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Jobs to be Done: Create a realistic but impactful marketing budget
This is the fourth instalment of a 6 part series that explores the Jobs to be Done (JTBD) for US SMBs that we identified in our recent research. Each blog post explores one of the jobs and how we examined it with a JTBD canvas. If you missed the first post that explains JTBD and the canvas, check it out before reading this.
JTBD #4 | Create a realistic but impactful marketing budget
Our research found that the most difficult JTBD for SMBs in the US relates to monitoring the time and money that gets spent on marketing, and its results. Our data analysed 16 SMB service providers (including incumbent banks, business platforms and digital banks) and found that this job goes radically underserved, receiving the lowest market coverage score (15%) of the 11 JTBD we identified.
‘Marketing’ is likely deemed too far removed from traditional financial services for providers to consider including it in their product offering. Business owners, on the other hand, see it as an essential activity that requires significant resources and needs constant attention.
So, have SMB service providers missed an opportunity to tap into and support the financial needs of a job that never gets truly ‘done’?
SMB owners - or a very small number of staff - are typically responsible for all areas of the business. As a result, marketing is almost always implicated in a number of operational inefficiencies that come with wearing so many hats. It either gets neglected and forgotten about until it becomes urgent (i.e. no pipeline or sales), or too much time and money gets thrown at it without enough return.
Taking care of marketing activities — especially when it’s not the person responsible's area of expertise — comes with a time-cost attached to it. The opportunity cost of not spending time on directly profit-generating activities, or even the dreaded and avoided financial activities (such as reconciliations and chasing invoices), can be significant.
New business owners, especially those who previously worked for larger corporations, quickly realise how they under-appreciated the value of setting time and money aside for sales and marketing.
In fact, the owner of a biotech consultancy in Pennsylvania told us “As an employee I didn’t have to worry about marketing myself. Now, I constantly have to sell myself and my organisation! That takes a lot more resources than I ever imagined.”
Spending time on this can be a significant investment that may have little to no return. He warned of the financial repercussions that come with being a one-man-band and having to down tools to write up a proposal, buy a ticket and fly to another state, just to pitch it to a prospective client he might never end up working for.
This is especially challenging when spending on marketing all of a sudden feels urgent. “The most unexpected costs are usually to do with trying to reach more customers. We had to pay $35,000 for a booth at a fair recently but it felt necessary because it was at a really popular fashion event and we never thought we’d get a spot at it,” said the owner of an fashion e-commerce business in Virginia.
All businesses need customers who make sufficient purchases. Without a reliable sales pipeline, they could experience dramatic cash flow problems in the future. So businesses could use help allocating resources ahead of time for the expected unexpectedness that comes with having to opportunistically chase marketing opportunities.
Currently, digital platforms such as Square and Shopify are addressing the marketing and financial overlap to some degree:
- As well as offering loans to small businesses, Square Marketing is designed to help small businesses target different types of customers and offers up analysis on how direct marketing translates into sales.
- Shopify’s tools also claim to help SMBs ‘take the guesswork out of marketing with built-in tools that help you create, execute, and analyze campaigns’.
- Stripe’s Sigma can help to make the allocation of marketing spend more strategic by providing SMB customers with access to data that identifies which customers are least likely to churn, which geographies to target and which products to amplify marketing messages around.
SMB service providers have an opportunity to provide better end-to-end digital services to their customers by including tools that help plan and trackthe OPEX costs and opportunity costs associated with marketing.
A note to SMB providers: as you prioritise customer-centricity, do not forget to pass on the philosophy by giving your customers the tools to get closer to theirs too!
Digital platforms such as Square and Shopify are addressing the marketing and financial overlap to some degree
How did we draw up the canvas?
- Current state
The current state for this job sees businesses typically taking a more tactical than strategic approach to marketing. Marketing opportunities (like promotional events) or requests for quotes for new business may crop up unexpectedly and there is often a perceived need to actively pursue these. These ad-hoc patterns often result in businesses having no visibility over how much is being spent on new business activities and a risk of getting into debt when marketing spend has eaten into other operational costs.
- Contextual triggers
Having been burnt by unplanned marketing costs before, a business might start asking more questions about the return on investment of marketing and sales activities - particularly the previously unde-rappreciated time value element of these expenses.
- Barriers to behavioural change
Currently, social media tools are focused on tracking the return on marketing spend, such as cost per click ad spend. But there are few tools available to track time investment, or tools that can translate that insight to proactively plan for the future.
- Desired state
Business owners want to stop derailing their overall cost and time budgets with marketing and new business development. They want to reflect more mindfully on past ROI to plan for the future. Ultimately, they want to stay connected to their customers and feel reassured that their efforts will translate into new or repeat customers.
How is the job evolving?
The social and economic turbulence caused by the global pandemic has forced businesses to adjust their services, marketing and business models.
As businesses are fighting to survive, marketing what they now stand for will be a key part of their recovery. Facebook recently pledged to support small businesses by offering $100m in cash grants and advertising credits.
Having to temporarily down tools has also allowed many SMBs to give themselves permission to direct more time and effort towards ideating new marketing strategies and creating content for the future.
East Meets Dress, an e-retailer selling traditional Chinese dresses with a modern twist, provided the example of running live vlog interviews and video content with brides who had had to cancel their special day due to the pandemic. The owners saw an opportunity to connect with customers digitally, empathise with their challenges in a relevant way and build relationships with new audiences that could become future customers. Previously, dedicating so much time to marketing content might have felt overly indulgent and better spent elsewhere, but recently it has become one of the few levers that businesses can experiment with.
As businesses are fighting to survive, marketing what they now stand for will be a key part of their recovery.
Newly formed businesses will also need support with managing marketing activities. By September, new business applications passed 3.2 million for the year, a 77.4% increase from Q2 . As more people lose their jobs and muster up a hopeful spirit of entrepreneurialism, digital services have an opportunity to offer support by helping individuals and microbusinesses create financially savvy plans.
Together, they can invest in selling themselves effectively to connect with their very first customers.
More in this series: