To complete your marketing plan, you have to define your key performance indicators, create a marketing budget, and develop a contingency plan.
Key performance indicators
Key performance indicators (KPIs) are metrics used to gauge how effective the business is in the execution of its marketing plan.
There are many KPIs you can use depending on your industry, your company, and product/service you offer. What is important is focusing on the KPIs that really matter in the long run and these are the ones that consistently and progressively contribute to attaining your marketing objectives stated in your marketing strategy.
The most common KPIs are sales, repeat business (or recurring revenue), brand awareness, and market share.
Sales are the most tracked KPI. Sales are monitored according to various key performance areas such as the following:
Using your furniture marketing business as reference, you may track sales of home and office furniture. The figures can tell you which contribute more to your revenue and which is more profitable.
- Home furniture
- Office furniture
In general, you may monitor sales generated from your offline and online campaigns. You can further break it down by attributing sales coming from organic and paid campaigns in case of online promotion.
For some companies, sales may be recorded based on the distribution channel they use.
- Direct marketing
- Channel distribution
Recurring business is an important KPI as it indicates consistency in revenue generation, which in turn helps in solidifying the financial viability of your business and gives you a good foundation for your income and cash flow projections.
Going back to your furniture marketing business, repeat sales from your key and major dealers will be the backbone of your business. You can project these repeat sales to increase progressively as you introduce marketing campaigns to improve business with these regular customers.
One of the primary functions of marketing is to increase brand awareness. As a business owner and marketer, you always find ways to improve your brand equity. You want to build a strong brand.
Brand awareness as a KPI is not always easy to measure especially for small business owners.
A progressive increase in sales over a period of time (at least one year) is an indicator. Attributing growing sales to brand awareness, particularly after a promotion campaign, will require certain tasks like trying to determine through a series of surveys (in-store or online) why customers are buying your product and/or if they have heard of your brand and if they are patronizing it.
Market share as a KPI can be determined through research and analysis of industry data over a period of time (at least one year).
An increasing volume of sales does not necessarily translate into a growing market share. It could be that your total sales is increasing year by year but your competitors are actually generating a lot more. Knowing your market share is important for long-term growth as you will know if you are losing or not market opportunities to your competitors.
At the end of each review period (weekly, monthly, quarterly, semestrally, and annually), you analyze results against targets and measures. Track the metrics regularly and record the findings.
You can determine which action shall have contributed positively to attaining your marketing objectives and which would not. You can then make the necessary iteration and tactical adjustments.
Over an extended period of time, you can determine what really works and what doesn’t. You can then make a strategic adjustment to improve performance in the long-run. It may include modifications in some key result areas as well as adjustments in your marketing budget.
This is the amount of money that you are capable and willing to spend in the process of implementing your marketing plan within a period of one year. Ideally, this sets your limit to every item of expense you expect to incur.
The total amount of marketing budget usually depends on the type of product/service you are offering, the size and stage of development of your business, and your industry.
Highly competitive or common product/service and relatively new and technical product/service require a bigger marketing budget to promote and build the brand.
A startup company will need a bigger marketing budget to make an initial foothold in a market that is competitive and with well-established players.
What are the usual items included in a marketing budget? Let us look at the following:
You have to hire a professional or an agency to handle your brand development from creating your brand message, story, collaterals, and communication.
You need a content marketer or an agency to formulate and implement your content marketing strategy – from developing content for your website, blogs, social media marketing, email marketing, and marketing collaterals to distributing these contents to reach your target audience.
Online advertising and promotion
To create awareness, encourage product/service consideration, and take purchase decision among your potential customers, you need to advertise online via social platforms and search engines. You need to hire good copywriters, creatives professionals, and online ads specialists to implement online campaigns.
Offline advertising and promotion
You may also consider advertising on the traditional broadcast media or non-traditional media. You can also conduct some offline promotions like participation in trade exhibits and events.
There is no standard insofar as determining the total amount of marketing budget is concerned. For a new company, it may be 15% to 25% of its projected annual revenue. This further depends on the amount of revenue being considered.
While many marketing plans that I have seen usually do not include this, I consider the contingency plan an essential part.
Your contingency plan should highlight any part of your marketing plan that has high-risk potential that may be beyond your control. It may consider scenarios such as losing your sources of raw materials or supply of your imported products. It can also include probable competitive reactions, like cut-throat pricing, as your marketing plan unfolds in the market.
The contingency plan gives you a foresight of the corresponding action plans to mitigate competitive reaction or consequences of events beyond your control.
I always welcome your questions, comments, or suggestions. Or, we can discuss your other business concerns.