Preparing Your Marketing for 2009

Do you have your 2009 marketing plan ready?

Have you evaluated the strategies that will be best for you next year?

Do you have systems and budgets in place to support your plan?

Do you know where and when you are spending your advertising dollars?

Developing a marketing plan is one of the most important functions in business management and leadership. Yet it is often one of the most overlooked. Or, even worse, it is developed then changed or forgotten as day-to-day decisions get management’s attention.

One of the easiest ways to develop your marketing plan is to approach it the same way you approach preparing to take a trip. Here’s how.

First: Decide where you are going. When you plan a trip the destination is actually your starting point. Once you know where you are going you can put together the other details. In business your destination is your sales. How much revenue do you want to generate in 2009? When you’ve set your revenue destination you are ready to start planning the details for how to get there.

Second: How much will you spend for your trip? This is your budget. It shows how much money you will need to reach your destination.

There are several ways to approach setting your advertising budget. These include:

• Average transaction value and average cost per transaction. Take your average transaction value and divide it into your 2009 planned sales. The resulting number is how many transactions you will need to reach your destination. Then multiply that by your average cost per transaction and that gives you a marketing budget. This approach works best for retail businesses.
• Average customer value. This approach works best for service businesses but is more complex for determining a budget.
  Analyze your active customer base on what they spent with you for the current year, less your cost to service the customer. The resulting net number is your customer value and the correlation of your cost to their revenue gives you the variance you have for establishing a growth budget.
  Prioritize your customers from highest to lowest value showing by percentage how much of your current net income each provides. Take your planned sales goal for 2009 and allocate it in the same percentage priority. That will show how much additional revenue each of your customers needs to generate for you to reach your goals. Use the variance percentage multiplied by the goal to determine your marketing budget to get the additional revenue.
• Margin of sales. If you don’t want to use a complex analysis to set a budget, you can base it on the profit margin of your sales. Take a look at your gross profits. Determine what percentage of gross profits you want as a net profit. With the remaining percentages allocate the percentages you need for fixed costs such as personnel and overhead. Prioritize what remains between advertising/marketing and research/development to determine your budget.

Third: How will you pay for the trip? You’ll need to decide how much will be covered with cash and how much is being funded by credit.

Fourth: The last step is to look at how your money is to be allocated during the trip. For travel this would be how much you’ll spend for lodging, food, transportation and entertainment. For your business this is how much money you will put into the various business sources needed to reach the destination.

You’ll need to decide how much of your sales will come from existing customers vs. new customers. Statistically most companies spend 20 times more to get a new customer than they spend on keeping and increasing the value of existing customers. Allocate your dollars into budgets for existing customers and new customers based on the percentage of sales expected from each and the cost per sale required for each.

Now you are ready to create your marketing plan. A good marketing plan will be in two parts; one for existing customers and one for new customer acquisition.

Within each plan you should include the following categories of information, at a monthly level:

• Media Sources to Use
• Date of Contact or Release per Media Source
• Cost for the Media

The following items should be projected when creating your plan. Put them in the plan by media source:

• Response Rate
• # Of Contacts
• Conversion to Sale Rate
• # Of Sales
• Gross Revenue Per Sale
• Total Gross Revenue
• % Of Gross Revenue for Overhead
• Adjusted Gross Revenue
• Adjusted Gross Revenue Per Sale
• Adjusted Gross Revenue less Cost for Media
• Net Revenue

A plan with this much detail will give you a clear picture of what you need in resources, when you need those resources, and a way to measure your success.

As you close each month of the year, replace your projected figures with real figures. The monthly results will let you know if you are staying on course to reach your destination, whether you’ve been detoured away from your destination, or whether you are positioned to reach your destination earlier than expected.

This knowledge is the map you’ll need to make quick, updated decisions that allow you to stay on course to reach your business goals in 2009.

You wouldn’t leave for a vacation trip without knowing where you’re going, what you are going to do when you arrive, how long you are going to stay and how much you will spend for the vacation. Likewise, you shouldn’t enter into a new calendar year of business without a similar destination plan.

By planning your business destination well and watching the progress closely, you may find that next year you can take more vacations!

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