Budgeting for your insurance marketing efforts is not just about limiting how much you spend but maximizing the profitability of your marketing.
When budgeting it is important to understand how much to invest, where to invest and how to get the most out of your budget. This article will help you do just that.
We will provide you with some general guidelines to follow but beyond that, we want to help you get the most out of your marketing budget.
Rule of Thumb for Budgeting
A good rule of thumb when establishing your insurance agency's marketing budget for the first time, is to set it around 20-30% of your agency's total budget. I know for some of you, that seems like a scary high number but that is because marketing has always been looked at in the wrong light.
Marketing should not be seen as something to throw money at. It is an investment and should generate a positive return.
Many agents think of marketing in terms of a cost of doing business because they are putting up advertising that is not bringing a return.
When you begin marketing in a way that is effective, you will want to invest more into it.
Of course, every agency is different. So your marketing budget will look different than the person down the road.
What if you have no money to invest into marketing?
When we begin talking with someone about marketing for the first time, it is inevitable that they have no extra money for marketing and it makes sense. If you have never done something within your business why budget and plan for it? However, this does not have to be a hindrance to marketing your insurance agency.
Here are a few ways you can find money to invest in your insurance marketing:
- Take money from other areas where you are currently investing.
- Pay yourself less or invest in marketing out of pocket.
- Ask your companies to utilize co-op without matching. Some companies will provide funds for you to purchase a website and to get started.
- Get good at marketing for yourself. There are zero budget marketing efforts that you can engage in marketing for next to nothing.
Don't let a small loss this year keep you from making a big return next year. Marketing is scary because there is often a cost associated upfront but remember, that once marketing starts working, it will provide a return year and year after year.
Where should you invest your marketing dollars?
The most obvious answer to this is to invest your dollars where your marketing is working. But, if you are just getting started with your insurance marketing journey or looking to do something new then you need a little more guidance.
This is where having an expert sit and talk you through some of this is helpful, but I can give you some things to think about now.
That being said, here is what your first 3 years of marketing may look like:
Year 1 as your insurance agency gets involved with marketing, you will likely spend a large portion of your marketing budget on purchases. So, you may need to buy a new website, hire a marketing person, upgrade your agency management system, etc... So to balance these costs, you may want to think about more advertising over marketing to get a return right away.
Year 2, as your systems are better in place, you can move from heavy advertising costs to lower acquisition cost marketing initiatives. At this point, you should start to see a positive return for your initial investments if you had not in year 1.
Year 3, you will have good insights into what is working and what does not work for your agency. You should be a well oiled machine at this point and marketing should be generating a positive return. You can use your own experiences at this point to determine where money should be invested and whether you should increase or pull back the spending.
Realize that some things are going to bring a potential return right away while others take time. Also as you go through your insurance marketing journey you will begin to discover things that work and things that don't. Unfortunately, this is different for everyone so you might end up throwing your marketing dollars at something that doesn't work before you get it right.
Getting the most out of your insurance marketing budget
I am all for investing in marketing but let's make sure we are not wasting. Upfront marketing can cost a lot plus there are many marketing efforts to spend your money on. Like with any investment, it pays to be wise.
So here are a few ways to get the most out of your budget:
- Utilize co-op and free money to the fullest extent. The money is there if you know how to look. When we do business with agencies we often pay for ourselves just in the additional money we can find for agencies that they are not utilizing.
- Analyze everything and adjust funds accordingly. Don't just throw money at marketing, constantly re-evaluate what is working and adjust funds based on your findings.
- Don't be cheap. Buying the cheapest marketing package or going with the cheapest marketing service seems like the way to go but a $100 marketing package that generates a $0 return is more costly than a $1000 marketing package that generates a $1500 return.
When you think about getting the most out of your marketing budget, don't just think in terms of marketing service and how much it costs. Yes you have to think about how much something costs, but you also have to think about what unique ways you can get more to invest and how to invest your marketing money in a way that makes sense.
It is easy to waste money on not knowing.
If you do not know how to do this, again, it would be worth the time and money to reach out to someone who can help.
Final thoughts on budgeting for insurance marketing
Marketing is a process. Do not go looking for a magic switch to flip or the cheapest switch to flip. It will take some thought and planning but when done right your marketing will become such a positive influence in your agency that you question why you did not invest sooner.
Be wise in what you do. You may not be able to do it all today but that is OK. We budget for what we can do now, and then determine what that budget will look like in 6 months, then a year, and so on.
It is a process. You try, you might waste a few dollars but you grow and you get better.
And remember. If you are worried about what next year holds or the year after, you don't have a choice but to invest in marketing your insurance agency.
As always, if you have questions or want to give your thoughts, drop them in the comments below!