Whatever the size of your business, a great marketing strategy can help you reach your customers and, ultimately, boost your bottom line. Many new and smaller businesses don’t see the value of marketing, or they may avoid it out of fear that it requires a sizable budget. Thankfully, that’s not always the case.
Our guide answers the most commonly asked questions about how to set up a marketing strategy for your small business.
What are the key elements of a marketing strategy?
A good starting point is a common tool known as a SWOT analysis, which allows you to analyse your strengths, weaknesses, opportunities and threats. Using a clear and simple framework, SWOT analysis prompts you to examine your internal strengths and weaknesses against your external opportunities and threats. It can be very straightforward if approached with objectivity. And, if done properly, it can offer immense value. You can get started by downloading a free template from the Business Queensland website.
How much money should I spend on marketing?
Planning a scalable marketing budget that enables you to grow — but doesn’t put too much pressure on your bottom line — is critical. Exactly how much you need to spend on marketing depends on the nature of your business, but here are some general rules to help you develop a marketing budget:
- Have a clear understanding of your business revenue. When setting budgets, you should base your calculation on ‘reliable revenue’ — that’s the minimum amount of money your business makes each month. So, if your revenue ranges from $8,000 to $10,000 each month, your reliable revenue is $8,000.
- Plan for future expenses. You shouldn’t be spending big on marketing if you have invoices due, so make sure you create a list of forecasted expenses so you can clearly identify how much you’ll have left to invest in marketing.
- Start with a small test budget. Once you’ve worked out your disposable income you can decide how much money to allocate to marketing. Start small — invest a manageable amount in an advertising channel you can easily switch on or off if you find it isn’t having the impact you desire.
How do I measure whether or not my marketing strategy has been effective?
A simple return on investment (ROI) calculation allows you to measure the effectiveness of your strategy. To calculate your ROI, measure how much incremental benefit you’ve earned, less the cost of the investment, divided by the cost of the investment. The result is expressed as a percentage or a ratio:
For example, a retail shop may spend $1,000 to promote a new product that’s just arrived in store, resulting in an additional $5,000 in sales from that product.
If you’d like to see marketing measurement in action, watch this online tutorial, which gives you a step-by-step breakdown of how to calculate your ROI using a number of different techniques. Don’t get too overwhelmed by all the number crunching; there are lots of helpful online resources that make this part of the analysis easier.
How do you select a marketing strategy for your target audience?
First, you want to get a clear sense of who your customer is. Reflect on who they are qualitatively, with questions like, ‘What do they value?’ For example, if you run a coffee shop and you know that your customers are interested in sustainability, you might promote the fact that you only sell Fair Trade coffee.
The next major thing to consider is how your customers get their information — what they read, what they watch, and where they interact with each other. That’s the space where you need to be marketing your product. For example, if you’re trying to attract customers in your neighbourhood, that’s where your marketing should be focused. Some ideas could include:
- Flyers in local businesses
- Posters at popular sites in the area
- A local area letterbox drop
If your business is online only, you should consider digital advertising, social media marketing, or even an SEO consultant. If you’re trying to attract young customers you’ll probably get better traction on social media platforms than you would on a more traditional one like radio.
At the end of the day, there’s no substitute for knowing your existing and potential customers. The fuller the picture you have of them, the easier it is to craft an effective marketing strategy that, ultimately, helps you grow your business.
This article is part five of our Business Plan series. Other guides include: guerilla marketing, competitor analysis, cash flow statements and business operations.