Welcome to our special series on setting up your annual marketing plan! We asked Amber McKee, Founder of Ambers Marketing Group and Former Director of Marketing at Goettl Air Conditioning and Plumbing to share her expertise below:
When it comes to ensuring the success of your home service business, establishing a marketing budget and maintaining a consistent marketing plan is absolutely crucial. In this blog, we're here to shed light on two effective methods for estimating your annual marketing expenditure.
Method 1: Using Historical Lead Costs
The first method involves using your past lead costs to set your marketing budget. This approach is particularly handy for businesses dealing with seasonal variations where lead costs may fluctuate. Here's how to go about it:
- Determine Your Historical Cost per Lead by Month: First, take a look at your previous monthly advertising spend. Divide this figure by the number of leads you generated during that time. Additionally, add the percentage of leads that came into your call center but weren't booked. This calculation will give you an insight into the cost of inbound leads in the past.
- Calculate Your Estimated Budget: Now, you have an idea of your historical cost per lead. To estimate your advertising budget, multiply the number of leads you need to reach your new revenue goals by your historical average cost per lead. This simple equation provides you with a ballpark figure for your advertising budget.
- Monthly Variations: Remember, the cost per lead can vary from month to month, so factor in these fluctuations when planning your monthly budget.
Method 2: The Percentage of Expected Revenue Calculation
If you don't have access to your historical lead costs or prefer a simpler formula, you can calculate your advertising budget as a percentage of your revenue. Here's how to do it:
Take historical ad cost percentages and apply them to your new revenue goals. This approach can be especially handy when your business plans expand significantly. Keep in mind that if you're aiming for growth, your lead cost percentage should be higher than in previous years to account for the increased expense of acquiring new customers. By utilizing these methods, you can help your marketing budget align with your business goals and revenue targets. Whether you opt for historical lead costs or the percentage of expected revenue calculation, the key is to have a clear and well-thought-out plan in place to drive your home service business toward success.
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Want to learn more? Register for the Leads to Loyalty: Creating Your 2024 Marketing Plan Webinar on Thursday, November 2 at 11am PT with Amber McKee and Sarah Ghirardo.
