You are trying to understand your food business marketing budget for 2020. We are with you in creating a budget that your business can afford, but also, one that brings more revenue your way.
As a business owner or marketing manager, you know there is a risk in doing business and in marketing your restaurant, coffee shop, etc.
But if you have a clear view of what your goals and numbers are for 2020, the risk of marketing and over-spending will be lower. Also, this will give you an ease of mind and a clear road map on where you want to go to next.
Let’s dive in.
How much is your customer’s lifetime value?
You see, most businesses only see the small picture. For example, a table or a person who comes to your shop might spend $45 or more depending on what you provide.
But what if this person became a regular client, spending $45 or more every week?
That would mean this person has spent $180 per month or $2160 if they continue to visit your business for the rest of the year. Hence, you will hear some people say it is cheaper to bring back a customer than to get a new one.
You can work out this number on your own or with your team. So, with your team and your business reports, you
can identify the following:
- On average how much does a person spend per visit?
- How many times during the month does this person come back?
- For how many continued months does this person visit?
What % of your customer’s lifetime value do you think needs to into your marketing budget?
Your restaurant’s marketing budget needs to clarify this and much more. You see, now that you know your customer’s lifetime value, you can identify how much you want to spend to get another customer like this one.
The best way to do this is to give it a percentage. For most businesses, they are willing to pay 10 to 15 percent of their client’s lifetime value, to gain another happy customer. In the case of the $2,160 – which is a low value, you would be spending about $432 to generate a $2,160 client, given you are using a 20% budget.
How much revenue do you want to make?
You have your customer’s lifetime value and the percentage that needs to go to acquire a new customer.
Now, we have to think about how much revenue you want to increase or make in the next 6 – 12 months. To make it easy for my math skills, let’s say you want to increase revenue from $20,000 to $70,000.
That means you will have an increase of $50,000, and since each client should bring you an average of $2,160, you will know you need at least 23 new clients to help you make that revenue goal.
How much will it cost if we do this on our own vs hiring an expert?
You have identified your cost for acquiring a new customer, and something to note is that a lot of the times, it has cost a lot less than 20% to acquire a new customer.
What this 20% or the percentage you choose will do is allow you room to get the results you want.
The other big number you need to identify is the cost for your team or yourself to get the work needed to be done to accomplish this goal.
Here are a few elements you need to consider if you decide to do it on your own:
- Do I have the team and skills to put all my marketing assets together?
- Will my team need training on how to create Facebook ads for the restaurant?
- How long will it take my team to start moving the needle?
- Do we need to buy software, dashboards and other tools to make it happen?
Here are a few elements to consider if you wish to outsource the work:
- What percentage of my total revenue goal am I willing to use to get an expert to make it happen?
- Am I able to see the results they have achieved?
- Will they work side-by-side with my business to make it happen?
Both options can help you achieve your goals, but you have to consider which one will allow you to take control of your business while your marketing is taken care of.
These numbers work for any business, not just restaurants, and food businesses. We used them every year for our company and our clients’ businesses.
Let’s discuss your numbers and audit what is already working and some opportunities for your brand. Schedule an audit to get started.