MSP Marketing Budget
By Ian Richardson, Managing Partner, Richardson & Richardson Consulting LLC
Inspired by Thursday Process with guest Taher Hamid, MSP Camp
MSP Marketing Budget
I hate spending money on an effort and having it fail. I feel stupid and ask myself “Why did I spend all of this capital?” I feel foolish because I DID spend the capital and have little or nothing to show for it. I can become skeptical about future endeavors because of my past failures. I can even get discouraged and start thinking my efficacy as a leader is compromised. One of the areas I had multiple false starts at my old MSP was in the realm of marketing.
Creating an MSP Marketing budget is tricky. There are hundreds of tactics you can use, all of them with promoters advocating their efficacy. On the other side of the equation, there are plenty of advisors, self-proclaimed gurus, and “industry experts” who will all preach that a tactic will not pay dividends (usually while not so subtly suggesting you instead procure one of their products or services as an alternative).
Over the years, through research, peer conversations, and thought leadership consumption from people like Paul Dippel & Brian OConnell of Service Leadership, Gary Pica of TruMethods, and Brad Schow of ConnectWise, I’ve come down to a pretty way on how to create an effective budget for MSP marketing that is independent of tactics. That budget can support business growth on a steady, predictable, sane basis. It’s not going to deliver 100% year over year growth targets – but unless you’re at a sub $500K top line revenue figure, that’s not really a S.M.A.R.T. goal to begin with. Setting your MSP marketing budget starts with looking at your gross revenue.
MSP Marketing Budget and Gross Revenue
Marketing can be a spending black hole. My friend Taher Hamid from MSP Camp, a MSP marketing campaign company, shared on the Richardson & Richardson webinar series The Thursday Process that he never feels he’s spending enough on marketing. You can view him saying so in the video clip above. My instinct tells me that if you speak with 10 marketing professionals at ten MSPs, they’re going to express a similar sentiment.
The reality of it is that you could spend 50% of your gross revenue, and without proper ROI measurement, accountability, and the right strategy, you’ll still “not be spending enough.” But there is a floor, a solid figure to plug into your budgeting efforts once you’ve hit a certain amount of top line revenue.
That figure is $1M annual revenue, and the percentage is 8%, or $80,000. That’s a lot of cash for a million dollar company to expend, and I’ll share my reasoning. But first, a note for the companies UNDER $1M in revenue. Don’t spend recurring funds on marketing at all. You don’t have the cashflow to truly invest in marketing efforts. What you can do is networking and referral-based marketing strategies. If you’re unfamiliar with them, Business Network International, or BNI, is a great learning tool and wise investment of time over the course of a year. Outside of printing business cards, some case studies and/or testimonials as leave behinds, a one-page “sell sheet” about your business, and a simple, clearly articulated, well designed website, you don’t need marketing, you need to prospect personally for your business.
With that said, let’s look at that Marketing Budget figure of $80,000. You’re going to need to create a solid strategy for WHO you are going to target, and HOW you will reach them. That’s an item that will take some investment year one, and continual tune ups annually afterwards. I’d set aside 25% of your budget and hire a professional to do so. Full disclosure – R&R does this (book some time here if you want to chat), but there are plenty of qualified marketing strategy agencies in the world. Do your research, ask your peers and advisors, and choose one. Unless you have a solid background in marketing, I’d not recommend doing it by yourself in a vacuum.
So, what about the $60K? That’s your fund for efforts. I’m not going to advocate any one method over another – your strategy will dictate the right way to go to market. But having $60K will allow you to invest in infrastructure like website updates and CRM software, tactics like webinars, thought leadership engagements, association memberships, and allocations for part time efforts on payroll. It’s enough spend to choose a tactic defined by your strategy for a year.
I mentioned above that $60,000 is enough budget spend to choose a tactic for a year. That time, 1 year, is important. Marketing is a “slow and steady wins the race” effort. There is not “quick win”, “silver bullet”, or “sure thing” in Marketing. It involves patience, management, resources, and most of all, time. When you’re choosing a tactic, you need to give yourself a year of execution and tweaks to see if it takes hold. How long does it normally take you to go from a first-time appointment to a closed deal with ink on the contract? That signed deal is your ROI on SALES effort, the FTA is the ROI on marketing. But you won’t truly have return without the other side of the equation – the new revenue in the bank.
I’ll dive into measuring ROI on both Sales and Marketing in future content, but for now – give yourself time. If your tactic isn’t generating FTAs with qualified leads (and there are only three types of leads you’ll get), change a part of your tactic – but don’t throw the whole effort away. Give yourself time to succeed.
If you’re struggling with creating a marketing strategy or budget, figuring out how to effectively execute on it, or getting alignment with your team on the need to invest in the effort, Richardson & Richardson can help. Check out our case studies for stories of organizations that we’ve assisted with similar issues and download our white papers for deep dives on tools you can use in your organization. If you’re wondering where to start, book a complimentary session with one of the Richardsons today to come up with a plan on how to move forward.
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