How much money should you spend annually on marketing if you want your financial advisory business to grow?
Why did Coca Cola spend FOUR BILLION dollars last year on marketing? BTW, that huge number represents 11.2% of Coke's entire global gross revenue.
Coke is a Marketing Icon
Coke is one of the most recognized brand names on Earth so much so that it no longer sells “soda,” it sells a brand experience. There may only be a handful of people alive that haven't heard of this iconic brand. So, why continue to spend so much moolah to promote a brand that everyone already knows? The simple answer is that they need to continue to spend money to stay top of mind so that they don't lose market share to Pepsi.
The more pressing question is why do so many financial advisors think that they don't need to spend money on marketing?
Stop Being Cheap with your Marketing
The average advisor that does have a marketing budget rarely spends enough. It is quite interesting to Google "how much should a financial advisor spend on marketing." There are myriad of opinions but the prevailing thought is somewhere between 2% and 10% of total annual gross production, with more of the "experts" leaning towards the 2% number.
WRONG, WRONG, WRONG!!!
I can't say it emphatically enough: this is complete hogwash.
If Coca Cola, one of the best-known international brands, spends 11.2% of gross revenue on marketing to beat off competitors, you should feel embarrassed to spend at a rate lower than them. After all, I am willing to bet that you have not established a brand in your community that parallels that of Coke.
According to a 2016-2017 Gartner Research study, companies are now spending roughly 12% of annual revenue on overall marketing. The industries with the largest spend are education at 18.5% and consumer services at a whopping 17.4%.
Wait a minute, did I just say consumer services companies on average spend 17.4% of their revenue on marketing? Hmm, aren't we in a consumer services business?
Look, the reality is that you need to spend money to make money.
Start slow, test your marketing to make sure that you have an acceptable ROI . Once you have established a proven process and conversion ratio, turn up the crank.
After all, if I told you that I had a machine that if you put one dollar in and three to five dollars will come out the other side, how much money would you stick in that machine? I am guessing that you would will back up the dump truck.
What would Salesforce do?
Salesforce is a great example. They invest 49% of their revenue into sales and marketing! 49%! Think about that for a minute. That’s nearly half of the $6.67 billion in revenue generated in 2016.
What did they get in return for such a massive investment? They got growth!
In 2016 Salesforce grew by 24% over the previous year. Learn from the techniques used by big business to scale and achieve massive and sustainable growth. Start treating your financial advisory practice like a business. Start spending money to grow your business, or you might find yourself on the wrong side of the cut line.