The Ten Percent Rule:
An Answer to the Marketing Budget Mystery
By Celia Rocks
time to create your 2010 budget and, as usual, you’re stumped about
how much to allot to marketing. Should you spend what you spent last
year? Increase the amount
(because you did or didn’t get the results you wanted last year)?
it (again, because you did or didn’t get the results you wanted last
year)? Throw a dart at a dartboard? No one, it seems, can give you a
straight answer. Surely, it can’t be that
difficult to budget for marketing . . . can it?
simple formula that most companies should follow when budgeting their
marketing dollars is:
If you market consistently, allot 10 percent of
your gross revenue for marketing.
If you haven’t marketed at all lately, allot 12
If you’re very successful and don’t need any
more business, take it down to, say, 8 percent—and spend most of
that on marketing to current customers.
tend to make the issue of marketing a lot more complicated than it has
to be. But I’ve worked with plenty of companies over the years, and
I’ve found through trial and error that 10 percent of gross revenue
is about right. Budget less and you’re not getting your name out to
new customers, budget too much more and you may not get a profitable
return. Ten percent seems to be the magic number.
earmarked 10 percent can be applied to anything from publicity to
relationship building to sales training. It all depends on your
strengths, your market, and the nature of your message.
founder of INSIGHTS for Marketing (and author of Marketing
for Dummies and The Portable
MBA in Marketing), agrees with the 10 percent rule and warns
companies to think long and hard before committing their marketing
can’t be too careful,” he says. “For most companies money is
tight, and there are plenty of so-called marketing experts out there
pushing canned, unfocused, or poorly executed ideas. Test all new
marketing ideas and methods on a small scale, with less
than 1 percent of your gross revenues, and scale them up only when you
find a formula that works.
not the numbers that differentiate a great marketing plan, by the
way,” Hiam adds. “It’s the honesty and strength of the core
message. Do you have something important to offer, and do you explain
it well, to the right people, and make that message easy for them to
find? A 15 percent improvement in the honesty and strength of your
message is a better investment by far than a 50 percent increase in
the budget for a lackluster program. Don’t be seduced by the idea
that more spending guarantees better results.”
one final piece of advice:
you know who you are and who your customer is before
you start telling the world. It’s shocking how many companies
don’t know who they really are. They can spend and spend on
marketing, yet see very little ROI. Take the time to do some
self-exploration and every dollar of that 10 percent will work
overtime for you.
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