What should I expect to budget for Marketing costs?

[John C Hansen, LEED AP]

What would be a normal, or typical cost for marketing. I am looking for guidance in preparing my operating budget.
Assuming a metro area (not rural).
Assuming the typical methods used today such as a website (any others?)
Assuming membership in one or two trade associations
Assuming membership in one or more referral websites
NOT INCLUDING the time to make calls on Realtors,
but the cost for collateral materials such as flyers and business cards and all other promotional printed materials.
Cost to sponsor Realtor open houses
Cost to promote and host educational seminars

For a typical on-going (not a startup) HI company of one person, what percentage of gross revenue should be set aside for Marketing?

[Bruce Ramsey]

What would be a normal, or typical cost for marketing. I am looking for guidance in preparing my operating budget.
Assuming a metro area (not rural).
Assuming the typical methods used today such as a website (any others?) $1000 for initial setup plus $100-$300 a year maintenance

Assuming membership in one or two trade associations $400 per association

Assuming membership in one or more referral websites

NOT INCLUDING the time to make calls on Realtors,
but the cost for collateral materials such as flyers and business cards and all other promotional printed materials. How many are you distributing? I sent out ~5000 letters a year. Printing, postage, purchase of mailing list was about $5000. Worked in my market place for several years but market conditions changed and became less effective.

Cost to sponsor Realtor open houses Works for some HI. Usually the agents stuck in open houses are the lower grade agents, not brokers.

Cost to promote and host educational seminars How many are you teaching? Renting space? Charging a fee? Too many variables

For a typical on-going (not a startup) HI company of one person, what percentage of gross revenue should be set aside for Marketing? Enough to keep you busy. Client and agent referrals drive most of my current business with much lower cost vs option you listed above.



See above

[Raymond Wand]

Do you even want to solicit to Realtors? Many do, but many avoid soliciting them for obvious reasons.

The secret is to set yourself apart from your competition, most of what you think should assist is what every other inspector in your areas is doing.

As for my own experience when I first started, I did not go to open houses, I slowly built my biz building relationships with a few agents. Word got around, clients where happy, got referrals from them, and from a good reputation as being honest, straightforward, and remembering who I was working for - The Client.

Last time I was in a Realtors office the counter was overflowing with every other Tom, Dick and Harrys brochures.

Realtors can be your friend or your enemy. After 25 years in the biz I can tell you some horror stories about agents who are only thinking of themselves and NOT the client.

[Markus Keller]

Marketing is definitely not something I am much good at so take what I say with a grain of salt on this topic.
- Website will cost you probably a couple, few hundred a year to run and host. Easily more depending on what you do.
- I wouldn't worry about the flyers so much.
- You can try advertising in your local small paper and see if that provides anything. Sometimes it does, sometimes it doesn't. They are usually cheap to run a 6 month or annual ad so it isn't a bad idea for a year just to get some name recognition
- Business cards don't cost that much
- Budget for google, yelp, angies list, that sort of thing, seems to work well for others
- As much as I hate to say it, given your location I would recommend you print up some flyers. 500, 1000 whatever and get them out to agent offices. You are out there in the Hinterland. HI's are far more dependent on agent gossip out there than we are here in the City. Getting some exposure among agents to start will likely help pull in work as some agents will try you out just to see 'who the new kid on the block' is. Which agent uses you after that will depend on your report and their way of doing business.
Marketing to agents is not really a good way to go. 'Building relationships' with agents that share your values as you go along is a better way to work with agents for referrals. Some agents think I am the son of satan, other agents think I'm great; I've also had listing agents who refer me for their own listings. They know I'm tough but provide legitimate information.
- Ask clients for reviews; I didn't for years and am still lousy at it. At best I might ask 1 in 10. I just don't think about it. However, reviews are very important these days. Its how a lot of buyers choose.
- Find your niche HI market and your niche client base. Do that and it will really help.

[Jack Feldmann]

Like it or not, Realtors are the gatekeepers. Just because you market to realtors does not make you a bad inspector, or lacking in ethics.
Try visiting open houses and chat up realtors there. Just introduce yourself to them, and see if they might give you a try.
Visit real estate offices. Drop off business cards, and maybe brochures.
With Vistaprint, printing costs are very low, especially when there is a Groupon deal going.

I found that educational seminars were a waste of time.
You might try discount coupons and put them in realtors mail boxes at the office at a few select offices. Consider giving away something with the inspection instead of discounting the price. Maybe a free radon test. Give away something that has little actual cost to you, but a perceived value for the client.
You might try a gift card idea. Send out a flyer and offer a gift card for the first inspection booked the following week, first come first served.
There are a lot of marketing ploys to use to get business that do not cost a lot of money.

Here is something I did when I lived in CA years ago. I offered one real estate office a chance for a drawing from each inspection I got for the month. I put a wheelbarrow in their office with a sign. I loaded it with a a bunch of stuff and it sat there for a month. I probably spent $100 on it. (At the time, inspections were going for about $175) The first month I got a few inspections, we had a drawing at their business meeting, and an agent won. The next month I got about twice the inspections. I did that for maybe 5 months, then the new office manager decided they didn't want their lobby cluttered with a wheelbarrow. By that time I had probably 30 realtors using me all the time. I had to hire another inspector. May not work now, but use your head and come up with something just outside the box.

[Marc M]

We used to be 90% realtor referred. now were are 10-15%...and we even grew our business.
So you gotta wonder...why would a person deliberatly want to go from being spoon fed business to, well, not...

[John C Hansen, LEED AP]

We used to be 90% realtor referred. now were are 10-15%...and we even grew our business.
So you gotta wonder...why would a person deliberatly want to go from being spoon fed business to, well, not...
Marc,
Thanks for your thought-provoking question, but this question is about marketing budget, and not about choosing where to spend that marketing budget.
Most service businesses thrive when they have referral business. I know that. But I mentioned in my question a few things that may be a part of all Home Inspection businesses marketing costs. Maybe not everyone spends anything on Realtors. They may choose to spend it elsewhere.
I received some excellent input about how to plan my marketing strategy from Markus and Bruce. The comments from Raymond are appreciated.
I must get my business off the ground with a solid budget in mind. I have to know what my marketing overhead costs will look like. I even consider the cost of membership in professional organizations a part of my marketing budget.
If my annual gross income were $50,000 how much of my overhead expense would be for marketing? I know the marketing costs will go down as referrals go up. But, everyone must plan their marketing budget before it is spent, not after the bills come in.

[Jack Feldmann]

We used to be 90% realtor referred. now were are 10-15%...and we even grew our business.
So you gotta wonder...why would a person deliberatly want to go from being spoon fed business to, well, not...

I would think that almost all of us relied on Realtor referrals when we started. Some of us grew enough to not have to rely on them. Of course there are a few that have softened their reports (and ethics) to keep getting those much needed referrals.

To John.. your marketing budget when starting out will be much higher that after you have been in business longer. You could easily budget 30% and not do everything you want to do, or if the marketing starts working well, your income will exceed projections, then the % will drop.

[Raymond Wand]

John,

Perhaps you have already considered the advantages of networking with friends, relatives, and family and others you meet at parties, et cetera.

Also leave your card on community bulletin boards, bulletin boards in hardware stores, supermarkets, et ceteras.

These do not cost you a dime other than the cost of a biz card, which is nickle/dime cost.

[John C Hansen, LEED AP]

To John.. your marketing budget when starting out will be much higher that after you have been in business longer. You could easily budget 30% and not do everything you want to do...
Jack,
Thank you.
Your response is useful as I look plan my marketing budget for starting out and growing my Home Inspection business.