By Samantha Litfin | Marketing Consultant
The rationalisation of ‘more bums on seats’ is touted as a great justification for spending 
more marketing dollars. After all, more customers equals more revenue…right?
To answer this question honestly, it depends on two things; the value of the customers your marketing activity is driving and the real cost of the marketing and promotional activity used to get them there.
We’ve all been to an event or promotion where the marketing team have done a brilliant job in snagging you, but you have no intention of returning or worse still, you were going to participate regardless of their marketing. Just last night I visited a local venue to meet friends for dinner. When I arrived, one person had printed a promotion off their website for all nine of us to have $8 off our main meal. We were coming anyway but we gladly took the discount – how lovely of them to offer. That promotion just cost them $72.
- Did this make me more loyal to this venue?
- Will I continue to come here?
- Is this wasted marketing dollars having this publicly available to everyone?
- Would this promotion have been more effective if they had offered it to us as a reward for visiting and an enticement to return?
I know that the value of it would have been increased because the gesture of personally rewarding me goes far beyond visiting their website.
For the many hospitality venues we review each year, we have witnessed a trend in the increase of marketing budgets to well over 13% of total revenue. The transition from traditional (coasters, posters and brochures) marketing to more modern marketing techniques is a key driver in this. However, I suspect there are many venues who simply haven’t had the resources to delve deeper into their marketing operations.
We are now working with a number of venues to scale back their AEMP (advertising, entertainment, marketing and promotions) spend to around 6-8% and hotels even lower than this. There is always the question of the allocation of those resources and if they are getting you the best bang for your buck. Getting more from your marketing budget is rarely about spending more.
If your business desires to have maximum impact for minimum outlay, then it pays to continually review where your marketing dollars are going, why and, more importantly, are they generating a profitable return?
Not sure if you’re marketing is hitting the bottom line? Here are some questions you should ask your marketing team:
- Are we placating the regulars over driving new business? Is that business high value to us?
- Are our promotions actually increasing revenue over and above what we would normally expect?
- How do we change customer behaviour for the long term?
- What metrics are we using to measure marketing return on investment?
- What kinds of offers should we be sending out – and to whom?
I would love to hear how you answer some of these questions – please feel free to get in touch with me to discuss your own situation at samantha@dws.net.au or 0499 789 019.
