Resource Allocation: 3 Tips That Stretch Your Marketing Money

Do you struggle every month to afford all the things you think will grow your business? Do you wish you had more money (or some money) left at the end of the month to afford to fund your marketing goals? Most small businesses struggle with too little money. Growing your business means proper resource allocation to ensure you’re getting the most bang for your buck.

If you’ve asked yourself these questions, you’ve come to the right place for the answers. Without a framework built on actual metrics, along with monitoring them continually, you end up spending too much money on marketing with too little to show for it. Today, we’ll give you three tips that help you stretch your money so you get more bang for each marketing buck.

Stop guessing, start growing with proper resource allocation

Many small business owners seem to think of marketing as a lottery ticket or an unnecessary budget item. Whether you’re throwing money around like placing bets on the crap table (hoping your number might randomly come up) or spending the little that’s left at the end of the month on whatever shiny new tactic you heard about at the Chamber of Commerce meeting last week, you aren’t doing proper resource allocation.

Before we start on the meat of our discussion for today, let’s get a little background on the math underpinning resource allocation. If you use metrics, as I recommend below, to help you not only determine proper resource allocation but also the right metrics to assess the performance of your strategy, it’s important we have a shared vocabulary.

• CPC or cost per click, is a measure of how much each click you receive from an ad campaign costs you
• CPM or cost per thousand (weird, I know), assesses how much it costs you to reach a thousand people
• CPC or customer acquisition cost, represents exactly what it sounds like, just as CPL or cost per lead, does
• CTR or click-through rate, assesses the percentage of users who saw your content and clicked on it
• Bounce rate reflects the percentage of visitors who left after viewing a single page
• Engagement rate represents the percentage of users who responded to your content with a like, comment, or share compared to reach
• Conversion rate measures the percentage of a group (such as website visitors) who make a purchase
• Churn reflects the number of customers or the percentage who leave. This is often a key metric for subscription services
• Customer lifetime value (CLV) assesses the value of customer purchases over time

  

• AOV measures the expenditure of the average customer at one time
• NPS or net promoter score reflects customer satisfaction and the likelihood of recommending a brand
• ROI
• ROAS measures the return a company gets for its advertising spend, which is a better reflection of the return achieved by the marketing function than ROI.

You need to continually assess these key metrics, along with several others we’ll discuss under the individual sections.

3 Questions to guide resource allocation

Below, you’ll find the three questions that surround the topic of proper resource allocation. The goal here is to find that sweet spot where you’re allocating enough resources (time, money, effort) to reach your goals without wasting them. Inherently, you’re looking to maximize your ROI (return on investment) by focusing your efforts toward those tactics with the highest potential payback.

While each business might face different tactical options, data is your friend when it comes to analyzing your returns versus outlays to determine which tactics warrant continued efforts and which should be scrapped.

Here are the three questions that should guide your decisions regarding resource allocation:

• How much should I plan to spend on marketing?
• Which marketing channels are right for my business?
• Which tactics should I implement myself and which should I outsource?

How much should I spend on marketing?

There’s no magic number that tells you how much you should spend on marketing. There are benchmarks based on your industry (see below), but your specific situation means you should adjust these numbers. For instance, a new business without a name or reputation might need to spend a little more, at least temporarily. A business in a highly competitive market might also need to spend more, as would a local business that serves a wide geographic area. Resource allocation doesn’t have some crystal ball.

Which channels should I use?

The number of possible marketing channels continues to expand each year. Here are the categories you should consider when attempting proper resource allocation:

• Traditional channels, such as TV, print, radio, and direct mail
• Digital channels, such as social media, email, SEM (search engine marketing), and SMS (short message service), including both advertising and unpaid
• Promotions, including guerrilla marketing, event marketing, and trade shows

Plus, consider that marketing is more than advertising, regardless of the channel. So, ensure you allocate sufficient budget for other marketing activities, including channel management for your physical channels and new product development. But those are topics for another post.

You can’t be on all of them, so how do you choose which channels are likely to be most effective in helping you reach your goals? My recommendation is that you establish three buckets to reflect your “must-haves”, “nice to haves”, and experimental channels. That’s because these buckets reflect the reality of growing your business.

Marketing must-haves

To improve your resource allocation, ensure you’re spending enough money on the marketing must-haves. This should get up to 50% of your budget for time, money, and effort. So, what belongs in this “must-have” bucket?

• First, and foremost, you need a well-designed and effective website. Even if you don’t run an e-commerce business, a website is critical, especially in a world dominated by AI. A website helps you get found online, so that when prospective buyers seek solutions online, they find your content. A website builds trust, enhances your reputation, and gives your business substance. It doesn’t have to be expensive to build a website. In fact, I offer a free ebook to help you build one for less than $200, without requiring any coding experience. Don’t fall for the trap of using those website builders, like Wix and Squarespace, as they’re harder than promoted, the websites all look the same, and it’s nearly impossible to show up in search or on AI platforms.
• Local SEO is another must-have for small businesses, as most of their customers tend to come from the local area.
• Analytics to help you monitor your progress. Luckily, Google Analytics is free and they even offer free online training to help you get the most from your analytics by transforming data into insights into action.
• Email marketing is needed because it offers the highest ROI of any marketing tactic.
• Marketing automation reduces your workload by helping you schedule posts on various platforms. HubSpot is a great solution that offers email marketing, automation, and lead nurturing all in one tool.
• Social media that matches your target market. Choose a few from the options below.

  

Nice to haves

Resource allocation should involve an investment beyond the “must-haves” to include several high-performing tools to help you reach and convert your target market. You should plan to allocate around 40% of your marketing budget on these “nice to have” options. These “nice to haves” should include:

• Paid advertising, since online advertising offers the highest potential due to the targeting capabilities, I highly recommend dedicating about 30% of your budget to advertising and other types of targeted social media campaigns, such as contests and influencers.
• Promotions such as guerrilla marketing, trade shows, sponsorships, branded swag, and coupons.
• Video marketing content

The key to success across these nice-to-have options is including persuasive content along with a strong call to action that resonates with your target market.

Experimental bucket

The remaining resource allocation should go toward experimenting with novel marketing tools and tactics. Again, use data to assess options and try different creative formats, as well as AI discovery tools such as those offered by SEO companies, including SEMrush and Ahrefs. This might be included in the SEO tier or require a separate add-on to your subscription.

Which tactics should I do myself and which should I outsource?

This is a complex question, as you can see above. Undoubtedly, hiring an outside agency to handle your marketing, or some part of it, is more expensive in real dollars. The amount you get invoiced is only one part of the issue to consider, however. Making a mistake by hiring the wrong staff because they’re cheap or assigning critical marketing tasks to existing staff that’s already overburdened is a recipe for disaster. Hiring good marketing folks with the right skillset (especially analytics) is expensive.

Of course, hiring an unqualified agency or staff member not only wastes money but can also lead to the same damage. One negative comment might sink your brand reputation, causing harm that takes years to fix.

Similarly, many of the tools required to manage the marketing function effectively are expensive. By hiring an agency, you’re able to gain access to those tools while the cost is split across the agency’s clients.

Optimizing resource allocation

Obviously, or not so obviously, a variety of factors determine how you should allocate your marketing budget. For instance, B2B firms might emphasize advertising on LinkedIn, although you shouldn’t automatically discount other social media platforms because organizational buyers are individuals, not machines, after all. A complex product might require more educational content, including video, than simple products. To optimize your resource allocation, create a dashboard that displays key metrics. You want to break these down by channel, by target market, maybe even by store or region.

You don’t need to assess every metric from our extensive list shared earlier. In fact, most experts recommend that you choose 10 metrics that adequately assess your performance. Choose metrics from across the customer journey:

• Awareness metrics like reach, CPM, CAC (customer acquisition costs), etc.
• Interest metrics such as engagement, CTR, and CPC
• Conversion metrics like conversion rate
• Retention metrics such as CLV and churn rate
• Advocacy metrics such as net promoter score

By breaking these key metrics down into categories, you gain a more nuanced vision of how your marketing spending is working. Below are some things you might want to monitor to improve your resource allocation:

• Which channels deliver the highest returns across each stage of the customer journey? Drop those without a sufficient return in favor of adding new ones that promise a higher return.
• What types of content are best at achieving your goals? Do short videos outdeliver text-based content? Or, maybe, humorous posts perform better on certain social media platforms but don’t work well on others.
• Are you more successful in reaching and converting certain target market groups than others? If so, consider ways to improve your performance among those in the lower-performing group.
• Do some products do better across one channel or another? Maybe selectively market certain products on the channels where they perform best.

Conclusion

As you can see, blindly spending your marketing budget on the newest shiny thing or continuing to spend it based on what you’ve always done are sure ways to waste your budget. Instead, use metrics to guide your resource allocation to get the most bang for your marketing buck. Also, ignore vanity metrics that might make you feel a sense of accomplishment without contributing to your bottom line. For instance, likes and impressions only have meaning when assessed over time rather than reaching some arbitrary number.

Similarly, don’t limit your focus to metrics that measure the bottom of the funnel (conversion). Sure, conversion is critically important because those sales allow you to pay your bills and grow your business, but conversion (as you can see below) is the end of the process. Ignoring the earlier stages in the conversion process means your funnel will dry up quickly.

Resource allocation isn’t a one-time deal. You must constantly assess your performance, shifting spending to optimize your performance since things change all the time. Thus, before you begin spending your marketing budget, set up goals for each metric, event tracking, dashboards, and the way you plan to apportion your budget across channels, products, regions, and markets.

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Hausman and Associates, the publisher of MKT Maven, is a full-service marketing agency operating at the intersection of marketing and digital media. Check out our affordable coaching programs to help your business thrive into the future.