I talk to a fair number of funeral home, cemetery and B2B decision makers responsible for their firm’s marketing activities and I can’t tell you how many times I’ve heard these same folks say: “We tried doing _(fill in the blank)______, and it doesn’t work.” Well, In my experience, the source of the problem is the result of two things: 1. The message is boring/vanilla/ uninteresting and, 2. The firms haven’t put enough fuel in the marketing engine; and by fuel, I mean funding. In short, the budget just doesn’t allow for their marketing/advertising goals and activities to be realized. Too frequently, companies save themselves into problems rather than overspend themselves there.
A weak marketing budget may save you bucks, but more importantly, it will cost you business. Instead of standing out to be noticed these firms do almost the opposite by running almost unnoticeable small-space print ads; developing the marketing message in-house or (maybe worse) have their marketing creative developed by the local publication/tv/radio station/direct mail firm who have no real funeral experience; relying solely on social media and other related ways of doing things. I’ve done this for a number of years and so I’m going to share a marketing truth with you: Marketing is a self-fulfilling prophecy: If you believe in it, you’ll commit to it, invest in it, and give it time to work and with the right strategy and messaging, it will. Or, if you don’t really believe in what the right messaging and spending can do to create a “better tomorrow” for you and your firm, you’ll hold back, and guess what? It won’t work, and you’ll be right as well. Either way, it’s what you choose to invest in that makes the difference.
Establishing a Marketing Budget
Developing a marketing budget as part of your strategic planning is one of the most challenging, and at the same time, most important aspects of a successful marketing campaign. Truthfully, to get the marketing budget dialed in takes time, patience, and experience.
There are generally held rules of thumb on the amount you should spend on marketing per year, but it really does depend on a number of factors, some of which you can control and some that come as a result of the marketplace. These include (along with some very initial thought starters):
- How recognized is your business in the marketplace? i.e. Are you the most well known in your business footprint or seen as “one of the others”?
- How is your visibility compared with that of your competition? i.e. Is the competitor involved in more community activities or do they advertise with more frequency, consistency, and more impact?
- Do your customers perceive your business the way you want them to? I.e., You may be surprised how people think of you – i.e., seen as really “old school,” catering only to a certain audience.
- Does there need to be a change to how you speak with your customers…some who may be new to the area or if you’re a B2B company, new to the buying role? i.e. Do they know what you offer; how you’re what they’re really looking for; how you help them plan for the future.
- What are some projects that you’ve put off but now need to invest in, i.e., website, advertising, tradeshows/event involvement, market/customer research, etc.?
- Is there a specific audience that you need to speak with? i.e., hospice, cremation-oriented families, religious or cultural groups or as a B2B firm are their new buyers to reach?
- Can you benefit from using professional marketing help? This depends on your expertise in saying and doing things that has your audience see you as a more interesting firm with whom they want to do business with. This option could be the right answer for many firms.
- Are there new channels in which to promote your business or products? i.e., YouTube, TikTok, Instagram, outdoor, TV/cable, radio, onsite or community events, church bulletins.
- What is the scope of marketing materials and programs that will be required? i.e., Is there a need to create a smart social media program; is the collateral seen as tired or in need of facelift?
How you answer these questions can help you determine how much you dedicate to your marketing budget. And your marketing needs to look like you believe in your firm and products because if what you create looks cheap, then cheap will definitely be the takeaway by your customers and prospect.
Budgeting for Change
Nobody wants to spend any more money than they absolutely have too. Nobody has unlimited funds. But even the smallest business can’t grow without committing to a reasonable marketing budget.
When we talk with our clients about budgeting for their marketing, especially when it’s recognized that the firm has been underspending in the past, we ask them to consider what budget amount would make them comfortable. (That’s the ante.) Then we talk about what the “gets you noticed and gets you more business” number looks like. The point we want to make clear is that a “comfortable” budget puts them only on the same level as their competitors, and often below that level, so truly little if any change can be affected. Change only happens when the commitment requires working up a sweat, emotionally and financially. If you’re not budgeting for change, then it’s unrealistic to believe that change will occur, right?
Four Methods to Setting a Budget
So, getting down to business, how can an effective budget be established? Here are the top four methods for setting a marketing/advertising budget used by the most successful businesses in the funeral profession:
A. Fixed percentage of sales.
Start with last year’s total gross sales, or average sales for the past few years, and then allocate a specific percentage of that figure for marketing. Obviously, there is not a “one size fits all” rule for how much you should spend on marketing. That’s because the amount that is “just right” for one business may not be a perfect fit for another. So much depends on the kind of business you have, your business objectives and revenue. While we cannot always isolate a single number, we can look at averages. With that in mind, startups spend generally in the 12-18% of annual revenues for marketing while established firms are in the 6-10%.
- Pros: It’s easy to understand and safe: Rather than predict the future, you’re dealing with a known amount. If you’re in a stable, predictable marketplace or business segment, this method is fairly sound. This strategy keeps your budget in relation to sales volume – the very thing marketing and advertising are attempting to affect.
- Cons: The budget is based on past performance. You may lose the opportunity to capitalize on shifts in the business climate, market demographics and growth opportunities that weren’t previously considered.
B. Comparable to the competition.
Matching what your competitors are spending is another way of developing your marketing budget. The assumption here is that if you want to remain competitive you have to spend as much as them.
- Pros: This is an easy approach for companies whose competitors' marketing efforts are highly visible, just as long as they can accurately estimate what the competitors are actually spending.
- Cons: Companies may only see the most visible of their competitors' marketing efforts and aren't aware of other programs below the surface that could affect their sales. This method also doesn’t take into consideration any changes in the market (i.e., competitive mergers/ acquisitions or a philosophical change by the competitor to boost their own marketing activities and budget, etc.) If a competitor decides to become more marketing oriented, this approach could be problematic as your firm will be falling behind rather than keeping pace.
C. Objective based.
Begin by setting specific marketing objectives and decide on the ways/things that need to be done to meet those objectives. Then, determine your budget by doing your homework and getting a good idea of the cost to carry out those tasks. If you can't afford to fund all your ideas, rank them, and focus on the top few.
- Pros: It's an accurate method. It ties the use of funds directly to the tasks you want to accomplish. If properly executed, the marketing becomes an investment, not an expense. By spending whatever is needed, the company may grow at a faster rate.
- Cons: Obtaining an accurate cost from various vendors in advance might be challenging especially if you’ve not figured out the specifics with each program, initiative, or idea. Another downside is that this method does not offer much room for adjustments in the strategy during the year. It also doesn’t allow for a “pad” to offset any increased costs on activities; new opportunities that present themselves during the year; or to address competitive marketing that could eat into your revenue or prospective client base.
D. A Hybrid Method
The first thing is to decide on the need to create change. As I said before, change doesn't happen unless the commitment is there. So, looking back at the fixed percentage of sales as a basis, rather than budget close to 6 percent of previous year’s gross revenue, consider significantly increasing that amount. And rather than basing it on last year's sales, base it on the sales you could expect if the marketing program is successful. That's budgeting for success. If last year's sales were $900,000, but a good year ahead could mean a ¬¬¬¬¬¬10% percent increase, in other words nearly $1,000,000, your marketing budget should reflect that anticipated increase. Does that approach make you sweat?
If you look at successful marketers in about any category, be it food, fashion or the deathcare profession, they're the ones who approach their efforts optimistically and with a purpose to create a brighter future for themselves. We've long observed that more companies save themselves into an uncertain future than spend themselves there. If you're not happy with the results you've been getting, consider that at the source may be a reticence to think of your marketing dollars as a capital investment rather than an expense.
While there's much to be done between approving your budget and executing the plan, it's the best first step. Think about it another way: You've probably never heard anyone point to a successful firm/advertiser and say, "I can't believe those idiots are spending that kind of money!"
Rolf Gutknecht is President and CEO of LA ads, a full-service marketing firm specializing in helping success-oriented funeral homes, cemeteries, manufacturers, and service providers develop impactful marketing programs and create compelling marketing messaging to grow their business. Rolf can be reached at firstname.lastname@example.org or 800-991-0625 ext. 2 and at www.laadsmarketing.com.