This is no secret: most small business owners — HVAC contractors are among them — invest 2% to 5% of their sales in marketing. Since small businesses, by definition, have small amounts of sales, 2% to 5% results in very small marketing budgets. Small budgets tend to yield small results.

Want better results? GO BIG!!!

Less than 5% is small ball. Unless you are the biggest player in your market (and maybe not then), less than 5% won’t move the needle. If you only spend at this level, you will question the value of marketing, conclude marketing doesn’t work, and be absolutely correct in the sense that you are not spending enough to get results.

Even 5% is only "maintenance" marketing. It’s the spending level that’s only justified for companies with a large, mature customer base, stocked with service agreements, and little desire for fast growth. Five percent will help the large contractor milk the existing customer base with replacement for lost customers and a little growth coming primarily from referrals. Five percent maintains market share. It doesn’t expand it.

 

 

To increase market share, to grow, the rule of thumb is to spend 10% of sales on marketing. Few HVAC contractors hit the 10% level. In other industries, even other service industries, 10% is actually still considered below par.

Twice a year, Duke University, the American Marketing Association, and McKinsey & Company, survey marketers from the Fortune 1000, Forbes 200, AMA Members, and marketers with connection to Duke. The CMO Survey, last completed in February, found that marketing spending for business-to-consumer services companies averaged 11% of sales. Companies smaller than $25 million, spent 13.9% of sales on marketing.

So a marketing budget equal to 10% of anticipated sales will help you grow, but not grow rapidly. For rapid growth, go big. Spend 20%.

Few companies spend 20% on marketing. In a survey of the CMO Council membership (different from The CMO Survey), only 2% of members spent 20% or more. Among contractors, the incidence of companies spending 20% or more is likely to be far lower than 2%. Nevertheless, spending at this level is not unknown. There are growth-oriented contractors doing it.