Pinching pennies

As a marketer, I’ve seen the look on more client’s faces than I can count. That look of shock, where the face goes pale and they exhale loudly as sinking back into their chair. The excitement of talking about marketing their business has exited the room, and the reality sets in that promotion costs money.

Call it unreasonable expectations.

Call it short sightedness.

Call it whatever you like, but there is certainly a discrepancy between what a small business owner will perceive as the cost for marketing services and the true cost. The bottom line conundrum is what I call it and there are numerous factors why marketers lose out on the clients they need, and business owners undercut sales by only looking at the cost of marketing.

The hard truth: Marketing costs money.

I’ve lost a few clients in my day because of my rates, and the reason never has to do with my competency as a designer, a marketer, or consultant.

“That’s too much.”

“I have a friend who can do this for way less.”

“You’re too expensive.”

It’s the bottom line price of executing a marketing strategy, creating the visual elements, and putting all the pieces in motion. It takes time. It takes resources. And yes, at every stage of the game, it takes cold, hard cash. But the important thing to remember is that as a business owner, you’re not just spending money, you’re investing in the expertise, talent, and the education of the people who can grow your business, increase exposure, and expand your market share.

Marketers are business owners just like you. They have payrolls to meet, mortgages to pay, and kids to feed. Just like you. And just like you they have gone to school for their chosen profession. They have the talent and drive and ideas, just like you. And just like you, they provide a service that other people need. This may all seem like common sense when you read it on a screen, but you’d be surprised at just how seldom this expertise is greeted with a sense of respect. Creativity and ideas have a price—and a cost that goes well beyond simple dollars and cents.

At the risk of sounding jaded, if everyone could do it, everyone would.

Make no mistake, plenty of people try, but most fail for a very simple reason—marketing is incredibly difficult to do when it’s your own interests at stake. After all, you’re a business owner and you’re tasked with numerous responsibilities; the day to day operation of your company, payroll, employee issues, scheduling, inventory, and of course, growing business so that your doors stay open.

Odds are that you didn’t go into business to market your company; no, you have other interests and other passions. Time spent marketing your passion is often time away from executing your passion. The tricky part to all this is that your passion extends to every part of your company—which makes marketing even more challenging. You want to tell everyone about all the things that make your company great; all the philosophies, all the innovation, all the benefits.

And that’s the problem.

There’s so much to say that when you go about your marketing, your tendency is to say it all. Objectivity is quickly lost. Clarity of direction becomes cloudy. Benefit is eschewed for the sake of volume. The result is often a mess of incomplete ideas and chaotic imagery that the story you intended to tell is often lost in the rubble.

Marketers help you cut through the clutter. They simplify, clarify, and differentiate in a way that you’re too invested to realize. It takes weeks, if not months, to research industry trends, identify points of difference. Marketing represents a significant of time, expertise, and thought; it is not a simple proposition at all.

So why is marketing so often eschewed as being too expensive? Why is the marketing budget the first thing to go when times are tight? An investment in marketing is a clear sign that you haven’t become content with where you are in your profession. It’s a sign that you aim to grow. Competitors beware.

So what is the right price? How much should marketing cost?

By rule of thumb, a company should set aside 7-10% of its annual gross sales for marketing purposes. Depending upon the business that may be a considerable chunk of coin, or it may be meager. In either case, it’s not about the bottom line price, it’s all about the return on the investment, and any marketer worth his salt should be able to give you an idea of what to expect on your ROI.

20% open rate / 3% click thru rate for email (eConsultancy, June 2014)

4% on direct mail (Pew Research Center, April 2013)

2% on print advertising (, 2014)

Those may seem like small numbers when you are staring as a bill from your marketer, but then again, context is everything. Instead of focusing on the bill from your agency, dial in on the response rates and how much you can hope to expect as a result of your marketing efforts. How many sales will you need to recoup your expense? In most cases, it’s not a high number at all.

Let’s say you sell garage doors and you send out a direct mail piece to 1,000 customers. You pay: $1000 for the postcard design, $1500 for a quality list of customers, $500 to print the cards, and another $500 in postage. Grand total for your efforts? $3,500.

Now before you faint at the total, know that that price is very reasonable when you consider all the components involved. Assuming you were able to create a moderately effective design that communicated an offer and call to action, you should expect to receive 40 viable leads based on average direct mail response rates (1000 customers @ 4% response). So the simple question you need to answer when framing the expected response against the expense has nothing to do with the cost you paid to execute the program, but your potential revenue as a result.

To keep the math simple, let’s say that each garage door you install costs $1000. Your ROI says that you’ve paid for the campaign if you land just 4 customers; a response rate of just .004%. Every response beyond that and you’re well in the black for the campaign. Your $3,500 investment yields a potential revenue of $40,000. That’s an ROI to be proud of.

So when the big picture is considered, here’s what you have gained for your $3,500 investment:

  • More time to run your business
  • Less time spent marketing yourself
  • $40k in reasonably expected revenue against an expense of $3,500.

I understand that the above example is relatively simple and that there are numerous variables that can increase or decrease effectiveness of any marketing efforts—but that’s where a marketer is better served to point you in the right direction and manage your campaign. That’s what we do and where our passion lies—so why so much grief over the cost of our services?

The value of specific expertise

Professional marketers live and breathe advertising and promotion. We silently critique every promotion we encounter. We name fonts as we pass billboards on the highway. We study the emotion of color and imagery. Our love notes to our significant others all contain a call to action. We understand demographics, psychographics, and infographics. We know all about C.R.A.P. (Contrast, Repetition, Alignment, and Proximity). We are storytellers and visionaries. And the best among us are highly educated, incredibly experienced, and have proven ourselves time and time again.

The truth is that marketers are worth every penny we charge and countless more pennies toward your bottom line. A marketer has at his disposal an insane number of resources to ensure you present the best possible image. We know the designers, the copywriters, the web designers, the analysts, the media buyers, and the videographers. Better still, we manage the entire group so that the entire vision of what you need to accomplish stays consistent and helps you build a strong brand. We evaluate your results, make informed decisions, and otherwise make your life easier and more profitable.

When you look at the breadth of everything a marketer performs, it doesn’t make sense to haggle over pennies or outsource your projects across multiple vendors who are offering the lowest possible cost. Yes there’s a difference between a $150/hr marketer and a $20/hr marketer. It’s called expertise. A $20/hr marketer charges that because that’s all he can get; if the quality of his work were better, he’d charge more—and he knows it. Caveat emptor applies. If you make your marketing decision based on the bottom line of a quote you’re evaluating the criteria incorrectly. So why the gripe over cost?

There’s a few reasons:

A competitive marketplace. There are a lot of people out there who call themselves graphic designers. And many graphic designers consider themselves to be marketers. This abundance of providers drives down cost. This does not infer quality of service, only that with many options available, a potential client unable or unaware of how to gauge expertise makes the choice based on the simplest means possible—the bottom line.

Access to software. The cost of software is relatively affordable. Most professional software packages cost around $1000-$1500 depending upon the programs included. Many of the programs can be purchased individually, or have ‘lite’ versions available at a reduced cost. Adobe’s Creative Cloud provides access to its entire suite of creative software for $50 per month. The affordability of software empowers people—often incorrectly—to believe that they can produce the same results as a professional designer.

Pride. Let’s face it, no one knows your company better than you. You’ve built this business from the ground up and no one will be able to do a better job promoting it than you will. As mentioned earlier, this is a conceit, not a fact. The truth is, most business owners are better at developing their product than they are at marketing it. Marketers on the other hand, are skilled practitioners at understanding the many components to effective advertising and promotion. From research to strategy to design and execution, a competent marketer will have a greater expertise in managing a multichannel campaign and presenting clear and consistent messaging than will the owner of business.

Marketers, designers, and web designers have fought this battle for as long as businesses have sought to make money. We’re always battling the association between cost and value, with the former often winning out over the latter. It’s only getting more challenging in this difficult economy where every cent counts. That’s where value, experience, and results count. Going cheap is not a sound financial investment. It’s the difference between buying a Toyota and a Yugo; flying first class and flying standby. If you need to get somewhere—improved visibility, increased sales, expanded market penetration—you have to invest in your company and its exposure in a meaningful way. It’s been proven time and time again—you cannot cut corners on your way to profitability.

This isn’t a call to overspend, it’s a call to spend wisely and do so with the intent of marketing your company the right way and investing in those who have a real chance to take your business to the next level.

A logo design for $50—run away as fast as you can.

A website for free? – kiss your branding and individuality goodbye.

A purchased mailing list—prepare for no response.

If you have made the commitment to market your company, also make the commitment to do it the right way and hire the professionals with the track record to help you obtain your goals. Paying reasonable rates isn’t an expense, it’s an investment in your company’s success. Partnering with a company with whom you feel a rapport and a shared sense of style, goals, and direction is especially important. These companies work for you and align their approach to match your capabilities in both budget, style, and work ethic. Find one and the issue becomes less about cost and more about value—that’s when you’re in the right mindset to effectively budget your market and properly frame the bottom line continuum.

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