How Much Should You Spend on Marketing?

There is a lot of talk that we are coming out of the recession.  Unfortunately, I still see a lot of roofing contractors struggling with a lack of business.

Some have reacted to the downturn by cutting all “unnecessary expenses” (marketing) and some have increased their spending on advertising in hopes of getting more work.  Which strategy is best?

Neither.  Now more than ever roofers need to be marketing, however they must also be very careful to control costs.

First let me make the case for why you should continue to spend some portion of your income on marketing.  Notice these comments from Harvard Professor John A. Quelch. You can read his full post here.

“This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”

He makes the point that right now marketing is cheaper and there are fewer of your competitors advertising, so your marketing dollar goes farther now.  If you spend that marketing dollar wisely.

I met with a roofing contractor today who said that he cut all his yellow page ads this year.  The salesmen tried to strike fear into his heart when he cancelled, his business would surely fail without the $20,000 per year he was spending on big yellow page ads.

I asked how his business was affected.  “Not at all” he stated.  I congratulated him for having the courage to break from the norm and cut some major costs.  Did that mean he stopped marketing?  No.  He has continued to market his roofing business in other ways.  He has gone back to the basics, yard signs, truck lettering, direct mailing to target markets and other proven methods of marketing that are much less expensive yet still very effective.

That brings us to the point.  Roofers need to be marketing but in more cost effective and creative ways.  Make sure you are tapping your distributor and your preferred roofing manufacturer as well.  Many of these will provide you with these tools for free or a greatly reduced cost.

How much should you spend on marketing?  It is different for every market and company.  However, I personally think that it should be a consistent formula based on your revenue.  I believe you should set a marketing budget that is in the 4-7% of gross sales range (this is just a suggestion, not a rule).  This way as sales increase so does your marketing spend and as sales decrease so do your expenses. This will also ensure that you have money available for marketing.  You need to add it to every sale as part of your expenses.  Don’t make the mistake of spending your profits on marketing.  Budget for it and treat it as a business expense.

In future posts we will look at creative and inexpensive ways to market your roofing company.

TAKE ACTION:

1 - Make sure marketing is counted into your costs for every job and set aside that money for that specific reason.

2 - Look for ways you can control your costs by cutting marketing that is overpriced or is not returning good results.

3 - Look for new and inexpensive ways to promote your business and ask for help from distributors and manufacturers.

Please post your ideas and comments!