How Much Should You Spend On Professional Services Marketing?
There's an old adage that says, "you've got to spend money to make money."
This is clearly the case with professional services marketing. Even if you're a small firm and handling sales and marketing yourself, you need to invest money in a
According to Gartner's 2016-2017 CMO Spend Survey, the average marketing spend is 12% of annual revenue.
The February 2018 CMO Survey released by Deloitte, the American Marketing Association and Duke University provided insight into marketing spend by industry:
- Banking/Finance/Insurance (9.2% of annual revenue)
- Communications/Media (9.0% of annual revenue)
- Service Consulting (7.5% of annual revenue)
- Tech/Biotech/Software (9.7% of annual revenue)
Budgets vary by the lifecycle stage of the company. Companies in growth mode will spend a higher percentage on marketing to spur revenue generation. Established companies with dependable cross-sell and referral channels will spend less on marketing.
What should you be spending your budget on?
The Gartner survey gives us some insight into this question.
The top category of marketing spend across all industries was on the company website. This is particularly important for SMB professional services firms. A professional website with customer-oriented content can position you favorably against your competition, including enterprise firms with global reach. On the other hand, a dated website can make a good firm look unprofessional and kill opportunities that you may not even know about.
Gartner also found that businesses were also investing heavily in digital marketing and digital advertising (search engine and social media advertising.) This is particularly important to firms new to the digital arena who haven't built up a dependable monthly flow of organic site traffic and leads.
Here are some the other areas you should consider for your professional services marketing budget:
- Growth stack technology - In the world of sales enablement, growth stack technology (CRM, Marketing
andSales) is not an option. Among other things, technology should make your marketing efficient by focusing your resources on high-probability buyers.
- Search Engine Optimization - This is the foundation of your content marketing efforts. From a high-level standpoint, SEO is finding the keywords your buyers use when searching for the solution you provide and creating strategies to help them find you when they look.
- Content creation - Content is the
lengua francaof modern sales and marketing. You should be creating a mix of written and visual content including video. There are 2 elements to content - the thought leadership that you have to share and presenting it in an appealing, easy-to-digest format.
- Networking - Investing money to join networking groups and attending events is an important part of professional services marketing. In addition to the financial investment, you need to invest time to successfully work your networks.
- Lead Generation - To create a consistent flow of qualified leads, you need to create premium content like eBooks, webinars
andvideos. You need to invest money into expertise to create the lead generation flows that distribute your premium content to qualified buyers.
Invest in expertise to manage marketing efforts
You need people to make your marketing machine effective. We are proponents of a mixture of in-house and outsourced resources to manage your professional services marketing efforts.
Simply put, we recommend investing in expertise and strategy. That's usually what professional services business are lacking.
A good business development consultant will transfer knowledge and train your internal staff to execute common tasks like email and lead generation campaigns.
Getting your business development strategy right in the beginning will focus you on the best opportunities and optimize your marketing investment. Too many times we see businesses skimp on strategy and chase unsuccessfully after the topic-du-jour.
You may need a little help with execution but look for a consultant that will help train your staff to handle repetitive tasks internally.
How can you measure return on your marketing investment?
We recommend a structured process to look at things more granularly. This involves identifying Key Performance Indicators and identifying the cascading actions (and goals) that produce new business.
To illustrate that process, let's take the case of a simplified inbound marketing funnel.
In order to hit the monthly sales goal of 4 new customers, this company needs to get 4,000 visitors to their website each month. They need to convert 2.5% of these website visitors to leads, for a monthly total of 100. Of these 100 monthly leads, the company needs to convert 4% of these leads to customers to hit their new business goal.
When you've identified the KPIs that move the revenue needle, use dashboard applications to monitor performance frequently.
An investment in sales and marketing is essential to the health of a modern professional services firm. All things being equal, you should be investing roughly 10% of your revenue in sales and marketing to compete effectively. Like any other business investment, you need to monitor KPIs to make sure your investment bears fruit. By monitoring marketing efforts regularly, you can channel your spend to the most effective channels and maximize new business production.