A common mistake that we see local businesses make is treating marketing as an expense instead of an investment tied to revenue. Without a steady marketing budget, it becomes difficult to attract new customers, build brand awareness, and grow revenue over time. Even in small towns like Auburn and Opelika, or close knit metros like Montgomery or Columbus, word-of-mouth only goes so far. At a certain point, you need to be able to reach customers that haven’t heard of you before.
A good rule of thumb we practice is to set aside a percentage of your gross revenue specifically for marketing, with the exact amount depends on your business goals.
| Annual Marketing Budget | Business Objective |
|---|---|
| 3% – 5% of annual revenue | Companies focused on maintaining their current customer base often spend between 3% and 5% of their annual revenue on marketing. |
| 6% – 10% of annual revenue | Businesses that want steady growth should plan to invest between 6% and 10% of their annual revenue in marketing. |
| 10% – 15%+ of annual revenue | Businesses pursuing aggressive or rapid expansion, or entering new markets, may invest 10% to 15% or more of their annual revenue in marketing. |
Marketing is kind of like planting crops on a farm. The more consistently you invest (seeds you plant), the more opportunities you create for future sales. Businesses that stop marketing during slow periods often find themselves with even fewer leads months later because their visibility has decreased. We routinely see this phenomenon with seasonal businesses that want to save money in the “offseason,” making re-entering the market that much more difficult come the following year.
Your marketing budget should cover a variety of activities, including search engine optimization (SEO), paid advertising, social media management, content creation, email marketing, website improvements, and customer retention efforts. A balanced strategy helps your business reach customers at every stage of the buying process. However, just focusing on services won’t be enough – you have to measure results. Track where your leads come from, how much each customer costs to acquire, and which marketing channels produce the highest return on investment. This data allows you to spend your marketing dollars more wisely each year. We often say that we hate guessing games. We would much rather make informed marketing decisions based on real data, rather than throwing darts at a wall.
While different industries will have different baselines for total lead/sales acquisition, the main goals are always the same: fill the sales funnel with high quality, high intent leads that convert quickly. So long as your marketing efforts are centered around those basic principle with an adequate budget to power them, your business can grow effectively.