can uncover:
New channels – are there some channels that the business has overlooked in terms of business generation?
New customer targets – can your existing offering be repackaged for a new type of customer, opening up more sales opportunities?
Upsell opportunities – is there an untapped area of demand amongst your existing customer base that you are well positioned to capitalise on?
Partnerships – is there a mutually beneficial collaboration opportunity that could immediately open up your offering to a vast new audience?
The list should be long and broad with a view to narrowing it based on budget required, time/resource required, and likelihood of success. This narrowed list becomes a ‘testing’ roadmap with a view to rapidly trying out ideas and being prepared to fail fast. Once you identify initiatives that work you simple double down on them and shift more resource in so you can scale them.
You will find that growth marketers will often more likely enjoy working in startups and smaller businesses where they are unconstrained by the bureaucracy of larger businesses where there is a much lower appetite for risk and innovation – crucial for businesses looking to achieve rapid growth.
If you are like many B2B business owners and managers, you will have put some considerable thought into how to get people to visit your website. But once the visitors have arrived on your website, what are the key elements that will help convince them that you are the right company to do business with?
Social proof is a key element that will give website visitors confidence in your business.
Social proof is the ‘virtual queue out of the door’ that shows people that not only do you supply the product or solution that they want, but you are good at it. And that’s why other people are choosing to use you.
You might think twice about eating in an empty restaurant when there is a buzzing eatery a few doors up.
You need your site to emulate the buzzing eatery and not the empty restaurant.
You want to be the restaurant that makes people confident that they have come to the best place in town when they walk through the door.
Websites are no different.
How to demonstrate social proof on your B2B website
This is one of the oldest and well used tricks in the book. And for good reason.
Prospects will trust what other customers have to say more than they will trust what you say.
Testimonials need to be genuine and ideally use a photo of the happy customer. It will further increase trust.
Try and make sure any testimonials represent your typical customer. The more the prospect can relate to that person, the better.
Don’t use a testimonial that features a pensioner from Florida when most of your customers are middle managers based in south east England for example.
2. Case studies
Case studies are great if you have a slightly more complicated product or service.
Not only do they act as a form of endorsement, but they also give you a chance to demonstrate practical examples of how your product or service can help.
Again you should take care to create case studies that focus on the client segment that represents the greatest opportunity to your business, so that the prospect feels it’s directly relevant to them.
3. Ratings and reviews
The good thing about ratings and reviews is they are more independent and therefore considered more trustworthy than reviews that are shown directly on your website.
The downside is you have no control of what they say publicly. This can serve as a very strong motivator to ensure you are addressing issues and building a first class business.
There are plenty of places where customers can leave ratings and reviews such as Google, Facebook, Trustpilot, Feefo, reviews.io.
You should decide which will be most important for your business and encourage happy customers to leave you reviews there.
Some review platforms require a subscription. If you are just starting out, Google reviews is probably the best place to start.
4. Usage statistics
Unless you are en established player or a big brand, there is a fairly high probability that prospects on your website have never heard of you and will be visiting for the first time.
Usage statistics can help prospects understand that you are not a small bucket shop business but a serious and trustworthy player. If for example you have served over 10,000 customers or stock over 500,000 items in your warehouse you should say this. It tells the prospect that you are a serious player and can be trusted.
5. Live usage stats
If you have ever booked a hotel on a website like booking.com, you may be used to seeing messages like:
“This hotel was last booked 8 minutes ago” or “there is only 1 room remaining”
These are great examples of social proof using live data. Other examples that could work for you are:
“Sarah from Lincoln just placed an order” or “Pete from Birmingham just signed up for the newsletter”.
Also on job boards you see this quite frequently:
“We have over 8,000 candidates registered in London”.
These can really help prospects coming to your website get a sense that they are in a ‘busy restaurant’ rather than an empty one.
There are tools like www.fomo.com that can help you display live usage stats on your website.
Every business is different so some of these suggestions may be more relevant than others, but they should as a framework to help you think about what could work for your business.
If you are a business owner or manager, you will recognise that without customers, you are not going to hit your revenue targets.
It may be that you have an established client base, but what if you feel that your product or service is offering true value and you want find more customers to benefit from it?
You can of course start trawling through your personal network or Google, but it makes sense to ensure you are tapping into the knowledge and expertise of people who have experienced a similar challenge, or specialise in solving them.
Here are 5 sources of B2B marketing advice that can get you set off in the right direction:
1. Online Forums – these are a great way to tap into a large group of people. It will likely contain a mixture of business owners /managers like you, and companies or consultants looking to win you over as a client. Either way you can start to pull together a shortlist of ideas that you can use as the beginnings of a marketing plan. Check out LinkedIn Groups, Facebook Groups as well as standalone groups.
2. Networking Groups – networking groups are a wonderful way to connect with like-minded people and share challenges and ideas. Most towns will have a business networking group where, as well as an excuse to mingle over a glass of wine or beer, you may get some fantastic advice and even some customers! Check out British Chambers of Commerce and First Tuesday who both run business networking events.
3. Hire an in-house specialist – if you are really serious, you may decide that you need an in-house specialist. An experienced B2B marketer will be able to formulate a complete B2B marketing strategy for your business and then action it. You should set clear targets for them so they know exactly what their objective is.
4. Hire a B2B marketing consultant – if you don’t have the budget or resource for an in-house specialist, you can look at hiring a B2B marketing consultant. The good thing about using a consultant is that you can set specific targets and a specific budget and see how they perform without the long term commitment of an in-house specialist. The cost of a good B2B consultant should pay back in value to your business many times over.
5. Google it! – If it’s not a full strategy you are after and you just need some ideas to help you boost your enquiries, Google can be a useful resource. There are some great articles on websites like SmartInsights and Econsultancy that offer some fantastic advice on B2B marketing.
1. Update your Linkedin profile and connect with key buyers
LinkedIn has over 25 million users in the UK and 575 million globally. That means there’s a good chance there are potential buyers who you can contact in there. You can search for them based in location, company name, industry and lots more. Once you’ve found them, simply send them a connection request with a short note outlining how your company can help. Don’t go in with a hard sales pitch in your first message.
2. Offer your expertise for free
You won’t win any new customers until they know they can trust you. Offering something for free whether it be an ebook, a free consultation or a product sample will open the door to an honest conversation that can lead to a new customer.
3. Hang out where your target customers hang out
Obviously you need to be visible in order for customers to find you. Google ads will help with this but it’s worth thinking carefully about where your potential customers hang out whether it be forums, events or online groups. Make a regular appearance and offer help so you start to become a familiar and friendly face.
4. Write guest posts
Content is a crucial part of online marketing nowadays. But if you aren’t getting visits to your website, how do you get people to read your content? Guest posting is a great way to do this. Write some great content and share it with websites who’s readers will find it useful. They won’t all say yes, but over time you should be able to figure how and where you can get your guest posts published.
5. Have a sharp website
You should think of your website as your store front. It needs to look professional, presentable, trustworthy and inviting. Get your key messages across effectively using the right balance of words and images, and you will greatly increase the percentage of your visitors who go on to make an enquiry or purchase. Think seriously about getting help with this if you’re unsure. A good wordsmith and designer can work wonders to produce a website you will be hugely proud of.