How Much Should SMB's and Start-ups Budget for Inbound Marketing?
We get this question a lot. If you haven't been in business for long or have only dabbled in online marketing, you're no doubt wondering how much you need to spend to "move the needle" and start generating sales. We've been doing inbound marketing for ourselves and quite a few clients over the past two years and online and offline marketing for more than a decade, so we have a good idea of what it takes and what it costs. Let's look at these requirements one by one.
What it takes to deliver positive ROI
Priority and Commitment - it should be a top priority to increase sales revenues rapidly, and marketing is crucial. Inbound marketing has been shown to deliver the lowest cost-per-lead and produces sustainable brand awareness over time. Management must be prepared to take an active role in strategy, oversight and at least some degree of participation.- Participation - ideally, you need to hire a highly qualified business development or marketing person to manage the marketing program and represent your company in blogging, social networks and all other forms of marketing. If you hire an inbound marketing agency to provide the needed services, your inhouse representative works daily with the agency to monitor results and drive strategic decision making. Ideally, everyone in the company engages in social media and helps to promote blogs and advanced content.
- Staying Power - you need to take the long view, because inbound marketing is about enhancing brand loyalty over time by building relationships. It's not about quick-strike campaigns, although those can be helpful in addition to publishing consistently excellent content and maintaining a valued presence in social media.
- Superior Content - publishing a relevant, helpful or interesting blog post as often as possible is your baseline. We recommend at least three posts per week. You must also create valuable content for lead conversion (e-books, white papers, videos, webinars) at least once per month to drive significant leads to your site.
- Increasing Your Reach - you can't just tweet a few times a day and expect to move the needle. You must aggressively grow your audience and well as connect with them on a consistent basis. Your content marketing and social media marketing strategies must be geared towards growth as well as finding quality connections, or influencers, who can help you to reach more potential customers.
- Don't Forget Your Customers - they are your most valuable resource for retention and referrals. Reach out to them with newsletters, special updates, webinars and live events to keep them engaged and loyal to your brand.
- Be the Big Kid on the Block - investigate all forms of local marketing including local search, geosocial, community participation and listing in all local directories. If you can't be #1 at home, you can't expect to gain market share elsewhere.
How much does all of this cost?
- Business Development or Marketing Director - $70K - $150K annual salary based on experience, location and responsibilities
- Inbound Marketing Team (In-House) - 2-5 individuals with experience in marketing, blogging, SEO, Web (HTML, CSS), graphic design, social media marketing, content marketing, lead generation, analytics - $150K - $400K annual salaries based on experience, location and skill sets
- Inbound Marketing Agency (Outsourced alternative to in-house team) - same skills as the in-house team, only provided by an inbound marketing agency - $72K - $120K per year
- Marketing Expenses - computer hardware, marketing automation software, crm software, e-mail and webinar services, outbound marketing (advertising, direct mail, trade shows, media) - $50K - $150K per year.
Bottom Line
Yes, marketing is expensive, but many companies are realizing positive ROI within one year of beginning marketing operations. Commitment and priority are the crucial elements for any size company, but it's especially true for SMB's and startups, because they tend to be financially challenged and/or focused exclusively on building operations. Without the full scope, as I have outlined it above, you are more likely to grow your sales slowly and incrementally over a longer period, which may cause you to doubt the effectiveness of marketing and abandon it altogether.
Realistically, you should be prepared to commit to a total marketing budget of at least $200K per year if you want to realize the full benefits of integrated or inbound marketing. That should buy you a full-time in-house representative, an inbound marketing agency on retainer, and a reasonable budget for external costs. This number is based on our experience with both successful and not-so-successful clients.
Have you looked at your Marketing Plan lately? If you are raising money to get off the ground or grow your firm, it's time to consider the real costs of marketing and do what you can to make adequate budget available. Yes, you have to have a product before you can sell, but you have to attract customers to stay in business. Companies that fail to get off the ground often forget about marketing or lack the budget to make it effective.
Tell us about your plans for moving the needle.
Photo credit: jurvetson
