Blog

The question of how much business expenditure should be allocated to marketing is a continual source of contention and uncertainty for many companies.  Unfortunately, there is no straight-forward answer.

On a superficial level there is a strong correlation between marketing expenditure and the quality of the results that are delivered in exposure, leads and sales.  Generally speaking, it is said that an adequate marketing spend is around 5 – 10% of revenue. But how accurate is this number?

In order to gauge the best budget for marketing in for your business, there are a few key considerations that must be taken into account.  These are: what are your current levels of revenue, what industry is your company in, and what are your marketing objectives.  Answering these questions will help you to shape your marketing strategy and define the level of marketing spend that is needed to achieve your goals.

What unique and compelling advantage or benefit does your product or service offer customers to induce them to part with their money given all the other choices they have, including purchasing a competitors product or ‘doing nothing’ and keeping their money in their pocket?

A meaningful, credible value proposition, must pass through three critical stages:

1. Identify and critically review your core capabilities

Develop a shortlist of your organisation’s unique and defensible core competencies valued by your clients.

Importantly, this should not be a long laundry list of services (what you do), but rather what you do differently and better that is:

• a genuine, unique and sustainable competitive advantage
• valued by your clients who are prepared to pay a premium, and
• difficult for your competitors to replicate

2. Competitive validation

Approximately 1.2m people in Australia live with severe and profound disabilities. Many of these people receive no formal care and have been disadvantaged through high levels of unmet needs. The introduction of the National Disability Insurance Scheme (NDIS) is designed to address the shortcomings of previous systems and provide disabled people with the level of support they need to improve their quality of life.

Most sales professionals know how to sell. They know how to generate leads, qualify clients, assess needs, develop proposals, manage objections and close deals.

In many companies however, employees with history of sales success don’t seem to make the grade. Managers look for fixes such as training, developing performance improvement plans and, more often than not, restarting the hiring process after employees quit or are let go.

This is a costly loss of momentum that often threatens sales budgets, but is usually stoically attributed to a poor hiring decision and an acceptance that ‘some you win, some you lose’

I know of several businesses that never seem to have this problem. Is this due to better hiring practices or something else?

In business today, you only have the ear of a prospective customer for a short period of time. If you cannot articulate a compelling value proposition that resonates precisely with their needs and expectations, they will almost certainly move on to your competitors.

If another competitor does stand-out in the crowd, you may be quickly overlooked. If no competitor stands-out, price will eventually drive customer decision-making. Either way, the consequences are not good. 

In our experience, there are few business owners who can articulate a meaningful value proposition that resonates with customers, so it should come as no surprise that neither can their front-line sales and account management staff.

This manifests itself in common themes – unsatisfactory sales performance, wasted marketing spend, high turnover of sales staff and solely price-based competition.

The goal of strategic planning is to position a business in its market with a sustainable advantage over its competitors that enables it to serve its customers more profitably, gain market share and deliver superior financial returns. Central to this is determining what assets - services, products and capabilities - you need to develop and deploy to create more value for your target customers in a market segment that has both growth and profit potential. To create a sustainable advantage, you must create assets that give a prospective customer a compelling reason for selecting you over the alternatives that are available and are hard for competitors to duplicate. Strategic planning is therefore about ‘what’ and ‘why’. A business plan is derivative of a strategic plan that outlines the ‘how’ - how a business will execute a strategic plan over a defined period of time and focuses on the tactics to create the competitive assets.

When asked this question, a lot of people will say 'brand', 'history' or 'heritage'. Some will even say 'our people', 'our passion' or 'our purpose'.

Although you could argue there is truth in all of the above, where is the real value in a member service organisation, and how is it unlocked?

In my experience, the biggest asset in most membership organisations is:

In its simplest form, businesses have two growth options:

A recent article in the Financial Review discussed the issue of risk taking in Australian businesses. John Wiley, CEO of Lazard Australia and chairman of the Sports Commission stated that Australia has a 'risk-averse' culture and believes more guts and determination is needed for Australian businesses to grow and prosper at a rate on par with our Asian neighbours. Australian businesses are encouraged to take positive risk, that is, calculated risks where action steps are planned in anticipation for all possible outcomes. This can only be done by changing Australian business culture to a view that risk-taking is positive and should be encouraged (provided appropriate risk and crisis management systems are in place). Wiley also discussed that for this to happen, universities and leadership education systems should encourage entrepreneurship and a positive risk taking mindset.