Marketing for Accountants – how much to spend?

This the number one marketing question I’m asked, “How much should we spend on marketing our practice?” which is usually followed up by “What are other firms spending!?”

The short answer is, ‘it depends on many variables’.

The longer answer is, as a rough guide, successful, growing firms commit between 7-10% of their turnover into their marketing budget each year. In practice, I have seen anywhere from 2-3% from firms who are experiencing very little growth to 20-25% when they are launching a new service or are rebranding, launching a new website etc.

Clarify your objectives first

Before assigning any money to your marketing activities you need to map out what your objectives are. For example:

• Are you trying to attract new clients?
• Do you want to raise your profile in your local area?
• Do you want to retain existing clients?
• Are you looking to rebrand the practice including updating the website, marketing literature etc.?
• Who is your target audience?

The best approach to take is to create a marketing strategy for your firm. Click here to see what that should contain and how you can improve the success of your marketing by having a plan to work from.

Factors to consider when setting your marketing budget

There are many variables which will affect the type of marketing activities you implement and the costs associated with them. When reviewing and setting your marketing budgets, consider the following:

1. How quickly do you want to bring new business in? Entering into a new market or launching a new product or service would require more marketing budget than say a drip feed approach in your current marketplace.
2. What type of marketing activities will you be carrying out as part of your annual plan? If advertising in regional newspapers and magazines is your plan, this will cost a lot more than implementing a proactive client referral campaign.
3. What one-off costs are you likely to have? Redesigning your website, creating a new marketing brochure or rebranding are all likely to be ad hoc costs that you won’t need to budget for each year.
4. What staff costs or outsourcing costs do you have which are directly relevant to marketing?
5. How much does your average client spend with you per year? Don’t just consider how much a client may spend with you in one transaction, try to calculate how much they spend with you per year, or perhaps longer. Then consider the lifetime value of that client, rather than how much a mailing and a brochure may cost to send out to attract them in the first place.
6. How much can you afford? There’s no point in devising a marketing campaign that will cost £10,000 per year if you’ve only got a £2,000 to spend. In this instance, you need to reflect your choice of marketing activities on what you can actually afford.
7. How much time can you commit to the marketing process? You can spend all the money in the world, but if you are not committed to achieving your marketing objectives, it will make it harder to get a good return on your marketing investment.

The key is to define what you want to achieve from your marketing strategy, identify how much you are prepared to spend on achieving these objectives and then choose your activities that will help you achieve both your objectives and within budget. However, if you cannot afford to spend lots of money on your marketing activities, do bear in mind that it is likely to take longer for you to achieve your goals unless of course, you get lucky!