Alan Gayle is a sales and marketing consultant specialising in the construction industry. In this column he offers advice on how to make an impact in the market. This time he wonders: Should you reduce your marketing budget?
During tough times every business is looking to cut costs. It’s good business sense to cut back wherever possible and in the construction industry, at least, the marketing budget is often one of the first to go. But is that good business sense?
Before I answer that question, let me explain the Typical Customer Journey for most companies supplying products and services in the construction industry.
Typical Customer Journey:
Unaware: Your prospect does not know you exist
Aware: Your prospect is aware of your existence but that’s about it
Interest: Your prospect realises you may be able to provide him with something he needs
Customer: Your prospect buys something and becomes your customer
Client: Your customer orders again (and hopefully again and again) and becomes a repeat business client
The reason I explained that before answering the question was because I want to illustrate how long it can take for a prospect to become a client in the construction industry.
This is partly because of the long procurement process for property and building services and partly because we often supply high value products and services.
Often, the higher the order value, the longer the customer journey between the Aware and Customer stages.
After submitting a quote or tender (Interest stage), how long does it take for an order to be placed (Customer stage)? Six weeks? Six months? It can take several months between each stage and it might be years between Customer and Client.
For the sake of argument, let’s assume a typical customer journey is four months.
I know it’s not appropriate in every case but we need a figure to explain the principle.
So back to the question: When should you reduce your marketing budget?
If you need to cut costs the chances are your order book doesn’t look too healthy. If your order book was overflowing, cost cutting probably wouldn’t be on the agenda. So here we are in May and you need more orders. If your typical customer journey is four months, then to deliver the business you need now you should have been actively marketing in January.
With that logic in mind, you should reduce your marketing budget when your forward order book is full beyond your typical customer journey. In our case, if your order book is full four months ahead, then reducing your marketing budget might be a sensible decision or you will be letting customers down because you cannot handle any additional workload. If your order book is not full for at least four months ahead, cutting your marketing is likely to impact on your sales in the future.
To apply this to your business, approximate your typical customer journey. If you have an established business and you are well known to all your customers, simplify the process by just using the time between quote / tender submission and order placement. When you compare that figure with your forward order book you can make an informed decision about reducing your marketing spend… or not.
If your order book is not full, ask yourself how you will fill the gap. Perhaps you should be increasing your marketing budget rather than reducing it.
That’s why I am not alone in saying marketing is an investment, not a cost. It’s an investment if you have clear objectives and an effective plan to meet them – because without a plan objectives are just wishes.
If marketing were not an investment I would agree that it’s just another cost and you might as well save your money. But as Henry Ford said about advertising (although he could have included any aspect of marketing), stopping it to save money is like stopping a clock to save time.
Many thanks to Jackie Barrie at Comms Plus (www.comms-plus.co.uk) for some of the ideas in this article. Her book, The Little Fish Guide to DIY Marketing is a good read and full of useful information.