I have found that the majority of distributors do not budget as most of their clients do. If you are a 1099er, an LLC, or any form of small business, growth is dependent on patterning as a bigger business.
In a few days, the clock will turn to 2021 (thank the Lord 2020 is over) and new budgets kick in. There is no solid number that a business school will present to you for budgeting advertising and sales promotion. There are, however, rules of thumb. Generally, a budget line of 15% (plus or minus is a good guide). So, 15% of net sales on $500,000 is $7,500. If you are on a 1099 and basically on your own and you net $100,00 in sales revenue (sales by another name is commission), the rule of thumb would be $1,500 out of pocket. But, you should also be asking your “partner company” for some contribution to that sum. Should you budget a percentage of last year’s sales toward FY 2021 for sales and marketing expenses, then the next question is what to do with that budget?
Moving outside the three dimensions, there are avenues for lead procurement few distributions beyond the top 25 have employed. A few weeks ago, I did another “Wild Wednesday” regional association seminar on “Geofencing”. I am 75 years old and own a smartphone and you can question what I could possibly know about this. Not as much as you should. Over the past year, I had been politically active and managed a campaign for a candidate for the South Carolina State Senate (he lost). While working, I did not whistle much but I was learning. The campaign spent a lot of money on digital advertising via Facebook, Instagram and the like. I learned how, for a reasonably small cost, we could target only those who read The Wall Street Journal with an ad. We could go after readers of business magazines, visitors to certain websites and social media platforms, etc. We bought nearly ½ million impressions for as little as a $3,000 budget. I am convinced that the ability to advertise and promote through digital media should be a required course for everyone in our industry. First, it serves their own business by being able to build their brand, build their prospect list, and their sales. Second, it must be part of the knowledge base for every consultant so that they know the avenues to help execute programs they may develop for their clients.
In normal times, we would see our products used as a premium/incentive to develop in-store traffic. Now, through the use of geofencing, a promotional consultant can go to the next level and push public awareness of that premium program and help pull patrons. The vast majority of small businesses do not have this expertise. If you build that knowledge and offer that value-added service (with a profit), the value of your company to your client is exponentially increased and builds your partnership and client loyalty.
More than anything else, geofencing caught my interest as a vehicle for distributors to help themselves and their clients. In my webinar, I reviewed two types of geofencing: addressable and mobile. I explained that this technology pinpoints locations on a map and presents an “ad” when people use their smart devices such as a phone or tablet. I explained how one could build awareness of their company just in a single building like the Merchandise Mart, The Empire State Building, or while business trade shows are running in a Las Vegas exhibition center. I explained how an internal program for health or fitness could get a boost on a large company campus. The applications for geofencing have no creative fences and it is well worth the learning and, I believe, the budget for 2021.
Briefly, geofencing uses a person's physical location at any given time to target them with an appropriate message/ad. If it were addressable, it would target people at a specific address such as the Merchandise Mart. If it were mobile, it would target those walking, driving, or passing through a given circle on a map. It should really be called big brother marketing, but that is for people who read the book.
So, Happy New Year. Before we are all released for active duty again, once the vaccine has arrested our nation’s problem, you might spend some time investigating this arena and how to use it to build or rebuild your business in the sunshine ahead.
Joel D. Schaffer, MAS is CEO and Founder of Soundline, LLC, the pioneering supplier to the promotional products industry of audio products. Joel has 48 years of promotional product industry experience and proudly heralds “I was a distributor.” He has been on the advisory panel of the business and marketing department of St. John’s University in New York and is a frequent speaker at Rutgers Graduate School of Business. He is an industry Advocate and has appeared before the American Bankers Association, American Marketing Association, National Premium Sales Executives, American Booksellers Association and several other major groups. He has been a management consultant to organizations such as The College Board and helped many suppliers enter this industry. He is a frequent contributor to PPB and Counselor magazines. He has facilitated over 200 classes sharing his industry knowledge nationwide. He is known for his cutting humor and enthusiasm in presenting provocative and motivating programs. He is the only person to have received both the Marvin Spike Industry Lifetime Achievement Award (2002) and PPAI’s Distinguished Service Award (2011). He is a past director of PPAI and has chaired several PPAI committees and task forces. He is a past Chair of the SAAGNY Foundation, Past President of SAAGNY and a SAAGNY Hall of Fame member. He was cited by ASI as one of the 50 most influential people in the industry.