For nearly 50 years, business managers relied on a fairly static set of benchmarks regarding how to invest in their business. But all of that changed – dramatically – since the turn of the century. How much should you invest in technology and marketing in today’s business climate? Read on to find out.
As recently as the 1990s, business owners knew what to invest in their businesses. For marketing, it was 8-10% of revenue for major brand building, 6-8% of revenue for retail, and 2-4% of revenue for manufacturing. For technology, the guideline was 2.2% – 3% of operating costs. But do those rules still apply today?
No. Everything has changed.
Business today is more reliant than ever on technology, and technology has transformed the way consumers interact with businesses and the way businesses interact with each other. This has resulted in a dramatic shift in the way businesses must invest.
|Before 2000||Since 2000|
|Invest in labor (body count) to get work done.||Invest in knowledge workers that can create content and exploit technology.|
|Invest 10% (or less) of revenue in marketing.||Invest 10 – 15% in marketing.|
|Invest 2.2 – 3% in technology for operations and marketing.||Invest 5% – 7% in technology for operations and marketing.|
In surveys of business owners conducted in Q4 of 2018, 58% of small-to-medium sized business owners project an increase in tech spending in 2019 and 2020. The main reasons they cite for these increases are:
- Maintaining market share through marketing activities.
- Making operations more efficient.
So here’s the question for you: If your competitors are increasing tech spending in order to be more efficient and more effective, what are you doing to make sure you maintain your brand image and hold on to your customers? And what are you investing to ensure you find new customers?
The jewelry industry has traditionally lagged in technology spending, but that isn’t a luxury most jewelers can afford any more.
Make sure as you do your budgeting for 2020 that you carefully evaluate what you need to achieve your strategic plans. Chances are, technology is a part of it. So be sure you are allocating the funds and mind-share necessary to make those investments happen. In today’s rapidly moving business cycle, there’s just no time to fall behind.