Even in normal years, it is often a difficult task for an organization to confidently budget for marketing. As we move into 2022, with uncertainty still looming but the sunrise of exceptional growth in the year ahead teasing our senses, it is much more difficult. As a travel company that is focused on international sales, one is trying to emerge from almost two years of minimal revenue. For those specialized in domestic travel, it has been the exact opposite for most – a windfall of epic proportions.
The question for both still looms – how much should you invest in sales and marketing efforts in 2022? Is it the proverbial 5% of revenue, or the more often-seen range all the way up to 20% or more for more margin-rich entities? How should you allocate the expenditure across digital vs offline, advertising and media, resources and software?
Moving into 2022, if you have managed finances well and have some extra bandwidth due to PPP forgiveness by the U.S. federal government (or other government funded program) and low overhead, it is a good time to increase your investment in marketing to get ahead of the projected travel explosion. However, it is crucial to be strategic, targeted and yes, still frugal about the spend.
Many companies spend needless funds in the perpetual search for the magic eight ball answer, whether that is new digital platforms, a new website, a new CRM, new branding, or new sales protocols. However, that is often done before performing an audit of the existing efforts, and then prioritizing next steps based on your customers’ journey, the mission critical gaps and the greatest projected benefit. To maximize your time and effort, it is essential to understand where you are, what has been successful with your audience segments, and what will enable you to truly deliver upon their desires.
What do you audit? Start with digital and sales and review the spend against the success metrics. Even if you have very little data, you can assess engagement of your audience against the effort. Some examples of areas to audit for digital and sales include:
Digital Success of:
- Emails: targeted vs mass
- Website: content & conversions
- Blogs: website hosted vs third party
- Social media
- SEM & SEO
Sales Conversions with:
- Active travelers: define active
- Inactive travelers
- Prospects within database
- New travelers: define where they originated
Establish a Sales Funnel
Now that you’ve identified what you’ve already done, you need to align it and your marketing strategy against your customer’s journey. When you create your marketing budget breakdown, it is essential to establish your sales funnel first. Your sales funnel is a critical component of your marketing budget because it determines where you’re going to spend your money.
Your sales funnel is the process your audience goes through to become a paying customer. Typically, it will have four stages with inclusions such as the example shown.
Once you have performed the audit and defined the customer journey, it is finally time to assess the financial and resource investment the company can dedicate to begin the investment. The good news is that it is likely that you will find one audience segment that is overperforming, and that it does not need to be complicated.
The vast majority of travel companies, regardless of audience, have seen an exceptional increase by a specific audience segment – the existing database – and via digital first programming. The future of travel, especially for small and mid-size companies should be focused on maximizing the conversion of the database through digital practices targeted for your specific audience. The old adage that the acquisition of a new client is five times more expensive than the retention of an existing one is still a good rule to plan by. However, it’s crucial to assess the lifetime value of the client, not just the immediate return.
It is also essential to maximize resources. Integrate sales and marketing more than ever. Utilize your team as cross-pollinators rather than hyper-specialized. Today, the ambidexterity of the team will make your company more efficient and innovative.
Digital First Pivot
Digital is the new entry for your company if it wasn’t before and cross-pollination of messages and resources is your secret sauce. Digital media makes up more than 50% of marketing spend and for good reason. It is less expensive, more expansive and its GTM (Go-to-Market) is nimble and quick. As a travel company moving into 2022, it is a safe calculation to allocate 50% of marketing expense against digital.
Behind that expenditure should be content – resources internally, a freelancer or agency – and software deployment. As mentioned, this can be achieved through an internal hire focused on digital media, a consultant or agency that can charge from $500 - $10,000 per month on average for strategy and execution. In addition, you will need to budget for the software, ad buys (for SEM/PPC and social media), and any development.
Some ranges of prices for a travel focused B2C company are:
- Content marketing: $2,000 – $20,000 per month
- Email marketing: $300 – $2,500 per month
- SEO: $500 – $20,000+ per month
- PPC: 5-20% of monthly ad spend
- Social media marketing: $250 – $10,000 per month
When developing the strategy, the most effective way to proceed is through multi-use messaging, whereby content is distributed across the digital channels in various forms such as email, blogs, social media, and partners. This not only increases efficiency but also ensures consistent brand messaging as viewers scan their various digital channels.
As noted at the beginning, 5% of marketing spend to revenue is still valid as a maintenance mode. However, for those seeking growth especially in B2C markets, it is recommended to increase the ratio toward 10% while B2B businesses would be adroit at increasing by 1-2 percent. For start-ups, that percentage of spend doubles for effective brand presence, awareness and ultimately conversion. In reality, the marketing spend ratio truly comes down to where your company is in its journey with its guests and where your priorities lie.
In summary, there is no magic eight ball answer when it comes to marketing in any year, across any industry. However, by keeping it simple – answering the needs of your targeted client base, communicating with them in the way they consume, and focusing your efforts against the results; you will be successful in your efforts from a marketing, sales and financial sense.