A recent survey shows that the economic uncertainty caused due to inflation resulted in a dip of 4% in profits for small business owners. With the looming global recession and a shrinking economy, it can be tricky for franchise businesses to ride the waves of coming uncertainties. As more and more consumers are expected to cut back on their spending, business owners must brace themselves for a possible decline in overall revenue and profitability.
One way businesses can ensure continuity during the economic downturn is to rethink, reimagine, and redefine their marketing plan in such a way that every dollar spent on marketing drives maximum ROI. If you’re someone who owns a franchise business and wondering how you can make the most from your marketing budget, this blog is for you.
Ways to optimize marketing dollars to drive maximum ROI
According to a report by the International Franchise Association (IFA), the franchise industry is expected to grow by 5.8% in 2023, with an estimated economic output of $477 billion. Which means more competition, a crowded industry, and hence businesses need to get creative with their marketing to cut through the noise. However, budgets are limited and one needs to plan smartly to make every dollar spent worthwhile.
One of the most effective ways to do this is through a well-planned marketing budget that can help franchise businesses easily reach their target audience, increase brand awareness, and generate more leads.
- Set clear marketing goals
The first step to make the best of your marketing budget is to begin by reviewing the overall strategy of your business. Evaluate the goals you’re trying to achieve through your marketing efforts. Whether the primary goal of your franchise business is to increase brand awareness, generate more leads, or boost sales. Doing so will help you determine the marketing methods that will work best for your franchise business and can enable you to measure how effective your campaigns are. When it comes to setting goals for a business, those should be SMART (Smart, Measurable, Attainable, Realistic, and Timely).
For example, if you run a restaurant franchise business, a good goal might be to boost sales by 20% over the next six months. This goal is specific, measurable, and includes a clear period, making it easier for you to determine the performance and success of your marketing efforts.
- Invest in the right marketing strategies
Businesses that don’t invest in advertising consecutively for six months witness their average brand awareness decrease. In today’s tech-savvy world where most consumers continue to spend more time online, promoting a business and creating brand awareness is no longer a tough nut to crack. Leveraging digital marketing strategies such as paid advertising, content marketing, social media ad campaigns, email marketing, etc., you can easily reach your target audience in no time and convert them into paying customers.
In fact, as per the survey conducted by the Wall Street Journal, the average CMO allocates more than 75% of its marketing budget to digital marketing activities. Investing in digital marketing strategies not only undermines their efforts but also enables them to effectively generate the highest revenue for their business and get the most out of their marketing spending.
- Measure and optimize your campaigns
Measuring the effectiveness of your marketing campaigns is essential to understand how your efforts are impacting the bottom line of your business. Keeping track of key performance metrics like email open rates, website traffic, conversion rates, etc., can help you identify which campaigns are driving results and which ones need to be optimized. Using this critical data, you can refine your marketing plan over time, relook at strategies that require more spending and make informed business decisions to improve your return on investment and profitability.
- Focus on after-sales marketing
Research shows that acquiring a new customer is 5x more expensive than retaining the existing one. On the other hand a 5% increase in customer retention rates can increase a business’ profits by 25% to 95%. This means, as a franchise business owner, your primary focus should be on nurturing your relationship with the customers who have already purchased from you. To achieve this, you need to allocate some percentage of your marketing budget for after-sales activities like email marketing, customer service, newsletters, etc.
Doing so will not only help you retain your customers for longer, but it’ll also enable you to turn your loyal customers into brand ambassadors who will market your business to their community. However, this doesn’t mean that you don’t invest in acquiring new customers. Design a marketing strategy that focuses on acquiring new ones and retaining old customers and create a strong brand presence for your franchise business in the market.
- Follow the 70/20/10 rule
Use the 70-20-10 rule. The 70/20/10 rule says that whether you own a small or big franchise business,
- 70% of your budget should be allocated to carry out strategies that work well for your business.
- 20% of your budget should be utilized in carrying out marketing strategies that contribute to the growth of your business.
- The remaining 10% of your budget should be allocated to the activities and experiments to check if they work for your business or not.
Using this rule, you’ll not only be able to drive positive ROI for your business, but you’ll also be able to try out experiments that can lead to its future growth.
To sum up
The year 2023 is expected to be full of uncertainties. However, as a franchise business owner, you can leverage effective marketing strategies to alleviate the impact of a potential economic downturn. Whether it's a global recession or pandemic, if you have a strong business plan with a well-devised budget, there are no obstacles you can’t overcome.
All you need to do is define your business goals, use the right marketing strategies to achieve them, establish strong relationships with your customers to retain them for a long time, keep track of what’s working and what’s not, and make informed business decisions. At the end of the day, that should be the goal of every franchise business to make the most out of its marketing budget to make it thrive and succeed in the highly competitive marketplace.