1. What does the sales funnel look like?
Building an effective marketing budget requires a deep dive into your sales funnel, where you track results throughout the sales cycle, from prospect to customer. If you use marketing automation or a CRM, you can easily surface this data. Collect the following data:
* How many website visits do you have per month?
* How many leads do you generate per month?
* How many of the leads convert into sales qualified leads (SQLs)?
* What is the cost of generating these SQLs? (Not just the direct costs, but don’t forget the use of sales and marketing in that).
* How many leads convert into opportunities and into sales?
* What is the typical value/return of a new deal?
* Not unimportant: How much marketing budget do you have this year?
2. How do you make your marketing budget SMART?
To make the marketing budget SMART, ask yourself two important questions
* What are your business goals for the coming year?
* How many prospects should marketing deliver to sales to reach?
Benchmark: SMB marketing companies spend between 5 and 10% of revenue on marketing (and 10 to 20% on sales, more on that in another blog). Consider costs for such things as websites, blogs, sales materials and promotional costs, campaigns, advertisements and events.
3. Show that marketing is an investment and not an expense
Too often, marketing budgets come from the top of the organization, where the marketing budget is seen as an expense. By these thoughts, organizations will look at last year’s marketing spend and make a decision about where to spend more or less. Instead, your marketing budget should be treated as an investment, something that provides a quantifiable and verifiable return over time.
4. What stage is the organization in?
Of course, your budget will be affected by the stage the organization is in. (You can read more about this in the blog about McEwan)
Does your company want to grow? Then invest more in quick-win marketing techniques that support your sales. Use short transactional marketing so that your website and social channels become a central marketing center rather than an online brochure.
Does your company want to consolidate? You cannot, within the existing target market, expand in revenue and do process optimization. At this stage, managed growth is more welcome than a rapid influx of new business, and you can focus on activities that produce longer-term results. Think of things like publications for suspects and building a network of contacts who can later become clients.
5. Understand current and future trends
Take a good look around you at what trends you see in society and ask yourself how you can respond to them.
When setting a marketing budget, it is important for marketers to use and apply different technologies to keep pace with industry and societal changes. See if your tools (CRM, Marketing Automation, E-Mail Automation, Advertising) are still adequate or if you need to tap into new channels. A marketing budget should include traditional market approaches as well as the new media. The guiding factor here is which channels are used by your potential customers.
Many companies spend too little to fill their funnel. Instead, they focus on short-term transactions. This is a strategy that works when the funnel is already filled or you are approaching large audiences. One of the best ways to ensure that your marketing is properly secured is to develop a multi-year marketing strategy and create a solid marketing plan. By following a well-defined plan, you ensure that you are spending your marketing money wisely and in the right way, and prevent the board from holding marketers accountable every year with: “why it’s not producing direct sales!”