Blog for Building Materials Companies

5 Rules for Building Material Marketing Budgets

  |  Posted in Budget, Marketing

5 Rules for Building Material Marketing Budgets

Here are five ways you can build a budget that will truly make a difference.

1. Start with a blank sheet of paper
Most companies take the easy way out and build their budget based on the previous years’ budget.  They start with the premise that they have to do certain things and then see what’s left for new ideas.  There are two problems with this approach:

First, many of the programs you assume you have to do, are no longer as effective as they once were. For example, if you ask yourself, “What would happen if we stopped doing trade shows or printing catalogs?” you might start to make better use of your marketing budget.

Second, you become predictable to your customers, your sales force and worst of all, your competition.  And when you’re predictable, typically you become less effective, allowing your competition to out flank you and your customers to take you for granted.

The best way to build a budget is zero-based budgeting where you don’t assume anything and start totally fresh.  This is almost impossible to do unless you are the new head of marketing and came from outside the company.

A more realistic method for most companies is to start by challenging each line item.  Ask yourself, “What if we no longer did this and just saved the money?”.  Then ask yourself, “If we took this same money, how could we better spend it?”. Even then it’s very tough to be objective and you still may benefit from some outside perspective.  If you trust your ad agency, which you should, they may be a good source for advice.

2. Think like the Boss
Put yourself in the shoes of your companies’ CEO.  They have to build a plan they believe will most effectively achieve profitable growth.  They have many options such as adding more sales people, investing in manufacturing, pricing,  acquisitions, research,  new products and marketing.  Each of these areas will try to make the case for why they need more money.   They can’t do it all so they choose initiatives that make the best case for what the company will get in return.

Take each item and relate it to the objectives of the company and then show how each program will strategically help to achieve the objectives.  Make everything you can measurable.  Many people think that the results of marketing expenditures are not measurable, but if you tie them to sales results, almost all of them are measurable.

Ask the sales manager what he wants to accomplish and what his greatest challenges are.  Now think of how you can measurably help achieve these sales goals. For example, our goal with a trade show is to convert 20 major customers, which relates to $10 million in additional added sales.

Most people are afraid to do this because they might fail.  If you work for the right company the leaders will respect you for trying to measure what has historically thought to be un-measurable.  It’s alright not to hit your goal as you will learn what worked and what didn’t, and do better the next time around.

3. Think big, not incremental
Here’s where you can really make a difference.  Most companies continue to do the same basic programs every year with the goal of making small incremental changes such as small cost reductions.  Or they add something trendy for the sake of being trendy, like introducing a social media campaign.

If you assume anything is possible and ask yourself, “What if we had all the money in the world. What would I do?”.  If you answer is simply to do more of the same, then you’re not thinking big enough.  You’re thinking safe.  Big thinking requires a willingness to take risks.

Consumers and the channel are changing everyday.  When was the last time someone in your category redefined how your products were sold?  Why shouldn’t you be the one who shakes up the category and makes a really big change?

4. Get rid of the biggest wasters
Three areas where I consistently see wasted budget dollars are printing, trade shows and promotional items.

You should do everything you can to stop printing items like literature and catalogs.  They may make salesmen feel good, but they are usually a total waste.  The world is moving from print to online and mobile.  Get on board, get out ahead of your competition.  The option is to wait for your competition to do it first and force you to play catch up.  And the company who plays catch up is never viewed as a leader or as innovative.  Sure, you may say, we have our information online.  I’m talking about having the confidence to just stop printing as much as possible.

Trade shows are another big waste of money.  They are expensive. Attendance is in decline.  Most companies have no clear objectives or goals other than making sure the CEO likes the booth.  And with consolidation in the market, as well as, the 80/20 rule (80% of your business comes from 20% of your customers), why do you need to go to exhibit at trade shows? There are some trade shows that may still be a good investment for you, but maybe you should consider making your exhibit smaller or less expensive and surely, you should have some goals?

The third area is promotional items.  Many companies have curtailed the purchase of golf balls, T-shirts, ball caps and pens.  But there are still a surprising number who waste money here.  It’s usually driven by the sales force feeling they need these items.  They usually don’t need them, they are just an expensive crutch.

5. Multiply your budget
Let your channel customers spend their manpower and their marketing dollars promoting your products.  Rather than spending your marketing budget selling to your channel customers, spend more of it on programs that they can use to sell your products for you.

Yes you can do co-op or promotional allowance programs, but I’m talking about programs where they use more of their money and manpower to promote your, products.

Many channel customers such as contractors, builders, dealers and even big boxes are looking for ideas to help them grow their businesses.  So help them. Start by putting yourself in the shoes of your customer. How can you gain them more sales?  How does or can your product help?

Here are some examples:

Remodeling or home improvement contractors are looking for leads.  They will invest a lot of time and money on leads.  They go to events like home improvement shows.  They pay for the space.  They use their own manpower.  Most of the time they have very poor display or sales tools.  If you simply let them borrow a backdrop for a display and gave them sales materials they will then spend their money promoting your product.  The tools you give them should first promote the project of a new kitchen, closet or siding, for example, and then promote your brand.

Builders are looking to differentiate themselves.  Spend some of your budget on model home sales tools and sales training for their staff.  They will then make your product part of every new home sales presentation.

Big box category managers are looking for ways to improve their department.  Stop trying to sell your brand over the competition.  Give them ideas on how to bring more people into the aisle as a whole.

The list goes on, but the big idea here is use your annual budgeting process as the best time to revolutionize your approach to sales and marketing. I wish you good luck!

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About The Author

I am the leading sales growth consultant in the building materials industry, I identify the blind spots that enable building materials companies to grow their sales and retain more customers.  As I am not an ad agency, my recommendations are focused on your sales growth and not my future income.

My mission is to help building materials companies be the preferred supplier of their customers and to turn those customers into their best salespeople. Contact me to discuss your situation.