More than once I’ve found myself in the ‘marketing budget’ dance. I ask a prospective client what their current or planned marketing budget is, and they respond that they don’t have one because they are unsure what it should be. And more often than not, the other party is pretty surprised by what I have to tell them. So, I want to put that question to rest so that you can start planning and right-sizing your firm’s marketing. There’s no magic number, but professional services firms currently spend an average of 11.6% of revenue on marketing (Hinge). That’s up from 8.5% about a year ago. In fact, small firms often invest a higher percentage of revenue into marketing because of fixed costs. And what’s more, that ratio holds for even the fastest growing firms - who just do a better job of allocating their dollars toward ROI driven activities, which tend to be more sophisticated.
Where does your marketing investment stand? If you’re nowhere near that amount, now is the time to figure out why, and how you’re going to get there. Don’t start 2022 doing the same thing you did last year--Unless you’re satisfied getting the same results.
Start With Your Goals In Mind
There’s no one right way to establish your marketing budget, but it’s important to remember that marketing is an investment in your long term goals. The more specific you can be about your goals of increasing revenue, attracting talent who will stay with your firm for years to come, finding more hours in the day for partners to do deep work, or whatever your big audacious goals may be, now is the time to articulate your desired future state. Then consider, what investment would you make to achieve those goals? Side note - please consider growth in terms of the “lifetime value of a client”, that is, if you win a new $20,000 engagement that you’ll keep for 10+ and grow over time, I would argue that you’ve won a $200,000+ engagement in terms of marketing ROI.
Where Are You Spending Your Marketing Dollars Now?
As I always say, “Marketing is one word that means a lot of things.” It’s important to account for all of your marketing expenses so you have a clear picture of what you’re spending. Marketing’s umbrella covers sponsorships, Google Adwords, marketing employee salaries, graphic design, subscriptions, network association dues, etc. If your marketing spending feels like an expense that you can’t justify increasing to get to industry norms, the problem may be with a misalignment in the activities and your goals, not the amount you’re spending. Marketing activities fall on a sliding scale between Awareness Generating and Revenue Driving. If your budget is being spent on Awareness activities but your goals are Growth oriented, you’ll constantly be disappointed.
Outsourcing Can Help
Traditionally, many organizations that want to take the next step in marketing hire a marketer and find work for them to do. The challenge with this model is that today’s marketing is sophisticated and complex. It’s unreasonable to expect any solo marketing person to be a strategist, copywriter, graphic designer, video producer, digital marketing manager, business development support team, and SEO specialist. Since one person can’t do it all, and you don’t need 40 hours a week of any of those skills, fractional solutions can help.
Partnering with an experienced outsourced strategist means you get their knowledge that comes from working with a range of firms. They will also manage production specialists to execute your marketing plan.
Don’t let 2021 slip by before creating a marketing budget that supports your vision for your firm. Let’s talk about your marketing budget and overcoming the hurdles that may be limiting your commitment to investing in your firm’s future. Contact me today.
