When I ask the average insurance agency owner how much they spend on advertising and marketing I usually get a blank look. Sometimes it’s because they have no idea – they’re spending money they just don’t know how much. Often its because they aren’t spending any.
When I ask what is an appropriate amount to spend on marketing activities I usually get something like five per cent. I think that number must have been in a book somewhere because I hear it so often!
My agency has been in the Best Practices list several different times. In some of the cases it was in the Top 25% Fastest Growing list and other times in the 25% Most Profitable list. But we were never in both lists at the same time!
It costs a lot of money to grow and that reduces profits – or the owner’s income. But if you want to grow you must be prepared to invest in it.
I can’t answer this for you but I can tell you 5% ain’t gonna cut it! I would suggest that you consider reinvesting ALL of the profit that you make from whatever growth you achieve until you get as big as you ever want to be. I know that sounds like a lot but I put my money where my mouth is. We are growing at a 50% annual rate and investing all of the profit growth back into the business. That’s what it takes.
If you want to grow slower invest less. But just remember – it’s an INVESTMENT not an expense – you are going to get a return if you invest wisely.
How much are you investing in growing your business?