August 16, 2018

Business Advice from Berkshire: How to fund your marketing

If you consider changing your car, what factors do you consider? Initial outlay, running costs and possibly the resale value are all taken into account. However, I suggest the over-riding factor is what do you want to use the car for. Is it to tow a trailer, take the children to school – and their friends or simply to give you the pleasure of driving when you choose to use it?

penny1What link has this got to your marketing? You need to ask yourself what is the purpose of your marketing. Once you decide what you are trying to achieve, you will be able to judge how much you can afford to spend. By looking at the financial returns, you can see what your budget should be. I appreciate this is easier said than done. Planning your cash flow is easy for cash going out, but not so easy for cash coming in. An advert that brings you customers might only do so because they have become familiar with your name through the six previous adverts that didn’t result in them buying.

This suggests that the cost of acquisition of your customer needs to include the raising of the profile of your product or service, not just the final marketing activity that leads them to buy from you.

Having started to look at the possible costs, the next step is to look at the returns. How much profit do you make from each sale? How much of that profit can you afford to spend to generate a greater number of sales? This is typically not an infinite number as most businesses will be restricted by their capacity to fulfil orders – at least in the short term. This brings me back to the question, what are you trying to achieve. Once you decide on that you will know how much you have to spend to achieve your goals. The difficult question is then where do you spend it.

Penny 2If you need help calculating the figures, get in contact. Not only can we work out the figures with you, but show you how it is done and how to monitor your returns. Remember ‘You can’t manage what you don’t measure’

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