Homebuilders frequently ask me how much I think they should allocate for their marketing budget. I find that, if they’re asking, they’re probably not spending enough—or on the right things.
One percent of your gross revenue—GROSS, not net—is a good rule of thumb. Now, if you’re grossing $10 million a year, then your marketing budget should be $100,000. Before you squirm, let me share a little story with you.
Bob prayed over and over to win the lottery, but nothing happened. Finally, he bellowed, “Lord, why have You forsaken me?”
Thunder clapped in the sky. A voice boomed down from the heavens and declared, “Help me out here, Bob. Buy a ticket, will you?”
So, if you’re going to complain that your marketing isn’t getting you where you need to be, then maybe you’re not taking the steps you need to make it happen.
Start by allocating a sufficient amount in your budget. One percent is a good figure. If you’re trying to expand—into a new market, for example—you might need to increase the figure. If you have some brand building to do—maybe the competition has gotten tougher—you should also consider a more aggressive marketing budget.
Remember, marketing is not an expense. An expense refers to spending money that delivers no appreciable return. An investment generates value. Consider your marketing budget like any other investment in your business. Leverage its power to grow your new home sales by generating more interest, inquiries, leads, and referrals that you can convert into revenue.
Then determine how to use the marketing funds to get the maximum return on investment. But that’s the subject for another post. Stay tuned….