This article was written by Mike Gastin and published at his blog mikegastin.com.  It is published with Mike’s permission.

Clients ask all the time: How much money should I be spending on marketing?

On the surface it’s a basic question. Anyone that’s ever put a budget together knows that it helps to have an idea of how much to set aside for each function. One easy way to do that is to go by experience. “What did we spend last year on advertising?” Another is to go by an industry rule of thumb. “Marketing should be 5% of your overall budget.”

When you dig a little deeper the question has another aspect to it. It’s usually asked to answer a deeper question that goes beyond preparing a sound budget. Facility owners are trying to answer,Am I doing this right? It’s an important question to answer. Spend too much and you’ve given your ad agency and local television station money that could have been spent on building your business or your personal wealth. Spend too little and you might sit with empty beds, losing money and running in the red.

The answer you get will depend on who you speak to. If you ask an advertising agency, they will give you the standard answer that you should be spending between 5 and 20% of your budget on marketing. Of course, since they’re in the business of making ads, that money will go to creating and running commercials and print ads. If you ask fellow owners and administrators, you’ll get answers that are all over the place. Mainly this will be because most of them are applying a reactionary scattershot approach to advertising and because they might be a little hesitant to give you an honest answer for fear of looking like they are doing it wrong, too.

So, how do you know how much to spend?

I’m going to give you a very simple answer. My answer is going to sound a little cutesy, but hear me out.

My answer: You need to spend as much or as little money as it takes to have the right census.

I know that might make your eyes roll, but let me explain.

My answer has an assumption at its core: you’ve developed and are using a strategic marketing plan. A marketing plan in critical in determining how much budget you need to commit. (Read my post on the seven reasons you need a strategic marketing plan for more info.)

Without a plan there is no way to determine how much budget to allocate. You’re just taking a guess and hoping for the best.

Once you have a plan in place you have a roadmap for the year. You’ll know what strategies you’re committed to, you’ll know what tactics you need to employ to execute those strategies, you’ll know what results you can expect and you’ll know how much money that will take. And the beauty is, you’ll have the ability to evaluate as the year progresses. Not only will you know if you’re budget is effective but you’ll know why it’s effective and why you need to spend more or less money to meet your goals.

With a plan you’ll be able to know exactly how much money it takes to have the right census. Every day.

So, if you’re trying to figure out how much money you should be spending each year on your marketing efforts, please do yourself a favor and back up for a minute. Put that question aside and do what it takes to get a sound strategic marketing plan in place. Once you’ve done that you’ll find it’s much easier to answer how much to spend and you’ll have the confidence that comes with knowing you’re doing it right.


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Finally: If you know anyone who is looking at emergency call systems I would appreciate the opportunity to talk with them about Vigil Health Solutions.