If you search around the Internet you’ll find plenty of evidence of a correlation between high marketing spend and rapid business growth. And in a recent poll, when asked what percentage of turnover should be invested in marketing, 67% of advisers said between 5% and 10%.

So how much should you invest? Here are some factors to consider:

1. What’s a new client worth to you?

   Let’s say that your typical client generates £750 profit per annum and stays for ten years. So if their lifetime value is £7,500, how much are you prepared to invest to recruit someone just like them?

   If the answer is £750 and you need to recruit 20 more clients this year, then your budget would be around £15,000.
   
   

2. What falls into your marketing budget?

   Marketing is about every touchpoint your brand has with customers, prospects and the wider market. This can broadly be split across three sectors:

   • Owned marketing media (your website, social media content, blog content, etc)
   • Earned (Google Reviews, testimonials, PR reviews, Facebook engagement, etc)
   • Paid for marketing (exhibitions, seminars, events, sponsorship, Google Ads, etc)

   Many companies also include agency and freelancer fees. Some also include the cost of employing internal marketing staff.
   
   

3. Where is your company in its lifecycle?

   If you’re a new company yet to celebrate your fifth birthday, then you may need to work hard to earn a significant initial share of voice, awareness and loyalty.

   Expect to invest anywhere between 15% and 25% to achieve this.

   If budgets are really tight then consider including some of these options which usually only require an investment in time, not money.

   If you’re a more established business then you’ll already have earned some market share, local brand awareness and positive client loyalty.

   You’ll also already have invested a significant amount to build this position and therefore can maybe afford to consider a reduced marketing budget (c. 6% - 10% dependent on business objectives, competitor spend levels, etc)
   
   

4. What are your business goals?

   To work out your budget you need to know your primary objective. For example do you need to rapidly grow your client base or are you planning to launch within a new niche market?

   And over what time period?

   Plus don’t forget your current customers. Maintaining your existing customer base is key to an effective growth strategy so ensure that you include the costs of your retention strategy within your budget.
   
   

Whatever you do, it’s essential to see your marketing spend as an investment and not a cost.

When you manage an investment you’re focus is fixed on the return you’re getting - and if you are getting a good return, make sure that you do more of what’s working. Remember Pareto’s Principle that 80% of your profits comes from 20% of your marketing spend.