The adage “You gotta spend money to make money” is only partially true. When it comes to your small business marketing budget, it’s not about having a large budget…It’s about using your money wisely.
You can make digital marketing work well for your money and don’t have to sink tens of thousands of dollars into it to see a positive ROI. It all comes down to knowing your audience and spending your budget where you’ll have the best chances of reaching and converting your customers.
Keep reading for our 5 best tips for optimizing your small business marketing budget.
First, know your customer
Before you start digital marketing, you must know your customers well. The better you know them, the better you can strategize and allocate budgets to the right marketing strategies.
For example, Facebook ads can be a profitable investment, but not if your target audience doesn’t use Facebook. You could also invest a sizeable chunk of cash into valuable video content, but if your audience prefers reading to learn about your niche, you’re wasting your money and time.
To better understand your customers and how to tailor your digital marketing towards them, get clear on the following:
- What pain points do you solve for customers?
- Where do they “hang out” online?
- What is their preferred way of digesting information online? (reading, video, podcasts…etc)
- What drives their buying decisions?
- When are they are more likely to purchase? (after payday…etc)
Once you understand this, you can begin allocating funds to the right marketing activities that meet your customers where they are, and that match their online habits and buying processes.
Second, create a plan + goals
Digital marketing strategies usually have one of three goals:
- To raise brand awareness – exposure to new people without being salesy
- To nurture leads – increasing online visibility and providing valuable information to support making buying decisions in the future
- To make a sale – directly asking or encouraging a sale
Your marketing strategy should include elements for these three buying cycle stages. Be sure to allocate budget for:
- Activities that put you in front of potential new audiences (brand awareness)
- Activities that educate customers about your company, products, and expertise (nurture)
- Activities designed directly to drive a purchase (make sales)
Thirdly, diversify your marketing spend
It’s rarely a good idea to put all your budget into one basket without testing the efficacy of that strategy first. We typically suggest testing the waters with small budgets on several online marketing channels to see how they perform. This way, if a strategy isn’t successful, you don’t lose too much money and can adjust your strategy to optimize.
Here are two examples:
- In 2020, the Clubhouse social media platform gained widespread popularity very quickly due to the pandemic and societies’ need to stay connected to others. However, no one really talks about it anymore. If you invested a large chunk of your money and time into this channel then, you may not be seeing any results now.
- Similarly, we’re mindful of platforms like TikTok, which has gained widespread popularity, but there are many security concerns regarding information privacy. Many regions and companies are banning the app due to potential security concerns. If you invest all your cash into TikTok and its ban becomes more widespread, you may notice a loss of followers when people stop using this app due to these concerns in the future.
Next, Automate for consistency (and money savings)
Automation can enhance the efficiency of your digital marketing efforts. Popular marketing automations in digital marketing include:
- Automated email sequences (welcoming new customers, reminding them they left items in their digital cart, reminders of account expiries or anniversaries..etc.)
- Transactional emails (thanking them for their purchase, providing email receipts or bills)
- Automated analytics reports (exporting analytics from your social media, ad performance, website activity…etc.)
- Automated chatbots (to answer common questions people may ask)
- Preschedule social media and blog posts to publish at a specific date and time
- Gated content (offering free digital content or lead magnets when they share their email with you)
Most businesses succeed when they budget for email marketing and analytics software, as they handle many of these automations for you. Adding a social media scheduling tool can also be a big time saver. You’ll also need written or video content for these automations, so include a budget for a marketing consultant and copywriter to create these for you.
While automation is a helpful tool for marketers, we caution against overreliance on it. Be sure to always include elements of personalization and personal touches so you don’t lose that valuable connection with your customers and you can maintain engagement.
Lastly, test and optimize
Digital marketing is never a one-and-done project. As we’ve seen in the past four years, the world changes quickly. As marketers, you must be mindful of changes in your community, customers, and the world to ensure your marketing budget has the greatest chance of a positive ROI based on the current industry landscape. This means reviewing your marketing spend vs ROI every month. You may benefit from a deeper dive every quarter to see if significant marketing spend reallocation is needed.
To know if budget changes are needed, make sure you’re collecting analytics from all your digital marketing programs and channels.
For example, if you’re spending a modest $100 per month on Facebook ads, but those ads are directly leading to $5,000 worth of business, that’s a very high ROI. You may be happy with that, or you may want to try increasing your budget slightly to see if you can raise your spend-sales ratio.
Don’t be afraid to try new channels as they develop, but diversify your strategy in case they’re not as popular or successful in the future. Continual monitoring can ensure you catch any underperforming channels before they become money pits.
What’s your digital marketing strategy?
What’s your goal with your digital marketing? The picnic team can help you allocate your marketing spend to maximize ROI. We can help you create a strategy, create written and video content to support that strategy, and continually monitor its performance to help you optimize your spending, no matter your budget.
Ask how we can help you optimize your marketing budget by booking a complimentary discovery call with Erica of picnic social today.