It may sound counterintuitive, but the best way to lose money, is to not spend money. Of course we all run into budget crunches from time to time, particularly during slower periods of the year. But as you start looking for cuts, there should be one area of your finances that remains untouchable: your marketing budget.
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While it’s tempting to slash your marketing budget, not only should you avoid cutting it during down times, you should actually increase it, and here’s why.
Spend Money to Make Money
Cutting your marketing budget to save money will eventually lead to more cuts because your sales will decline. Consider this, if sales are already tight, how are you going to increase those sales if you cut the budget of the only vehicle attracting customers? The same holds true if you’re not spending enough on your marketing budget to begin with.
I budget between 5 percent and 7 percent of my budget each month to my direct mail marketing campaigns. That’s not 5 percent to 7 percent of my expected monthly budget, that’s the percentage of my target budget. In other words, I may expect to bring in $50,000 for the month, but my target is actually $80,000. The 7 percent marketing budget I spend is based on the $80,000 figure, not the expected income.
Marketing also does so much more than simply bring customers through the doors. Marketing raises your profile within the market you serve. I always put my picture or a picture of my family, or shop on my direct mail simply so my community becomes more familiar with me, who I am, and my shop.
Within your community, your biggest competition most likely comes from large national chains. The only advantage you have over those chains is your direct connection to the customer. Constant marketing keeps you visible and begins to build a bond between the community and your shop.
Another bonus to maintaining your marketing budget is timing. When I send out my direct mail campaigns, I know that only about 8 percent of the recipients will actually take the time to read my mailer and fewer than that will actually act on my offers. But each time I send out my direct mail, I reach potential customers. These customers may not have needed an oil change, or a tire rotation last month, but this month they’re thinking about it, and when they see my direct mail with my offer, they’re much more likely to walk into my shop for service.
This is where digital marketing often falls short. As a small mom and pop shop, if you pay to have your ad on the front page of a website, you may be in competition with much larger, national chains. With direct mail, my mailer may be the only shop ad they get that week. Every month, my direct mail campaign reaches customers that need my services and my offer may be the only one they see at the particular moment they’re considering having their vehicle serviced.