Want to increase your revenue? Many experts say you should market your business because marketing done right drives revenue. But how much marketing do you really need? Exactly what percent of your revenue should you spend on your marketing for the biggest impact? Turf asked experts inside and outside of the industry what they recommend.
Behind the numbers
The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you’re doing less than $5 million a year in sales and your net profit margin – after all expenses – is in the 10 to 12 percent range. Some marketing experts advise that start-up and small businesses usually allocate between 2 and 3 percent of revenue for marketing and advertising, and up to 20 percent if they’re in a competitive industry. Still other marketing experts counsel a range between 1 percent and 10 percent, and even more depending on business age, competitive activity and budget.
According to Captora research, 46 percent of companies spend less than 9 percent of overall revenue on marketing, 24 percent of companies spend 9 to 13 percent of overall revenue on marketing and 30 percent of companies spend greater than 13 percent of overall revenue on marketing. Their research also showed smaller companies spent 9.2 percent of their revenue on marketing, while their larger counterparts spend roughly 11 percent of their revenue on marketing.
That’s the general small business consensus.
The landscape industry isn’t that much different. Chris Heiler, president and founder of Landscape Leadership, an inbound marketing agency for the industry, says, “I’ve heard 5 percent and 15 percent. A lot has changed in how we market our services in the past five to 10 years, but I still think 5 to 10 percent of total revenue is a good range for a landscape company’s marketing budget.”
He suggests marketing budgets will vary depending on the following factors:
- Are you a start-up or an established business with a long track record?
- Is your marketing handled in-house or do you outsource it? Or a combination of the two?
- Where and how are you marketing your services? Online or offline? Or both?
- How aggressive are your growth goals? How much are you willing to spend per lead and to acquire each new customer?
“A start-up lawn care operator with no existing market share and the goal of aggressively growing their new sales will need to spend a higher percentage of their revenue on marketing compared to an established lawn care operator with modest goals for new sales and more focus on client retention,” Heiler explains.
Think you spend enough on marketing? Think again.
The Captora research reveals that companies who plan to outperform their competitors invest 13.6 percent of overall revenue to do so.
So you may need to spend a little more to make more.
“Don’t fall into the trap of thinking that your landscaping or lawn care business can get by on a shoestring marketing budget now that there are so many inexpensive, and even free, ways to marketing your services,” Heiler says. “You still need to spend some dough. And you need to factor in time spent – like those 12 hours you spent on Facebook last month – into your marketing costs.”