In my opinion, there may be no other area that small business owners are missing out then integrating their accounting and marketing. The wealth of information that accounting data can provide to small business marketing efforts can help save money and be more effective.
I know there are a lot of jokes out there….mixing accounting and marketing personalities can be like toothpaste and ice cream (you can figure out which is which). However, the best marketing people I have worked with have a thirst for good data they can use. On the flip side, the best accounting people I have worked with can see how they can use the data they are compiling to help other areas of the business.
In today’s day of social media, marketing is changing more quickly than at any other time. Gone are the days of placing an ad in a newspaper or worrying about your yellow page ads. OK, those days might have been gone 20 years ago. Never the less, when I first started marketing my small business, the previous owner was spending $6,000 per year marketing in a local parenting magazine. The first thing I did was send out a coupon through this magazine to see what returns we were getting. The results were amazingly bad. Our return on this investment was less than stellar (and actually, less than positive).
With social media, you can now calibrate your ads to reach the exact audience you want to reach. With emails, you can send specific messaging to certain customer groups. The marketing abilities small businesses have today are amazing. However, in order to fully utilize these tools, small businesses must interpret data so they can market effectively and efficiently. Maybe that is why only 25% of small businesses are investing in online marketing (which is a huge opportunity for those small businesses that do).
Below are three ways that you’re marketing and accounting can work together to create a well-oiled marketing machine.
Analyze Customer Data to Reach Your Ideal Customers
Most businesses are collecting a treasure trove of customer data but doing nothing with it. For instance, if you have a loyalty program, odds are you are collecting some tidbits of customer data. Do you accept credit cards or have an e-commerce site? Then you are collecting data. Even your basic Facebook page can tell you a ton of information about your current customers.
What type of information am I referring to? Information like zip code, age, distance from your store, geographical area, times visited your store, and so much more. Imagine if your marketing team could zero in on certain zip codes in Google AdWords or Facebook to market to customers and know exactly what they are doing. Maybe your small business is not getting customers from a zip code just to the west of your location. You can blanket that area with one ad. You could then target other zip codes where you are getting business from with a different ad. Most small business owners are blind when it comes to this sort of targeting and are spending money on their “best guess” of where their customers are or are not.
I often talk to my marketing team about “building a better customer”. In other words, how do we use the data we have to increase store visits and ticket price each time a customer visits. In order to do this, you need to have information on who your best customers are, what characteristics they have, and then determine the best marketing strategy to go after them.
While 72% of businesses focus on increasing revenue, only 50% focus on establishing great customer relationships. Have you ever heard the acquiring a new customer is so much more costly than increasing sales from a current one? Look how much you spend on email marketing versus Facebook/Google and you’ll quickly begin to see why this is true. Your accounting should be able to help you identify great customers and build better relationships.
Develop Better Marketing Plans
If there is one thing accountants are good at, it is planning. No time for jokes…okay, maybe one…..An accountant once got locked out of his car so he went and bought a clothes hanger to unlock his door. After unlocking the car, he stuck the hanger under his seat and thought to himself, “Now if this ever happens again, I’ll have one”.
In all seriousness, only 15% of businesses operate with a marketing budget. This is somewhat amazing since the range small businesses spend on marketing varies wildly. Even scarier is that a small business might make a decision to spend thousands of dollars on a marketing strategy but have no idea what the impact will be on their bottom line or any idea on how they will track if it is successful.
According to a study by Sageworks, data shows that the average small business invests about 1% of revenue in marketing. In the retail industry, the average jumps to 4%. While this might not sound like much, for a business of $400,000 in revenue, this is between $4,000 and $16,000 in expense each year.
When marketing and accounting are sitting down, the accounting team should be able to lead the marketers through a series of strategic questions in order to help them develop a plan. They should be asking questions such as:
- What has worked well for the business before? Why do they think those tactics worked well?
- What are the marketing objectives? Are they to grow the business and if so, by how much?
- What are the forms of media and places to advertise that meet those objectives?
- Where do competitors advertise? What investment are other competitors or business in your industry making in marketing?
- How is the business going to track whether investments in certain marketing efforts are successful?
Tracking Marketing Successes and Failures
One thing my accounting brethren don’t understand is that not all marketing is going to be successful. There is both a science and an art to marketing and there will be failures along the way to figuring out what will be a successful formula for any small business.
Another dirty little secret is the results of all marketing will not be directly measurable. For instance, when Budweiser runs a commercial during the Super Bowl, they often do not have a way to measure the direct impact of that spending.
However, the vast majority of marketing efforts can be measured. The tools that Facebook and Google AdWords give you can help you measure the direct impacts of that marketing in most cases. Do you want to know how successful your website is? Look at Google Analytics. Many marketing campaigns, no matter the medium, can be tweaked so that the success of them can be measured. Without measuring the success of marketing efforts, a small business will have no idea if their efforts are working or if they would be better off lighting their money on fire.
And lastly, while the direct impact of the Budweiser commercial can’t be measured, the impact of “brand” marketing in totality can be measured. If a small business spent 1% of revenue to generally market their brand this year and the business’s revenue stayed flat, that might indicate a problem with the strategy (or it might not, but either way, you should know why).
If there is one thing us accountants are experts in, it is determining how to measure things. Your marketing and accounting functions should be constantly working together to determine how to measure the success of certain marketing campaigns.
Conclusion
Hopefully, you have come away with a few ideas of how these two important business functions can work together. This is just scratching the surface. It is often best to get everyone in one room and brainstorm ideas.
If you would like to discuss your goals and how Krieger Analytics can help your business grow to achieve them, contact us now. What are you waiting for? Phone calls are always free!