DO this Before the Budget is DUE
THREE questions to ask yourself before the budget is due.
And no, “How much should I spend?” is not the first one. That’s the last one.
1) WHO are they?
The first one is: WHO am I trying to reach. Here at Lehman’s, we have a diversified customer base, from rural homeschooling moms, to second-home owning city dwellers, to missionaries and Peace Corp workers, to environmentalists and even the chronically nostalgic (since we sell brand new, but old-fashioned merchandise all over the world).
The demographic search can be the most time-consuming, but the most interesting and enlightening piece of your budgeting process. Case Study: We realized that everybody eats. That’s right, all humans consume food. We sell a ton of food processing items (juicers, steamer, noodle makers, cider press, canners; you get the idea). Therefore, that is one common strain.
However, some people have massive gardens covering acres of countryside. Others have two tomato plants in copper kettles on their front porch. Here, the demographic diverges. Past buying behavior can often tell you who your customers are – male, female, wealthy, home owners, etc. You can take this data and add a psychographic overlay to find other similar customers. You can use hard data (zip codes, for example), as well as softer data (e.g. social media profiles).
Do I need to say Deep Dive into Big Data?
2) WHERE are they?
Once you have your demographics (personas, if you will) determined, you need to find out where they are. What are they reading and listening to; where are they surfing on the web; how do they spend their money and their time. There are vast data resources to help gather this information. But some of it will always be intuitive. Service providers can be very helpful as you gather data. They typically know who their customers are – so when selling you their services, they can provide insight.
3) HOW much should I spend?
Then, finally, the third question is…how much should I spend. The ideal situation is to spend where the ROI is the best. However, it is also necessary to divide the marketing budget into “hard” and “soft” activities. The hard activities, such as on-line and past buying behavior are trackable. The soft activities such as community relations, and outdoor and broadcast media, will be difficult if not impossible to track. Know the difference. And then get over it.
After two to three years of intense study on the demographic (WHO), their behavior (WHERE), and your spend (HOW MUCH) you will have historical data to meet your strategic goals.
You don’t have to do it all today. But you do have to do it.
Posted by: Glenda Lehman Ervin, Vice President, Marketing and Owner at Lehman's and NEMOA Board Member