How To Determine a Marketing Strategy
Retail is cutthroat. Regardless of whether you're in eCommerce or a brick-and-mortar location, in an established consumer market or finding a new niche, it can be a difficult landscape to navigate without the right approach to marketing. It doesn't really matter how fantastic the quality, price, or other selling points are. At the end of the day, it all comes down to one simple fact: people need to hear about it.
It is difficult to overstate the importance of proper marketing and while Shopify is the prime example of how eCommerce platforms are making small business ownership incredibly accessible, for many small business owners the focus is on other areas. Developing the product line, the day-to-day operations, or whatever the case may be, marketing strategy and determining that budget is not often one's forté. Deciding what to spend and where to spend it can be outright overwhelming. So, here are some tips.
Two Budget Approaches
Methods for defining a marketing budget rely largely on a few key factors. How long the business has been in operation, the size of the business, and the current sales are the main points that will direct the approach.
Typically, new businesses have limited resources. There may be very little sales history to make accurate estimates and informed decisions, meanwhile capital may be stretched thin. Adopting a fixed budget approach to marketing is usually recommended at this early stage for a business.
In a fixed budget, a set amount of money is directed to marketing expenses. Understanding the business' operating costs is imperative to then determine what can be allocated to marketing thereafter. It is important to focus on not overspending and this method will ensure a measured, responsible approach.
For established small businesses, the task becomes a bit easier. The standard practice is allocating a budget ranging between 7%-12% of revenue. By this method, the marketing budget is not fixed, rather it is positioned to scale proportionately with your business.
It is worth noting, however, that according to economists among the U.S. Small Business Administration, it is recommended that budgeting a revenue percentage for marketing only be used when a business has margins above 10%. Otherwise, the fixed budget method should be applied.
But where to spend it? It can be a daunting task to determine what might be the best-suited marketing channels for a business and target customer base. The first step is to determine the goals of a marketing campaign. This determination is also largely a function of the history, size and sales of a business. Do you need to capture more social media followers? Do you want better search engine rankings and visibility? Do you already have an audience that you can target to try to convert to sales?
There is always a general procedure to follow in order to maximize your results. First things first, you need to build an audience. Before you can offer sales and target conversions, you need a set of people to be targeting. Of course it ought to be an on-going mission - the more people following your brand, the more impact you'll have over all in your marketing efforts. Once you've begun to build that audience you can then use methods for effectively targeting and re-targeting to convert sales.
Young businesses can likely only afford a single marketing channel, while more established businesses might have a multi-faceted strategy. Perhaps an email service will have the greatest impact. Perhaps the target customer spends a lot of time on Facebook and Instagram. It is important to do adequate research to find what will be most impactful and cost effective. Be sure to note how the competition approaches marketing, but with special attention to the scale of those businesses to ensure they are a good model for informing your decision-making. Also, reach out to other business owners. It never hurts to ask the friendly competition.
Key Performance Indicators
Marketing strategies need constant assessment to ensure they are meeting goals and maximizing opportunities. Depending on the goal of a marketing campaign, there ought to be some measure for success. Yet, some of those measures can seem difficult to gauge.
Number of retweets, Instagram followers, Facebook likes, etc. can all be employed as a means to quantify your success in outreach to current and future customers. If your immediate goals are to obtain a wider audience, identifying what has the greatest reach and receives the most attention within your market is a place to start.
However, when it comes to analyzing sales generated through marketing, one of the best methods of determining the effectiveness of a campaign is through examining what is called Return On Investment (ROI). ROI is a ratio that indicates net profit. It is a simple measure of revenue generated divided by costs invested.
Using ROI can help in analyzing a marketing campaign and guide further spending. Most digital marketing channels have marketing attribution, helping you to see the direct impact on sales from your investment in that respective channel. This data is useful in assessing ROI and using that in turn as a measure of what marketing strategy is most impactful. Although you may be apprehensive of a larger marketing expense, you may find that it generates a significantly higher ROI. There are often trade-offs to consider, but on occasion you may identify a clear win.
Deciding on the right marketing strategy for a business requires a lot of finesse. However, businesses of any size can utilize marketing resources to see results. The first step is ensuring that it is an affordable expense. A cognizance of the customer base and trends within the industry is the next step. And lastly, a bit of trial and experimentation in marketing channels and examining their results will ultimately set a course for success.