Is Your Small Business Tracking Your Marketing Spend?
November 17, 2012 Pros Corner
Marketing is a tricky thing. You’re not going to cheap out on it, but spending massive amounts of money doesn’t always do the trick either. Somewhere in the middle lies the solution to your business’ marketing problem.
This article, however, isn’t about how to market your business. It’s about making sure you’re tracking how much your spending on marketing. After all, if you’re not tracking your marketing, you have no idea how much your return on investment actually is. If you prefer working with the lights off, no problem. But if you want to turn your marketing into a science, then start tracking your spending today.
I recently read a blog post about this same topic. In that post, the author described the “missing link” when it comes to effective tracking. It was likely a product placement, but she recommended using a $13 application called Ifbyphone.
But how can you track your spending? First, it’s important to understand why you need to track your spending.
Each year, most businesses set up a budget. That budget fluctuates year-to-year based on how well it performed the previous year. Marketing obviously falls into that budget.
According to the finance blog Boomerang, the average marketing budget is about 5 to 10 percent of your total budget. That’s just a rule of thumb, but if your’e new to the business world, it’s a good starting point. Each year (or even half year) you can try and find your sweet spot in marketing.
How were sales with a 5 percent marketing budget? Can you look at those numbers and say, “If I would have spent this much more on marketing, would I have made more sales?” If the answer is no, then it’s time to start tracking your marketing spending.
By tracking your spending, it doesn’t mean that you’ll end up spending less on your market — you could actually spend more, but don’t worry. If you’re spending more, and using an effective marketing campaign, that means you will make more money. Great solutions for small business accounting software exist for just this purpose. Peachtree, Intuit, and Outright are three viable options.
Tracking Your Spending
Think of all the different marketing campaigns you spend money on: Print (newspapers); maybe radio and television; direct mail; and trade show booths. Then you have our web-based marketing outlets: Email, LinkedIn, Twitter, Facebook and Content Marketing (blogging).
Whether you use one or two of these campaigns or all of them, keep track of how much you spend each month on all of your campaigns. The next part is tricky: You need to determine your return on investment. Ask yourself some of these questions:
- Did the campaign bring traffic to your website?
- Did it produce any leads? How many?
- Did you experience any direct sales?
All of these questions help you figure out how effective your marketing campaigns are. Bow of course, like anything, marketing isn’t perfect. There will always be the unexpected and outliers that could skew your data, but for the most part, you should be able to determine how effective your campaign is and what your return on investment is.
Far too many times, people don’t track their spending and they end up spending more money than they really need to. It takes a little extra time, but tracking your marketing spending can not only help your business save money — it can actually help your small business flourish.