Save Time and Money: Are You Overpaying for Your Marketing? [Endless Customers Podcast S.1 Ep.30]

If you're listening to this, you probably are wondering if you're spending your marketing budget effectively, whether you're a small business and you barely have any budget to spend on or a medium to large-sized business and you have a generous budget. The chances are you're wondering, am I spending it most effectively?

We're going to answer that in this episode.

Let's do it.

Welcome back to Endless Customers. I'm Alex Winter and today I'm joined by Katie Coelho, our VP of Services here at IMPACT. Katie, welcome to the show. Thanks. Yeah, thanks for being here. Today we're talking about if you're overpaying for your marketing.

So if you're a business leader or if you're a CMO and you're trying to get your marketing game to the next level if you're overpaying and what you should really be thinking about as a business owner. So according to our research right here, it says average B2B marketing budgets are 2 to 5% of company revenue. Yes.

Is that a good place to start? Should we start there, like high level, with what the company revenue is and how that plays into your budget?

Yeah, I think that's a good marker, especially for smaller businesses. It's a little bit harder to actually hit that 5%, the upper level of that, just because you're probably making investments in product or anything that you need to do to push your company forward. So yeah, I'd say that's probably an accurate range for most small to mid-sized businesses. Got it, got it.

So we work with a lot of small businesses at Impact. That's our bread and butter. We love helping small businesses, and really all businesses grow, but are their budgets in line with the stats that you were just talking about, or is there variances?

Yeah, I'd say most of the people that we end up meeting with end up having a budget for marketing somewhere between 2% and 5%. And that does depend on if they do have any in-house marketers. Sometimes their budgets will exceed that a little bit because they, you know, if you also consider the in-house marketer, their salaries are into that budget as well.

But yeah, overall, like, you know, a lot of the companies that we speak with do spend somewhere between there. Now, I did mention, though, that on the smaller side of businesses, so companies probably more around like the two million dollar mark Probably aren't spending nearly as much They might just have just a handful of people on the executive team or just in their

In their company in general and so they might need to be making other investments And kind of prioritizing those for their product or, you know.

Yeah, what do you recommend for business? Like, so if you get a business that comes in and they want to start their marketing journey and they haven't really started it

and they don't have a budget. They don't have a budget, they don't have a marketer.

They haven't thought about this stuff. They're like, help me. I'm like literally starting from zero. Like, what's that conversation for you look like?

In most cases, they're gonna need to make that initial hire at least within the next six to 12 months if they really want to grow their business. If they're fine with where they're at, they might not need to. But if they're really looking to grow at least two times year over year, five times, whatever their growth goals are, they're going to have to hire somebody in-house at some point.

They might be able to get away with it in the first six to 12 months there once they're coming to us, but they're going to have to make probably at least $100,000 salary investment plus maybe investments in their website, maybe some ad spend or just other content creation dollars that they're going to have to add to their budget. So they're probably looking at within 6 to 12 months something around at least $200,000 to start if they actually want to, like I said, hit their goals and grow their business.

Yeah, I'm sure some of our listeners right now are like, $200,000, like what? That's a lot of money.

Yeah, for the smaller businesses, it definitely is.

It is, and some smaller businesses, that might be a real stretch for them, but how do you position it when it comes to return on investment? And clearly, that's an investment you're making to help scale your business.

So how do you get them to see that there's gonna be a return on this investment? You're investing in your future, you're investing in scaling your business, and that these people are gonna be instrumental in helping with that.

Yeah, I mean, you definitely have to make the right decision for your business in terms of what you're looking for in return. I think a lot of small businesses will start with an agency because it's less risky, right? You don't have the additional costs of hiring an employee

and you kind of get like a potential plethora of skills. And so, you know, if you are hiring an agency to do some of your marketing you know you're you're gonna want to ask them questions to make sure that the return of your spend is In a level that you're comfortable with and that they can Guarantee, I guess if you will that there will be some type of returns, which is pretty hard to guarantee

Yeah, just like flat-out say that it is hard to guarantee

There is no real guarantee But it sounds like it's really all about the strategy and figuring out a clear trajectory of where you want your business to go and what growth means and clearly defining that.

Right, and the right strategy to get there. And for a lot of small businesses, that return ends up being more when they invest within their company rather than investing in an agency. If you really are, unless there's a specialized agency within your industry, there are plenty of very skilled agencies and people at agencies that can do great work.

But if you're investing those marketing dollars in a marketing hire, you're even just a content manager, right, not at the $100,000 salary, but maybe a journalist major that is really excited about creating content for your company and can do some marketing.

Right, and it's maybe in that like 60 to 70 K rate or something like that. Yeah, yeah, yeah salary depending on you know

The place that you live in the country sure you can Manage that ROI a little bit more you can be more in control of what you want them to do and what you don't want Them to do you know they're gonna get more ingrained in your business and the needs of your business and your buyers more than any agency ever really could and so

And so you really have more control over what that ROI could actually look like as long as you have the right strategy to guide them.

That makes total sense. Yeah, so that's the small business side. Have you ever had experiences with maybe, maybe small businesses too, but medium to large businesses that are spending way too much money on their marketing? They're just like throwing money at it

because they have a budget and maybe like it's their annual and they don't want to lose budget, so they're just frivolously spending this money. What do you recommend for people that are doing that to get a little bit more strategic and meaningful with what they're spending?

Yeah, a lot of times we see when there are larger companies with maybe a more established marketing team or they have the budget to hire from the outside, very skilled marketers or field leaders. Yeah, or just in general, when you're bringing together a team and they have a higher, higher budget really for that, what you end up bringing is a lot of other experiences,

right? If you hire somebody experienced, they have agencies that they like to work with or ways of doing things. Totally, or like different freelancers or different technical experts or specialty people that they can pull in. Sort of like the way it's always been done. It comes with all of that experience as well. And so what I've seen is when companies come to impact with a lot of that experience, they're really stuck in their ways. And so they might, you know, they might have an agency that they've always worked with. They have the

relationship there. The relationship is great, but is their ROI really where it needs to be or where it could be? Probably not, right, in most cases. But it's the way that they've always done it. And so that's where I think a lot of the waste comes. It's the way that somebody has always done it. It's the way that the company has always done it. It's the way that that agency relationship works. Or it's, you know, they've just always had that budget there for that, you know, that amount.

And so... Is it an education thing? So like when you meet somebody like that, that's an expert, that's very smart, but they may be stuck in their ways a little bit because they're just used to or accustomed to the way it's been done.

Yeah, I mean people are creatures of habit, right?

Totally.

Yeah, it's hard to break. It's hard to realize that you would like to change and actually do the change. Like there's the two distinct hurdles, that you actually want to make a change and then you actually do it.

Right. Step one is self-awareness. Step two is figuring out how to change. Usually step one people get and step two that becomes the hard part of like actually implementing a change. But I think for a lot of business owners out there when they start to understand, they ask you answer and they start to see what we coach and train on, there's a ton of ROI in it. And I think even people who are overspending on their budgets, they start to see like,

wow, I could really be doing 2X what I'm doing with this budget. Exactly. And see the potential.

Yeah, especially if they're spending with an agency, again, we're talking larger businesses here that maybe have a larger agency spend. Reinvesting that into hiring a content manager, hiring a videographer where you have 40 hours a week of somebody to manage and really maximize their input into your company in a way that's so custom that no agency could ever really truly know your business from the inside out

because they are naturally outside. Right, no this person is embedded in your culture. Exactly. Yeah, they're part of the team. Exactly. When you have a strategy like they ask you answer and you have that content manager and the videographer or whatever the makeup of that team looks like. In-house, it's really about the efficiency that that team creates for your business. And truly, they're just able to create more quicker and have it be more aligned to something productive for the sales team.

Totally. And if you're already overspending or you're spending a lot of money with an agency, not that agencies are bad, agencies can be great, but for an owner or for a CMO to be able to walk two offices down and say, hey, content person, I need your help right now, instead of having to

shoot an email, submit a ticket, wait for them to respond, like it just, there's a lot of efficiencies there and reasons why, if you're looking at it, it's a good investment.

Yeah, especially when it comes to creating content.

Yeah, it's true, and I think people sometimes are like, oh, but you know, employees come and go. So don't agencies. Agencies come and go too.

Right. The people at the agencies too can come and go.

Exactly. Yeah. And that's a struggle too for a lot of people. So I want to get a little bit more granular. We have a really interesting point here. And I'm going to read this succinctly because I went to film school. I'm not like a math person. Okay. So we're going to try here. It says if you're a $5 million business, right? So $5 million in revenue, 5% of that is $250,000. That's not a small chunk of change. So what are some ways you see businesses misspending this budget? And we've kind of already hit on this and talked about this, but like, let's say you're spending 250 grand a year.

What are some of the common things that you see?

I'd say probably, you know, the people that come to us maybe with that type of budget and that they likely are wasting some money on ads. And the ads themselves, with whatever agency or maybe somebody internally set those ads up, the ads themselves might not actually be the problems. The content or the place that they're pushing them to

might actually be the real problem. And so then you question, well, why are we even spending money on the ads if we're not getting the return or if the content behind it is really not compelling people to actually take action.

No, that makes sense.

So a lot of companies will dabble in ad spend because they think it's a thing they should be doing and in reality their website might be lacking and when you're driving ad traffic to crappy content on your website, then what's the point of spending any amount of dollars, even no matter how good the ads could be.

And I think there's sometimes a misconception where somebody will pay a lot of money for ads, like you're saying, right? They're doing like paid ads or they're doing some type of ad promotion and then it drives them to a landing page.

That's crappy and that doesn't convert, but then they blame it on the ads. They're like, oh, the ads aren't working. And that's not always the case.

Not always the case, right.

Right, so it's really looking at, there's layers to it too, and I think a lot of agencies, when you get into the paid world, they like to use terminology. It's like, oh, look at all these impressions that you got.

Look at the click-through rates, right? And click-through rate is definitely a good one to look at, but I feel like impressions, people will, they'll almost sell themselves on like, we get a million impressions, but that just means somebody saw it.

That doesn't mean someone actually took action.

Exactly, which in some cases could be good. Could be good. Right, but for most mid-sized businesses or small to mid-sized businesses in the B2B space, that's not enough.

Not enough. You want engagement.

Exactly. That ends up being that vanity metric just like an agency could say, will it increase your traffic? Well, great, but what does that mean for sales?

So you mentioned B2B. This is a perfect segue, right? I hear this a lot in B2B and it's just a traditional thing in that world is like, oh, most of our business is referral-based. You know, and some of it tends to be a little old school, a handshake is more important than a contract and I wish that that was the case and that's how business was always done, but it's not always the case.

And with these new tools coming out, how do you talk to business owners that are in that space that only have referral sort of leads coming in to try to shift them into a new game where they can get leads from other sources.

If you truly operate from referral-based, I mean, you must have an amazing product and like fantastic for you. Apps like keep going. Whatever you're doing, keep going. But why not diversify? And why not potentially do more?

And it all just depends on the goals of your business. Totally, and we're speaking generally,

but I hear you where there could be money on the table. Maybe you're doing great and the referrals are great.

Right, you're only reaching who your referrals are reaching. But even at that, if you were to implement a strategy like they asked you to answer, there are still benefits even with just your referral strategy, there are still benefits to creating content that answers buyers' questions, right?

Or help with assignment-telling pieces of content, so that you save time and or just build an even better experience than you already have. Right, if it's referral-based, if your product is amazing, your sales team is pretty great

with the people that they're talking to, why not make it even better? Make that experience even better. Maybe you'll get even more referrals, right, if you stick in the referral realm. But also, you can use that content,

you might get even more people. So it really just depends on the goals that you have and what you're comfortable with.

All right, so we talked a little bit about referrals, but can we also talk too about unnecessary rebranding and how a lot of times, we talked about this with the referral thing, where people think there's a problem or they're like, I'm paying for these ads

or I'm getting these referrals, but there's potentials for other things to be done that could really strategically help them versus things that you might throw money at and it's literally not gonna do anything. Like a $50,000 redesign of my website

that is still the crappy content we were talking about earlier. What are some tips or some advice you can give people that are trying to audit or think, shit, I went into audit. What are some tips you can give for avoiding

unnecessary spending or unnecessary rebrands or things that you don't really need to be doing?

Yeah, I think you have to look at, I hate to beat a dead horse here, but you have to look at what your goals are. And when we talk about ad spend, we talk about ROI, but we should also talk about website updates or website redesigns if you truly need one in terms of ROI as well.

What are you looking to get out of updating your website or your content? And what are the problems or the pain points that you're having today? Because a lot of businesses around that $5 million mark, I'd say that's probably the have enough budget and enough experience in-house to know that their website definitely needs an update of some type. But they'll get advice or maybe it's again that that marketer that has always done things a certain way.

They've worked at the past five companies. They've done a website redesign. They know, you know, this is what we can expect from it. And so they go down that path and you know, they may spend fifty to a hundred and fifty thousand dollars on a website redesign. That takes maybe somewhere around I Mean eight months if you're lucky to 12 months because It's a big time investment a lot of time and a lot of money

But for business owners like they'll they'll redesign their site right make it like we have a new logo We have new colors and a new theme or whatever But they didn't Think about the CRM that they're gonna have to plug into to track their sales and leads and their traffic funnels and they're not thinking. So like, how do you try to get people to understand that? Like sometimes the flashy stuff is actually not as important. And it's funny, we're talking about this because

we had Vin Gayeta on the show, our head of web strategy, and he was just talking about this with me too, that like, this happens a lot. It's a common thing that we see. So what should business

owners be thinking about strategically and talking about so that they're not wasting their money and their time. Yeah, I mean, first and foremost, content is the most important on your website. I mean, we have seen this before, where businesses will come to us, and their design of the website, not the most beautiful.

Could be a little dated, could be basic, but the content, kick, split, and it works. And they get leads, and they build trust and that ends up coming to them in revenue dollars later and they can prove that through the serum. And so I think that those cases just go to show that yes, design is important in built, it's a factor in building trust, but what you say on the website is so much more important or the videos that you have on the website showcasing your team, the jobs that you're doing, your product, all of those questions

that somebody might have, that is so much more important in most cases. And that's where you really should be focusing first and foremost, even if you do end up going with an agency for a whole website redesign, because everybody has their reasons that they might need to. There's no blanket statement that we can say that nobody needs a website redesign.

Of course not. No, sometimes you really do. Exactly. Yeah, but it's more about focusing on the factors of this redesign and not focusing on the flashy, showy stuff and really focusing on the content, building trust, doing all the things that you literally just said.

Exactly. That's the key. Yeah. And we have seen it time over time where less flashy websites that maybe aren't the prettiest but are built correctly and that hit all the points you talked about, they convert. And they do really well, and the ones that are the opposite,

it's almost like an endless pit of doom. They don't know where their leads are going, they don't have any way to track what's going on, and it becomes a real problem.

Right, and especially if they just went through a redesign process, not only did you spend money on the redesign itself, but your entire team probably put effort into writing content for pages where the strategy didn't really make sense, or it's not actually producing anything for your team. Yeah, and

So not only did you spend real dollars and shipped it out, but you also used your team's time, right?

Yeah

Nothing more fun than telling a CEO that he needs to redesign the website that he just spent all this time and money Redesigning or she yeah, that's crazy We talked about this earlier with businesses bringing their marketing in-house and trying to hire people internally, can we, I think that's a good spot for us to circle back to of like the ROI and how much of an investment that is for business owners, not monetarily,

but like from a growth perspective and what that means for the team as you start to scale and how that plays into the ask, you answer and really everything we do. Yeah, exactly.

So, you know, I think up front, having the baseline benefits that we've already talked about of hiring in-house for your marketing and investing in-house is about that efficiency and especially about creating content at a pace at which you'd like to. You just have control over all of that. So if you're hiring in-house and using some of that marketing budget and beefing up your

internal team and then using some of that on coaching and training courses, whatever whatever it might be to invest more in them in-house. Not only is that gonna help level up your marketing, because they are learning along the way. It's a great indirect way of getting ROI for your business, because a lot of millennials and Gen Z value education and growth within a company or investment that a company might make in you know

They're learning and so, you know, if you love that no, that's an amazing point. Yeah, you are Investing in them right which is a an investment in your company, but if you're investing in them You're able to keep them around longer potentially. So obviously the cost of turnover is high. It's difficult to have turnover.

Right, and retention is what everybody wants

when it comes to employment. Exactly. On both sides of the fence. Exactly, yeah. And so if you can use that budget to educate them and keep them around longer, your marketing is better.

Well, they can also grow as well. And as the company grows, they can grow with the company.

Exactly.

And typically, we do see like, you hire a content manager to start, and then as it starts to work and they start to get good at what they're doing and really get into a rhythm, it gets to a place where like they can't do it by themselves, and then you have to hire on a second person. And before you know it, we have companies that have four, five, six person marketing

teams, where three, four years ago, they were like nobody on the marketing team. Exactly. Yeah, so it's really cool the growth that can happen.

in a current job market where a lot of people tend to hop jobs, especially the younger generation, keeping them around for just even years longer can be incredibly beneficial to your business and getting that return.

Yeah.

Oh, that's really cool.

This is probably not gonna be a good analogy, but in my head I don't know why right now I'm thinking about comparing this to being a homeowner versus renting. Yeah. And it's like, neither of them are right or wrong, it just depends

on what's best for you. And like is it better for you to rent and have somebody else own the building and you don't deal with it? Or is it better to invest in yourself and hire some people on and take on the mortgage but you're building equity as you move forward?

Yeah, building equity is a great way of putting it.

Right? Cool. Just hit me. But I think that that's a really great point for businesses and for companies. Like if you want to scale, you want to build equity, you want a return on your investment, then this is important to think about. To wrap things up, Katie, right,

we talked about the importance here is saving time and money. It is, like for business owners, they want to save time and money. So how do they, final thoughts on how do they think about overspending, underspending on their marketing

and what they can do to change that?

Yeah, I would just say to think about what your goals are. Think about where you're currently at and what you're currently spending your money on and just ask yourself if you're happy with what you're getting back, really. And especially others in your space, too. Do you expect that they're getting more?

And just take a hard look at what you've always done and maybe you shouldn't be doing it anymore.

Great points, Katie. I love talking with you.

Thanks for being on the show.

Yeah, thanks for having me. And for everybody out there watching and everybody listening, this is Endless Customers. I'm Alex Winter. I'm Alex Winter. See you on the next episode.