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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:

  • Aggressive
  • Moderate
  • Conservative
Media Mix: Aggressive Moderate Conservative
Direct Marketing 40% 30% 20%
Newspaper 10% 20% 20%
Broadcast Media 20% 20% 30%
Yellow Pages 20% 20% 15%
Internal Marketing 7% 7% 10%
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%
New Customers
  • Letter Campaigns
  • Early Season
  • Spring
  • In season
  • Fall
  • Early Bird
  • Holidays Offer
  • Weekly
  • 8 over 11
  • placement
  • spring and fall
  • Cable Television
  • Spring and Fall
  • Campaign
  • 8 over 11
  • Book
  • Verizon
   
Existing Customers
  • Newsletter 1
  • Newsletter 2
  • Newsletter 3
  • Service Agreement 1
         
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:

iMarket Website Solutions Web Design and Development

This is a congratulatory letter to iMarket Solutions. We have contracted your services and implemented your Domination package. The results have been fantastic!

What was most amazing to me was the results we are seeing in our commercial division. I believe we at Advantage Airtech erred in just how much coverage we allotted the commercial division of the business. However even with this disproportionate allocation of space on the site the leads are overwhelming.

Our commercial leads are up 320% and are accounting for 78% of our leads. This is quite frankly, a tremendous increase in leads that we never experienced in the past. Our residential leads have dramatically increased as well, I somewhat expected this due to the calibre of the site and the material which is weighted more in the residential. Our residential leads have increased from the 22% of our leads from last year to this year being 54% of our leads.

I have been negligent in thanking you for a job well done as this impact was noticed shortly after launch. The negligence in relaying the good news to you has happened because frankly I have been busy trying to keep up with the leads.

Happy to be aboard with your company!

Andy Clowes
Advantage Airtech Ltd.

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