Outsource Your Marketing - A Three-Part Series - Part III - What Do I Need Vs What Can I Afford?
You're in the home stretch now.
You understand the importance of marketing and how it relates to your company's ability to achieve its objectives.
You've decided you simply cannot afford the overhead associated with an in-house marketing infrastructure so you've decided to outsource your marketing.
You ask around among a few friends and associates and you come away with the names of several marketing firms.
Now what? It's time to figure out what you're going to spend.
For the sake of this exercise, we're going to assume that your company has achieved $2.
5 million dollars in annual revenue.
You've been in business a little over four years and based on industry trends and your ability to establish dialog with some key prospects, you believe you could double your revenue in the next one-to-two years.
Because you're not completely comfortable with the idea of committing $700,000 to marketing in the next year (20% of a forecast of $3.
5 million.
See Part II; fast growth percentages), consider a range of $500,000 to $700,000 and then allow the marketing prospects to tell you what they can do within that range.
Even if the number scares you, it provides a foundation on which a realistic marketing plan can be built.
Tactical components can be woven in because specific dollar amounts can now be assigned to them.
While you may not be familiar with all the tools that are available or what they cost, undoubtedly you will have an idea of some of the things you might need, e.
g.
, print materials, trade show displays, catalogs, advertisements, samples.
As you meet with and decide on a marketing contractor, other things will come to light like billboard advertising, transit advertising (buses, airport terminals, taxi cabs) or sponsorships.
If you think about some of these things ahead of time, you will be better prepared to discuss the value and validity of such vehicles when you meet with your prospective contractors.
Remember the adage about all your eggs in one basket.
A successful marketing plan incorporates multiple tactical components communicating a common message.
You could easily spend $700,000 on television advertising alone.
However, that may not be the appropriate venue for your message, and it likely would not make sense financially at this stage in your company's development.
Regardless, the point is, we're dealing with finite numbers here.
While all media options must be on the table, it is the job of your marketing contractor to recommend an appropriate mix of media that will achieve the most bang for your buck in terms of reach and penetration.
That might be a combination of billboard advertising, sales materials, trade shows, internet presence and trade advertising.
Then again, it could involve a heavy push in radio advertising combined with event sponsorship, trade shows, publicity, direct mail and sales support materials.
The objective: reaching your target market using the most cost-effective mix of media that will most effectively communicate your message and promote your brand.
No single medium will do that.
It takes a combination.
Don't expect results overnight.
Marketing is a process, and you have to allow for your message to repeat enough times in enough venues so that it begins to resonate with the audience.
While it's reasonable to expect the phone to start ringing in the near-term, and you should have measurement tools in place to track results, allow your plan at least one full quarter, if not two, before you begin to really scrutinize results.
With no track record on executing a formal marketing plan, you should be prepared to allow things to play out over a full business cycle to determine whether the plan was on target.
A good marketing plan allows for some flexibility, so if you feel compelled to cut the budget prior to the completion of the business cycle because you're not happy with the results, do so only after careful evaluation of your options.
This next point is very important.
Months into your business cycle, should you find it necessary to cut back, cut the budget, NOT the forecast.
When you formulated your revenue projections for the year you had valid reasons for arriving at the number you did.
Half way through the year, you may have concerns about whether the company will hit that number, but you should not change it.
It is that number against which you measure the effectiveness of your sales and marketing efforts, so by reducing it, you're letting yourself, your marketing plan and your team off the hook.
Should revenue pick up dramatically mid-way through the third and into the fourth quarter, you can re-commit dollars that were originally budgeted for marketing and make a final push.
That's where the flexibility part of a marketing plan comes in.
In Part I, I stated that running your business without a marketing plans was analogous to setting out from Maine to visit your uncle in San Diego without directions, a map or a GPS system.
A marketing plan is like a road map.
Occasionally you might find yourself forced to take a detour, but every map has more than one way to reach a destination.
Regardless of whether you are in a position to allocate resources to finance a marketing plan and all of the commensurate tactical measures, at least commit to hiring marketing experts to help you draft the marketing plan.
After all, you're trying to go somewhere you've never been.
Why would you attempt to get there without a map?
You understand the importance of marketing and how it relates to your company's ability to achieve its objectives.
You've decided you simply cannot afford the overhead associated with an in-house marketing infrastructure so you've decided to outsource your marketing.
You ask around among a few friends and associates and you come away with the names of several marketing firms.
Now what? It's time to figure out what you're going to spend.
For the sake of this exercise, we're going to assume that your company has achieved $2.
5 million dollars in annual revenue.
You've been in business a little over four years and based on industry trends and your ability to establish dialog with some key prospects, you believe you could double your revenue in the next one-to-two years.
Because you're not completely comfortable with the idea of committing $700,000 to marketing in the next year (20% of a forecast of $3.
5 million.
See Part II; fast growth percentages), consider a range of $500,000 to $700,000 and then allow the marketing prospects to tell you what they can do within that range.
Even if the number scares you, it provides a foundation on which a realistic marketing plan can be built.
Tactical components can be woven in because specific dollar amounts can now be assigned to them.
While you may not be familiar with all the tools that are available or what they cost, undoubtedly you will have an idea of some of the things you might need, e.
g.
, print materials, trade show displays, catalogs, advertisements, samples.
As you meet with and decide on a marketing contractor, other things will come to light like billboard advertising, transit advertising (buses, airport terminals, taxi cabs) or sponsorships.
If you think about some of these things ahead of time, you will be better prepared to discuss the value and validity of such vehicles when you meet with your prospective contractors.
Remember the adage about all your eggs in one basket.
A successful marketing plan incorporates multiple tactical components communicating a common message.
You could easily spend $700,000 on television advertising alone.
However, that may not be the appropriate venue for your message, and it likely would not make sense financially at this stage in your company's development.
Regardless, the point is, we're dealing with finite numbers here.
While all media options must be on the table, it is the job of your marketing contractor to recommend an appropriate mix of media that will achieve the most bang for your buck in terms of reach and penetration.
That might be a combination of billboard advertising, sales materials, trade shows, internet presence and trade advertising.
Then again, it could involve a heavy push in radio advertising combined with event sponsorship, trade shows, publicity, direct mail and sales support materials.
The objective: reaching your target market using the most cost-effective mix of media that will most effectively communicate your message and promote your brand.
No single medium will do that.
It takes a combination.
Don't expect results overnight.
Marketing is a process, and you have to allow for your message to repeat enough times in enough venues so that it begins to resonate with the audience.
While it's reasonable to expect the phone to start ringing in the near-term, and you should have measurement tools in place to track results, allow your plan at least one full quarter, if not two, before you begin to really scrutinize results.
With no track record on executing a formal marketing plan, you should be prepared to allow things to play out over a full business cycle to determine whether the plan was on target.
A good marketing plan allows for some flexibility, so if you feel compelled to cut the budget prior to the completion of the business cycle because you're not happy with the results, do so only after careful evaluation of your options.
This next point is very important.
Months into your business cycle, should you find it necessary to cut back, cut the budget, NOT the forecast.
When you formulated your revenue projections for the year you had valid reasons for arriving at the number you did.
Half way through the year, you may have concerns about whether the company will hit that number, but you should not change it.
It is that number against which you measure the effectiveness of your sales and marketing efforts, so by reducing it, you're letting yourself, your marketing plan and your team off the hook.
Should revenue pick up dramatically mid-way through the third and into the fourth quarter, you can re-commit dollars that were originally budgeted for marketing and make a final push.
That's where the flexibility part of a marketing plan comes in.
In Part I, I stated that running your business without a marketing plans was analogous to setting out from Maine to visit your uncle in San Diego without directions, a map or a GPS system.
A marketing plan is like a road map.
Occasionally you might find yourself forced to take a detour, but every map has more than one way to reach a destination.
Regardless of whether you are in a position to allocate resources to finance a marketing plan and all of the commensurate tactical measures, at least commit to hiring marketing experts to help you draft the marketing plan.
After all, you're trying to go somewhere you've never been.
Why would you attempt to get there without a map?
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