Earning More Revenue and Growing Your Pet Resort Business Faster by Including Marketing in Your 2020 Budget Plans
by Andrew Verdesca
For many pet resort owners and general managers, handling barks and biscuits is a lot easier than building marketing plans and figuring out a way to fit them into your budget. In fact, with all the priorities on your plate — from managing daily operations to caring for your pets and your employees — it's no wonder that budgeting for marketing initiatives doesn't always rise to the top of your to-do list. But beware, if you don't take some time to plan for marketing activities carefully and budget them accordingly, the risk of wasting promotional dollars usually increases. More importantly, your rate of business growth can remain flat or decrease year after year.
Using marketing to keep existing customers and generate new ones
You know you want to earn more revenue next year, but you don't know where that will come from — your existing customers or new customers? Studies show that, on average, 80 percent of future profits come from 20 percent of your existing customers.' That 20 percent likely represents pet parents who first brought their dog to you as a puppy, and who've stayed with you ever since. These are your top customers and you certainly don't want to lose them. Likewise, if only 20 percent of your profits come from existing customers, then you're likely going to need to generate more business from new customers. But where will they come from? For these reasons it is critical to allocate a portion of your budget to retaining your top customers and acquiring new ones. In other words, you need to invest in marketing to maintain and grow your business.
The other critical factor in generating more revenue is understanding what it will cost to keep existing customers returning to you and what it will cost to generate leads for new customers. Chances are, if you're a new pet resort, you'll probably need to spend more on generating exposure and visibility of your pet resort throughout your community, generating awareness among pet parents, and generating leads for new customers. If you're an established pet resort, then you might very well have a greater number of existing customers and need to spend more on keep-ing them in your reach.
Whether you decide to spend money creating loyalty programs or special promotions for existing customers, for example, or to buy more visibility in the marketplace with online advertising and social media ads to reach new pet parents, you want to be sure to minimize your spend and maximize your effectiveness. Simply put, you want to make sure your cost per lead, as well as your cost per customer retained, is as low as possible so you can get the most bang for the buck.
Getting started by setting your business growth goals
To get started, it's important to ask yourself some basic questions about your business:
- How much do you want your business to grow in the next year?
- Are you more interested in retaining existing customers or acquiring new ones?
- What has been your boarding occupancy rate during the past year or two?
- What has been your rate for converting your website visits, email requests, and phone call inquiries to actual bookings during the past year or two?
- What has been your rate of retaining existing customers? Or acquiring new ones?
- What kind of local economic and competitive environment is your business currently facing?
The answers to all these questions can shape your future success so it's wise to take some time to analyze your pet resort's revenue streams during the last 12-24 months, to identify which of your services is generating the most revenue, which of your customers are generating the most revenue (and why), and where you might wish to generate more next year. You'll also want to look back at your operational and non-operational expenses to see how you might be able to reduce or eliminate some of those expenses next year. By taking a careful, honest "look in the mirror," so to speak, you can identify realistic goals for revenue growth as well as expense adjustments needed to achieve those goals.
Consider treating marketing like an orchestra
When you understand overall operating costs and desired revenue goals of your business, you can better determine how much of your budget can support marketing efforts without negatively impacting your operations. Then it will be important to figure out the kind of marketing mix you wish to invest in.
With so many different avenues, or marketing channels, available in which to invest your marketing dollars, it can be very challenging to know which channels will be most effective for your business and offer you the best return on your investment. To some degree, it's better to invest in multiple approaches — a "marketing mix" — rather than put all your eggs into one basket.
To simplify this, it may help to think of the marketing mix as an orchestra comprised of strings, woodwinds, horns, and percussion. In this scenario you are the conductor! To begin, realize that the quality of sound an orchestra makes depends on the optimal mix of its instruments. Too many strings and the music might sound like there's too much treble, not enough bass. Likewise, an overbalance of percussion might drum out the sound of the other instruments and distract more listeners than attract them. So, too, is the marketing mix for your pet resort business. A good marketing mix is usually comprised of a variety of channels and tactics, some more prevalent than others, but optimally mixed in order to produce a sound that attracts the masses and converts them into lifetime fans. And that's what you want to do with your pet resort — with your presence online as well as on the ground — as the pet lifestyle expert of the community whose pet parents are your biggest fans.
Clear connection between marketing and your pet resort growth goals
When it comes to driving growth for your pet resort, there are three major factors to consider:
- Average price of your services.
- Your rate of occupancy in boarding, daycare, training, grooming.
- Your rate of customer retention.
To put this in context, if you're increasing your prices, then you'll probably need to spend more on marketing in terms of 1) creating materials or taking other steps to justify the price increase to your customers, and 2) ensuring that your customers feel like they're getting a better (or additional) value than they did previously.
By analyzing your occupancy rates — the numbers of pets in your enclosures, your daycare, your grooming care, and your training classes — you can quickly distinguish your "regular customers" from your occasional ones as well as from those who might not have used your services within 24 months. In fact, most research on this topic indicates that an average customer retention rate is only about 70 percent, meaning that 30 percent of your customers don't come back every year. This means your typical customer life expectancy is just over three years. And that means you'll need to replace 30 percent of your customers every year.
With this knowledge, you can apply thoughtful marketing strategies, campaigns, and tactics to maintain or increase patronage from your regular customers or take steps to not lose the occasional ones and possibly bring back others. In short, incorporating marketing into your budget is critical to business growth — to withstanding either a deficit of customers or an overflow of customers (and subsequent additional operational expenses to support them).
Choosing the right marketing tactics for your pet resort
These days there's no shortage of marketing channels, strategies, and tactics to choose from. Each has its own pros and cons, of course, as well as dependencies such as whether competitive pet resorts are near yours, whether your location is easily accessible, in a rural or urban area, whether your local economy and population is stagnant or thriving, and so on.
A study from Prospect Marketing, which compared traditional marketing (print advertising, mass media, direct mail, events) to online or "digital" marketing (websites, social media, search engines, email, ratings and reviews), estimated that 50 percent of leads generated today come from digital marketing.' The study also observed the following:
- Online search visibility and mobile marketing tends to focus more on acquiring new customers instead of retaining existing ones.
- Website and social media marketing tends to be more balanced in approach, being used for both customer acquisition and customer retention.
- Email and mobile marketing tends to be the preferred marketing channel choice for customer retention and for engaging existing customers with a reminder to come back.
The study also recommended that an optimal marketing budget is one that is well-balanced. In other words, investing a lot in social media doesn't do much for you if your website is unable to convert its visitors to your customers. The marketing channels need to complement each other like the instruments in the orchestra, as described earlier. The amount you should invest in marketing depends on a number of factors including how long you have been in business, the physical location of your business and customers (rural versus urban, convenient versus difficult to get to), your level of reviews, and customer word of mouth. Based on these factors a marketing budget could be as low as 2 percent or as high as 10 percent or more, depending on your personal level of comfort and level of effectiveness of your marketing investments.
Perhaps you could best summarize all the reasons why including marketing in your pet resort budget is critical by simply stating that marketing can keep you connected with people who value your service and introduce you to people who will discover the same. Like almost anything, what you get out of something depends on what you put into it. When it comes to the important tasks of promoting your business, enabling pet parents to find you, working on retaining your existing customers while cultivating new ones, and establishing yourself as the pet lifestyle expert of your local community, pet resort owners should dedicate the right amount of time, thought, and resources to marketing tasks. When these are well thought out, planned, and budgeted, the task of executing them efficiently, effectively, and successfully becomes less daunting and much easier to accomplish.
1 Mansfield, Matt. "Customer Retention Statistics: The Ultimate Collection for Small Business." Small Business Trends, 22 August 2019, https://smallbiz-trends.com/2016/10/customer-retention-statistics.html
2 "Lead Generation Statistics." Prospect Marketing, 2 October 2013. https://prospectrmarketing.com/where-do-marketers-get-leads
Andrew Verdesca is Director of Marketing and Sales for Pet Resort Marketing at Nehmedia, Inc., which specializes in generating substantial leads and revenue for pet resorts nationwide by creating compelling websites, social media, emails, newsletters, and managing online ratings and reviews. To learn more about the subject of this article, members of IBPSA can check out the two-part webinar series, "Pet Resort Marketing Plan for 2020... Made Easy" in the Video Library of their online member dashboard. Learn more at petresortmarketing. com.
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