Traditional Marketing Budgets
No business has unlimited resources with which to generate leads.
At iMarket Solutions we understand that you need to set and follow a marketing budget and constantly review it to make sure it’s getting the results you need.
During our 40+ years of experience in the HVAC industry, we have learned how to help service companies set marketing budgets that are both affordable and effective.
There are no hard and fast rules for marketing budgeting. Every company’s situation is different, and company owners all have different goals for how much and how fast they want to grow. But here are some general things to consider as you determine your advertising and media objectives:
- What is your company’s business plan calling for in terms of growth?
- How well-known is your company? Another way to ask this is “do you have brand equity?”
- Is your company seeking to grow into new markets?
- Are you launching any new products?
- How much of your company plan is built around existing customers and leads?
- What kind of market are you advertising and marketing in? Are you in an expensive market?
Once you’ve answered the questions above, you should assemble the following data:
- Your average number of lead opportunities generated from demand service
- Your average upgrade sales for the past year in service
- Your average closure rates for upgrade sales leads (this varies by month)
- Your financing decline rates (if any) on consumer sales (credit card or financing company related)
- Your ratio of leads that come from demand service – and from service agreements if you have them
- The average W2 of your field production for your service and installation personnel
- The sales forecast for your company (by market segment if possible)
- Company costs by each cost-of-sale category
Once you know how many sales you currently make and how many you want to make in the future in each market segment, we can then think about what kinds of marketing expenditures you might need to meet the lead and sales plans.
First, you need to determine what your overall marketing budget should be. If you do not already have this number, you can use our downloadable Budget Template to develop your company’s budget.
Once you know your overall budget, you will be able to establish your marketing budget.
First, you should decide what type of marketing plan you want. The plan you choose will depend on how fast your company wants to grow:
|Reserve Funds (for emergencies)||3%||3%||5%|
What should each of these marketing styles look like in practice? It will vary depending upon your local media environment – in some places, for example, radio stations have a better reach than in others; in some places, the local newspaper has a greater readership percentage than in others. You need to determine which local media will be the most cost-effective for you.
Here is an example of how an aggressive campaign might be structured:
|Direct Mail 40%||Newspaper 10%||Broadcast 20%||Yellow Page 20%||Internal 7%||Reserve 3%|
|Continuing Prospect Model||
Letter Campaign – varying offers -SA 1
Contest for leads, monthly, for friends and family leads!
To determine the specific message for each of the campaigns you’ve selected, use the marketing chart like the one below. This will help focus the design/creative aspects of the campaign.
|New Customers||Existing Customers||Continuing Prospects|
|Target market||Demand Service||Demand Service Prior use||Demand service|
|Products/services offered||Warranty Coverage Agreement||Warranty Coverage Agreement||Warranty Coverage Agreement|
|Target Audience||Emergency Service Customers||Female – single family home||Female – Single family home|
|Awareness Vehicle||Yellow Pages||Direct mail Letter||Direct mail Coupon|
|Trial Method||Discount off of service call Promotion||Special Price Offer||Discount on an upgrade Free Service Call|
|Timing of Campaign||Jan - April||March, April||March, April|
|Consumption Patterns||Yearly SA||Yearly SA||Yearly SA|
|Repeat Behavior||3 a year inspections||3 a year inspections||3 a year inspections|
Sometimes, after you have determined your overall marketing budget and your marketing objectives, you find that your objectives cannot be supported by the financial realities of your company. You may have grand plans, but if the financial position of your company does not support the dream, you have to go back, readjust your company marketing goals, and start the process over.
Remember, though, that no matter how you allocate your marketing dollars, your primary focus should always be on generating leads. This is true for almost all small companies until they reach a very mature stage.
However, at the same time you create leads in the short term, your advertising is having a longer-term effect on the way people view your company’s brand. It’s important to balance these two objectives carefully.
Want more help with budgeting? Download our comprehensive budgeting spreadsheet - absolutely free!
Here's what people say:
Everything has been great with the results and customer service from iMarket. Anything that we’ve asked for has been done quickly and exactly as we wished. Everyone in your organization has been very responsive and are all truly customer focused – you have great people working for you.
Specifically, we’ve been blown away by the organic traffic to the site and the leads and revenue generated from the SEO work that iMarket has done for us. Our SEO placement and leads/revenue went from something that wasn’t even worth tracking to our second highest source of both leads and revenue in just 6 months – the only higher source for either has been customer referrals. The investment that we made literally paid for itself in 6 months – maybe less than that. We should have done this years ago.
When we ran our reports from organic/SEO leads and revenue, it was our most abundant source of lead generation and revenue as well as our most cost effective source of lead generation and revenue – even when we had amortized the entire cost of the new site over just a 6 month period.
In comparison to yellow page advertising, it has cost us less than 10% of what yellow page expenditures cost to generate both leads and revenue. As a result of this, we have already reduced yellow page expenditures for next year that will result in savings that are over 3 times what it cost us to build the new site.
As for the social media aspect of things – everything has been great. I’m not well versed in those arenas nor do I have time to get involved with it, so I asked Martina to take care of keeping us up to date and she’s done a great job with it, updating our pages (as well as our blog) 2 or 3 times a week. I may get more involved with it at some point, but I haven’t had to as it’s being managed for us without me needing to do anything.
Finally on the PPC campaigns, we have not spent a lot of money there – simply because we haven’t had to because we are generating so much organic traffic. What we have spent has been worth it, we are averaging around $30 per lead via PPC which is outstanding when compared to any other paid advertising that we are doing. The next closest source in terms of expense is $90 per lead. We may look to increase PPC budgets in the future as a source of growth. For now though, we have our plate full with all of the organic leads as we are on Google’s first page for nearly every keyword that we have targeted.
Kevin Carney, President
Carney Plumbing, Heating and Cooling