Does 2.5 per cent of revenue sound right for your AEC marketing budget?

2.5 per cent
How much is a 2.5% marketing budget? Not much, when you think about it.
2.5 per cent
How much is a 2.5% marketing budget? Not much, when you think about it.

Larry Bodine has posted 10 tips for lawyers relating to marketing. Many of his concepts relate to ideas I’ve repeated here including the value of setting up systems for repeat and referral marketing, association engagement, and measuring your results. ?Others are worthy, such as including video on your website.

He starts out with an intriguing specific recommendation on how much you should allocate for marketing:

Number one: You have to spend at least 2.5 percent of your gross revenues on marketing. Otherwise, you’re just pretending to market. That 2.5 percent does not include the salaries of any of the people that you may have hired to perform the work. This is money that is spent on generating new business, on taking clients out to lunch, on visiting clients – it’s all direct marketing activities. You have to put your money where your mouth is. If you’re not spending 2.5 percent, you’re not being serious about marketing, and you’re not going to get any results. And 2.5 percent of gross revenues can go a long way if deployed well.

This number seems right to me for established AEC practices/professional firms, especially since it includes hard costs for business development, not just marketing. I think, in cash dollars, you can in fact do it for less, if you properly allocate the time for association participation, current client follow-up and the like, (in other words prepare lots of sweat equity), and if you really get good at it, you may find your marketing can be cost-neutral or even revenue-generating. (This won’t happen instantly, but if you write a book and collect revenue from it, or receiving speaking fees/reimbursements, your overall costs will certainly decline.)

Nevertheless, I agree that if you set a budget and a plan — and put some dollars into the process — you’ll have much greater success opportunities. And, after all, 2.5 per cent isn’t that much. If your practice/business generates $5 million in revenue, after all, that would be about $125,000 a year; not enough to be a real budget breaker.

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