Small Advertising Budget? Why Low Cost Advertising Can Rock Your World

When you're planning your business, deciding where to allocate your income is one challenge you'll face even before you open your doors to customers. Although it could be considered contrarian thinking, in this article I make the case for a smaller advertising budget.

People who have spent time on a sales floor understand that there’s a difference between sales and marketing. Marketing increases awareness about your business and brings people in the door (or onto your site). Sales is associated more closely with the transaction. So marketing brings the customers in the door and sales moves the products out the door.

Lately I was talking to a medium sized business that has recently reached a maturity plateau following a time of extreme growth. We spoke about their business and I was shocked to discover that they had made a decision to increase their marketing budget and decrease their sales staff.

I think this is a mistake and I would encourage any business to consider doing exactly the opposite!

The reason is that advertising serves the marketing side of the business; it does not sell your product. And it’s not the people coming in the door that drive your business; it’s the number of purchased products walking out of your door that drive your business.

When marketing budgets are increased and sales staff is decreased, a few things happen:

  1. You’ll end up with a staff that doesn’t market because it’s already done by a “department.” This resembles “throwing money at the problem” thinking. Rather than encouraging your sales staff to be out making sales calls, they’ll be relying on television commercials to send customers in.
  2. Your smaller sales staff will likely be much busier, resulting in poorer service. Poor service means less referrals from customers who may not be satisfied with the attention (or lack of attention) they received during the transaction.
  3. Bigger budgets mean ineffective advertising because a bigger budget often means that businesses are willing to try more expensive media (like television and radio) where once they shied away from those things.
  4. The sense of aggressively going out to get business is replaced by a “let’s wait for business to come to us” mentality.

Instead, choose to maintain only a small advertising budget and a larger, more aggressive sales staff. When that happens…

  • Everyone is a marketer. When you make the top-down decision to reduce your marketing budget, you put the responsibility for marketing in the hands of every one of your staff; which is something they should be doing.
  • You have to get creative. With a lean advertising budget, you don’t “default” to expensive but often ineffective television ads. Instead, you’re willing to consider creative (and often more effective) marketing strategies.
  • You can spend your money elsewhere. There are two places that you should be spending most of your money: on improving sales and improving customer service. These two parts of your business increase the sale of products and the return of happy customers and their referred friends to you for more business.

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