How To Budget For Your Aviation Marketing
When I speak with companies regarding their marketing, they’ll often ask: “How much should we budget for marketing?”
It’s an important question, as most aviation businesses don’t have large huge budgets.
The answer that makes the most: “spend the least amount that achieves your business objectives.”
The best method I’ve determined to develop a marketing budget is really not too complicated. I’ve outlined the process and equation below:
- Establish your ARG (Annual Revenue Goal) – the revenue you want your company to achieve.
- Determine your CAV (Customer Annual Value) – the average sales generated by each customer in a year.
- Determine your CPS (Cost Per Sale) – the amount you spend on advertising, internet marketing, public relations, promotional materials, etc., to close each lead
- To establish your annual marketing budget, divide your Annual Revenue Goal by your Customer Annual Value and then multiply that number by your Cost Per Sale.
The equation looks like this:
Marketing Budget = (ARG ÷ CAV) x CPS
The key to making this equation work is to have accurate numbers for the average customer revenue (CAV) and your Cost Per Sale (CPS). So if you haven’t done so already, you should begin to track the effectiveness of your sales and marketing efforts. Once you start tracking sales, you should be able to calculate how much money it takes to obtain each new customer.
Use this Budget/Tracking Chart to calculate how much money it costs to generate each lead and close each sale:
|A.||Current annual marketing expenses|
|B.||Average number of leads generated per month|
|C.||Average number of sales closed per month|
|D.||Conversion ratio ( [C ÷ B] x 100 )|
|E.||Cost per lead ( A ÷ [B x 12] )|
|F.||Cost per sale ( A ÷ [C x 12] )|
Understanding these numbers will get you off to a good start. The other important factor to consider is how to wisely spend the dollars you’ve allotted for your budget – that’s where an marketing plan come into play. A great marketing plan may include many tools, tactics and media, but to implement them effectively takes adequate funding. However, choosing which one to use required carefully analysis and expert experience. Just as it’s a mistake to spend too much on a single marketing tactic, it’s equally wasteful to do too many tactics superficially. It’s much smarter to concentrate your marketing dollars on a select few marketing tools that are cost-effective and demonstrate good results.
Click to read more about effective marketing plans.
Why Most Marketing Campaigns Fail
The most common reason why marketing campaigns fail is that they’re asked to do too big a job on too small a budget. Do you realistically have enough marketing dollars to ensure to achieve your business objectives?
If you hit a ceiling in the amount you can afford to spend, it’s best to reassess your short-term and long-term goals, rather than expect an underfunded program to perform beyond reasonable expectations.
As a pilot, here’s an analogy I like to use: an under-funded your marketing budget is like trying to fly the Atlantic Ocean with half a tank of fuel. Yes, you’re going to make progress, but you won’t reach your ultimate destination.
You may discover that carefully planned campaign with an adequate budget won’t get you across the Atlantic, but could get you to beautiful Bermuda instead. And that’s not too bad, is it?
If you could use help creating a smart marketing budget, contact us.