Spending money effectively is essential for any sales and marketing team. This is obvious. What’s less obvious is how to spend it.
The sales and marketing budget is all-important: on average, it accounts for around 10% of a company’s total annual spend. Making sure it’s used in the right places – and, perhaps more importantly, not used in the wrong areas – is all-important.
So where should the money go?
Here are three areas to avoid, and three more to invest in.
1. Avoid cold calling and junk mailing
Just because you have a database filled with thousands of potential customers doesn’t mean they all want to hear from you. Cold calling and junk mailing require a lot of effort and investment for typically very little return.
Modern sales and marketing must be customer-centric. Businesses must focus on customers, not themselves or their products. Interrupting them during dinner or clogging up their inbox with irrelevant nonsense is just likely to agitate them and get you placed on spam lists.
In 2017 and beyond, relevancy is king. Calls and emails are fine, but they must be tailored to the precise needs of the customer. Better to research one hot prospect than waste time and effort contacting – and discouraging – a thousand uninterested strangers.
2. Avoid discounting
Discounting is for people who prize short-term gains over the difficult, frustrating, and ultimately rewarding work of building a brand that appeals to customers. Even worse, the short-term gains usually aren’t even that significant.
Price is important. You want to make sure customers are getting value for money. But when you discount your products, you’re essentially reacting to what your larger competitors are doing – and they can often afford to set their prices far lower than you can.
And what do you get in the end? An image as a ‘discount’ brand, customers who are only in it for the low cost, and – eventually – shrinking returns. Don’t sacrifice your sales budget in order to afford more discounting. The lower your prices, the lower your profits.
3. Avoid obsolete technology
If you’re going to spend money on technology for your sales and marketing teams – and you certainly should – make sure it’s the right technology. It’s easy to cut corners and invest in last year’s model, but over time, you’ll pay for any underinvestment.
The older your software, the more likely it is to become outdated, unsuited to your headcount and operational requirements, and even potentially discontinued. If you buy a tool that requires extensive maintenance and ongoing support, you’d probably be better off buying something more up-to-date. If you’re buying from a company that doesn’t offer maintenance and support, even worse.
Obsolete systems automate fewer tasks, and less effectively. They’re also more susceptible to attack and compromise. Your budget can and should be spent elsewhere.
1. Invest in market research
Spending money on market research is sensible – provided you do it correctly. It’s not all about focus groups and door-to-door surveys: these things certainly form part of it, but they’re not the be all and end all.
If you have less money to throw around, an online questionnaire through SurveyMonkey or a comparable tool can help you get an idea of what your customers think of you, and what they want from you. You can also create content around certain hot-button topics to gauge their feelings, monitor social media feeds, and generally just pay attention to your target audience and what it wants. It doesn’t need two-way glass to be market research.
2. Invest in customer retention
New customers can be expensive – to the point where they can cost up to five times more than simply keeping the ones you already have. Ideally, you’ll be doing plenty of both, but too often we prioritize the latter at the expense of the former.
The time you spend chasing a new lead, pitching them, preparing for meetings, and closing them is important, but it also costs a lot more than simply dropping your best customer a line and asking if they’re satisfied with your service. And yet, according to our own research, 25% of salespeople struggle with this.
It’s time to start actively pursuing a customer retention programme. Use customer analytics technology to identify how your interactions with key accounts are influencing purchasing behaviors, and figure out what you can do to up and cross sell more. Then use Business Intelligence to make the best use of your findings: software can alert you to drops in recurring revenue or customer unhappiness that may not have been immediately apparent to your salespeople.
3. Invest in your brand
To acquire new customers, you must build a strong brand reputation. The best way to do this is to make use of the expertise and wisdom your business has accumulated.
A content strategy is an excellent way to do just that. Create blogs, whitepapers, email marketing collateral, newsletters – whatever your customers will pay attention to. Contribute to industry publications when you have something to say on a particular issue. Be consistently informative and intelligent and your brand awareness will rise – even if your product is heavily commoditized and functionally indistinguishable from your competitors. Service quality and innovation are only part of the battle.
It doesn’t matter how much budget you have, as long as you spend it wisely. Ensure that all money is allocated to the areas that need it most – and, more importantly, that you aren’t spending it where you shouldn’t be.