If you’re not tracking this metric, then you’re burnin’ money!

If you’re not tracking this metric, then you’re burnin’ money!

Let’s see how well you know your business by answering a simple question. Ready?  Here we go…

What percentage of your business’ revenue is allocated as marketing budget?

Think fast. What’s the answer?

I’m not kidding. Seriously, do you know the exact percentage of revenue is allocated as your business’ marketing budget?

Don’t have a roundabout answer as there is no room for error. After all, every dollar invested in your business should be accounted for, right?

You’d be amazed to know that most business owners and managers don’t know this one interesting metric.

It’s a quite common for such a question to raise defense mechanisms and be qualified as self-serving by the questioning person or company.

Brad (business partner) and I have spent time interviewing a number of C-Suite Executives and business owners only to find out that not one had a clue, only “guestimates”.

So why is this question an important one to track, measure, and know off hand?

The short answer is that it’s important to understand how you’re investing precious dollars in hopes of generating more customers and revenue.

Business owners and managers in the dark on this metric might as well remove cash from the account and burn it like an old Rick Stacy commercial.

There’s hope though, and I’m here to share a few thoughts about how you can get started tracking, measuring and knowing this vital metric off hand when questioned.

One of the first things you want to understand is how do you get business. It’s imperative to get clarity on the driving forces and platforms that deliver customers to your website or cash register.

Get in front of a whiteboard and open up the online banking account for your operations. Here are the questions to ask and answer:

  • Who pays you money for your services?
  • Are they new or existing customers?
  • How and from what source did they hear about your business?
  • Did you invest any time or money into the source? If so, quantify it in dollars?
  • What’s the delta in dollars invested and dollars profited?

Answering the questions above in complete transparency truly helps to understand which marketing opportunities are truly worth their investment.

You may find the money you’re spending is at a greater percentage for less than stellar, if any, results.

I’m reminded by the book, Marketing High Technology, that it’s not enough to have the next whiz bang widget that takes your company to stardom.

That’s fine to have the widget, but you better truly understand the cost of the experience in its entirety to bring it to market, meet the needs of the market, and last but not least, being profitable while doing so.

Truly commit to identifying, tracking, measuring, and knowing the percentage of revenue your business allocates as marketing budget.

Should you not, then I can imagine Rick Stacy telling you:

“If you’re not tracking this metric, then you’re simply burnin’ money!” 😉