What percentage of sales should an SMB allocate to marketing?
The percentage of sales that a small or medium-sized business (SMB) should allocate to marketing investment can vary depending on several factors, such as the industry, target market, growth goals, and competition. However, a commonly cited guideline is to allocate around 7-8% of gross revenue to marketing and advertising efforts.
This guideline is based on the assumption that SMBs need to invest in marketing to achieve sustainable growth and compete effectively in their market. Investing too little in marketing can limit a business’s visibility and growth potential, while investing too much can lead to wasteful spending and inefficient use of resources.
That said, the percentage of sales allocated to marketing investment may need to be adjusted based on specific business goals and circumstances. For example, businesses in highly competitive markets or with aggressive growth goals may need to allocate more resources to marketing to gain market share and build brand awareness. On the other hand, businesses with strong existing customer relationships or low overhead costs may be able to allocate less to marketing and still achieve their goals.
Ultimately, SMBs should consider their unique business goals and circumstances when deciding how much to invest in marketing and should regularly evaluate and adjust their marketing strategies based on performance and ROI.
LMSG believes a fractional Chief Marketing Officer (CMO) can bring a wealth of experience and expertise to SMB’s. They can help a small business develop a comprehensive marketing strategy, increase brand awareness, improve customer relationships, and make data-driven decisions. A CMO can be an invaluable asset for a small business looking to grow and succeed in today’s competitive market.
For more information and a free 30 minute 1:1 CMO Consultation click here.