A distinct sense of direction will lead to greater profitability.

Knowing where to invest your marketing dollars and how those dollars perform are critical to marketing success. Start 2012 off with a marketing budget calculator (this one or one you create) to help you get on the right track.

A guy is doing a fine job driving through town. However, his wife tells him, “Slow down, you’re going too fast,” and his mother-in-law in the backseat says, “Speed up to get in the left lane or you’re going to miss the turn!” He’s had enough advice and shouts, “Who’s driving? You or your mother?”

You can get too much advice, no matter how well-intentioned, even though it’s clear from this example the guy should’ve let both women out several miles back - near a mound of fire ants.

When it comes to marketing plans, I have found most plumbers avoid them like a butane torch to the armpits, and those dispensing the advice just might have a financial stake, such as the cute-sounding voice who promises her media (regardless of what it is) “deserves” more of your budget. What a coincidence.

If you’re going to pick any time to review a marketing budget, it’s now. Forget that we’re staring at January. Things have changed. In fact, if you’re still using a marketing budget and plan that looks anything like 2007, it is significantly out-of-date. Here are two ways to get started.

  • Look back. What happened last year? Note your three biggest sales months and three slowest sales months. Usually, they are both caused by the same positive or negative forces (see below).

  • Look ahead. Set goals based on last year’s numbers. Follow the S.M.A.R.T. acronym: specific, measurable, attainable, realistic, timely. Most importantly, share them with staff who can help the team with a plan to achieve.
    Your marketing budget is the fuel to your marketing plan. Let’s look at three things that will impact your big and small months.
      1. Weather. If weather created a “positive” condition in a predictable pattern, start your marketing for this condition 21 days prior to estimated arrival.
      If weather created a “negative” condition, schedule “gap marketing” to your best targets (customers) with the most attractive offer (service specials, limited discounts) to fill in the gaps. You must be aggressive when you know the decline is coming.

      2. Marketing. If you had a “positive” campaign, focus on merely improving the same offer, the target and the media spend to broaden the appeal. Marketing is about improving what works, not reinventing the wheel with guesses.
      We’ll have clients run our “Plumbing Inspection Postcard Series” and do great. The next year, they ask, “What should I run?” and our answer is, “The exact same thing.” Walmart has been “rolling back prices” for seven straight years. The Lexus “Christmas Big Bow Event” has been around for six years. They’re tweaking and improving, not guessing.

      3. Economics. Were there conditions for rebates, financing or discounts that created positive results? Did you offer a water heater trade-in? Was there a maintenance agreement renewal special that worked? Revisit and engineer to make sure those reoccur again this year.
      If the general economics dampened your sales, look at how other retailers are flourishing by bundling services, offering payments, lowering the initial installment, building discounts for loyalty, etc. There are literally dozens of ways to reduce the “pain of payment” while still getting paid.

  • Marketing made personal

    Marketing budgets are not one-size-fits-all. According to the Chief Marketing Officers Council, 45 percent of marketing budgets are under 6 percent of sales revenue. Only 2 percent spend above 20 percent.

    Our marketing budget recommend-ations for plumbers range from a low of 3.5 percent of total sales to 10 percent. The higher the number, the more aggressive the acquisition role. The lower the number, the more aggressive the retention role. That being said, let’s take a closer look at some plumbing marketing platforms.

    Aggressive- You’re a contractor who is hard-hitting, insistent and uncompromising. You invest generously in marketing and advertising because you want more market share. Direct response is your favored ad type. If this is you, your personality calls for you to spend 6 percent to 8 percent of total sales on your marketing budget.

    Moderate- You’re a “meet-in-the-middle” type of contractor. You tend to look for balance, create a buffer, serve as an equalizer. Your marketing investments are consistent. You use aggressive direct response, but keep it balanced with all-purpose and image. Your personality calls for you to make a marketing investment of 4 percent to 6 percent of total sales.

    Conservative- You’ve built a large and active customer base and a long-standing, solid reputation in your market. You run minimal direct response campaigns and are more concerned about image and retention. Your favored messages are dependability, quality, reliability, honesty and integrity. With your personality style, your comfort zone for marketing investment is 2.5 percent to 4 percent of total sales.

    So what’s changed in the last few years?
    • Yellow Pages funeral? Surprise. Although 36 percent of home service contractors have greatly reduced or completely exited the Yellow Pages, it still represents a prime market for up to 40 percent of the 55-and-over age group. You’re advised to whittle your budget into the manageable 16 percent range (or less, according to what your calculator numbers tell you) using a pure direct response ad.

    • Is everyone online now? Not yet, and it’s smaller than the word on the street would have you believe. Roughly 64 percent of home service purchases find the consumer online now (augmenting the decline of the Yellow Pages), but seek support media to make their decision. This includes online reviews and social endorsements.

      Big online warning: If you have not claimed your local listing, you are in serious danger of either losing it or diverting huge amounts of traffic that would - but can’t - find you. A 90-day test here found a plumber with zero leads (Graves Plumbing in Indiana) and after claiming and optimizing his listing, Graves pulled in 536 leads. Advice? Claim your listing now. One source to use is www.locallockforcontractors.com.

    • Is direct mail in the hospital? Actually, it has bounced back tremendously. Response rates for the same list still out-pull email (which has seen lowering response rates). Winterberry Group says businesses spent $44.9 billion on direct-mail campaigns, expecting a 5.8 percent increase to $47.8 billion due to the improved return. They say, “Marketers ranked direct mail as the most effective marketing driver of new customer acquisition.”

    • Is that you on YouTube? About 45 percent of businesses were planning to use online video in 2011, up from 28.4 percent in 2010. Getting short, inexpensive videos done on advisory, instructional topics will be one of “the” marketing moves for the plumbing market leaders in 2012. We have already produced 19 of these, and see no slowing down.

    • Who is getting social? Several people who are bored beyond recognition apparently. Digital Brand says 78 percent of companies are using social marketing, yet 41 percent admit to “no plan” for how to do the interactions. Translation: time-wasters. Use the “auto publish” feature from your blogs to repost to Twitter and Facebook. Quit spending half your life trying to scare up a handful of leads.

    No plan, no strategy. Not a good idea. The one thing that hasn’t changed is if you want to get where you’re going, you’ve got to have a plan.

    Have a superbly profitable 2012 - all according to plan.