Plan Your Marketing Budget

Q. Just wondering if you have any articles or thoughts on best practices in establishing a marketing budget -- why do it and how? (question from a law firm marketer in Des Moines, Iowa)

A. There should always be a marketing budget...even my three-person company has one.

In fact, I just checked my expenditures and they run 3-5% of current year projected revenues--the amount we generally recommend to firms in growth mode or 'get up to speed' mode.

Maintenance mode would be 2-3%. Invest at least in maintenance of basic marketing "stuff" even if business growth isn't a long term goal. You have to consider routine attrition. If you are in a project business rather than one with on-going or recurring revenue, the amount should be greater than 2-3%.

Marketing budgets should be based on marketing plans.

If there's no plan, the budget essentially becomes the plan. (Much as when firms have no strategic plan, the compensation system "becomes" the strategic plan by driving behaviors in a particular direction.)

In a firm with a marketer but without marketing plans or budgets (and there are many such firms), I honestly have no idea what drives the marketer's job description, but I'd predict the marketer is fairly frustrated wondering from day-to-day what s/he should be doing and whether s/he is having much impact. And so are the partners. (If a partner in such a firm is reading this, your marketer needs a plan--for their sanity and yours and, oh yeah--for your firm to experience progress.)

When we work with firms, we usually combine the plan, time line, and budget into a single document. This keeps things simple. We find it is usually sufficient to break the budget down by quarter--monthly is typically more detailed than necessary for firms under 200 people.

What Goes In The Plan/Budget

I prefer to spend most marketing dollars and, more importantly, time, on things that will result in actually achieving a measurable goal:

1. More business from specific existing clients
2. Specific new clients
3. Heightened awareness and increased referrals from specific referral sources

I find most firms don't normally include these three categories in their marketing budgets with the exception of periodic canned newsletters, random sporting events, and occasional client seminars.

Instead, firms allocate the bulk of their marketing dollars to the "black hole" of marketing--a category I'll call infrastructure. This category includes such items as brochures, static websites, general advertisements, announcements, newsletters, holiday cards, press/media relations, etc.

Why?

Well, I have a few theories on that. They aren't pretty.

• these items are relatively easy
• these items can be easily delegated (require little partner time)
• these items keep the marketers busy

The problem?

While these infrastructure things can be useful, even requisite, unlike the above items that require some time and attention of practitioners (for marketers cannot market in lieu of them) none of the infrastructure items can be counted on to result in measurable ROI.

UNLESS, that is, those ads, newsletters, or non-static websites involve disseminating compelling, relevant information about specific areas of expertise to very targeted audiences.

Yep. Specialties. Practice groups. Niches. Whatever you call them. Back in the early 90s, my firm's partners learned it was good to be viewed as "famous" in an industry--so each sought to be famous for something.

Mind you, they stayed generalists in their day-to-day work, but they marketed as specialists. Now, 15 years later, they focus mostly on those specialty areas where they command premium pricing and their reputations make selling the work easy.

Now we are talking!

Niche focuses are where even the black hole of marketing can start to return value. Industry-specific goals and activities. The marketer can help with promotion and lead generation and the practitioners can be there where the rubber needs to meet the road: prospect, client and referral source interactions.

This is the basis for the marketing plan. The plan will drive the budget.

I'll post again in a few days about specific plan/budget considerations.

The main thing to remember now is that marketing budgets and plans are NEVER one-size fits all. They have to consider who you are, who your market SHOULD be, and what you are realistically able to achieve in a given period of time.

Don't spend marketing dollars foolishly, on an ad hoc basis. Make sure every expenditure is wise and part of a cohesive plan. You wouldn't get into a car and start a long trip without knowing your destination. Same thing here. Begin with your destination in mind.

Comments

[Robin]

Such a great reminder. I have found that since opening my own small business, I just "do" instead of plan. It is biting me in costs, so now I'm planning. This article supported that decision.

Thank you.