Almost every business in the world relies on some form of marketing to reach new audiences, find opportunities, and grow their businesses. However, there’s no one-size-fits-all solution when it comes to determining a marketing budget – or deciding how to spend it.
Especially in this time, many businesses are working with smaller marketing budgets than they used to have, and it can be hard to convince management to commit to major marketing spends. That said, by creating a plan with a clearly defined strategy, you can make a strong case as to what you need to spend, why you need to spend it, and how it’s going to deliver clear, measurable results.
RevenueWire, an all-inclusive growth, marketing, and optimization firm, shared the following advice based on their proven experience as a leader in the field. Having won countless awards for marketing, product design, customer service, and more over the years, their team recommends that all businesses looking to overhaul their marketing start here:
1. Understand what your sales funnel looks like
Before you can create an effective marketing budget, your organization needs to have a strong sense of your sales funnel – the process by which customers find you before purchasing products or services. If your sales funnel is poorly defined, your marketing spend, no matter how large, will likely fail to convert.
As you look at your sales funnel, be sure to ask:
- How do customers find us?
- What does our web traffic look like?
- How many leads are we getting?
- How many of these leads are converting into sales?
The better you can answer these questions and the more you fine-tune these processes, the better your results will be.
2. Assess your costs
To determine an accurate marketing budget, you need to know what your spend looks like. Create a spreadsheet listing all expenses, including but not limited to:
- Professional fees
- Outsourced content
- Web hosting
- Anything else you can think of that pertains to your marketing operations
Use this to assess what you need – and don’t need – to spend in order to run an effective marketing campaign.
3. Set clear, measurable goals
“We need to get more customers” is not a clear goal. If you fail to dig deeper and define further, no matter how big or small your marketing budget is, you and your organization are likely to be unsatisfied with the outcome.
By making your goals SMART – Specific, Measurable, Attainable, Relevant, and Time-Based, you can use them to build much more effective marketing campaigns.
Within your organization, start by asking some of the following questions:
- What kind of return on investment would you need to see to make this campaign worthwhile?
- What kind of sales would you need to see to hit your campaign’s revenue goals?
- What kind of leads would you need to generate in order to hit conversion goals?
Next, start asking yourself what you’d like to see your company achieve in the long run. What goals do you want to hit in five years?
A common mistake for many business owners is to allocate marketing budget based on what’s leftover after their daily expenses. Instead, if your business earns under $5 million annually, consider 7-8% an appropriate amount to spend on marketing.
4. Look into your competitors
By assessing the major competitors in your field and their sales funnels, you can get a deeper understanding of how to differentiate yourself and improve your performance. Look into how they allocate their marketing spend between physical and digital media, the platforms they use, and how they target their consumers. All of this information can be used to refine your processes and make your offers more attractive to prospects.
5. Marketing is investing – not spending
Your marketing budget isn’t just a necessary cost. Businesses should look at it as a crucial investment and one that will eventually produce returns. Marketing spend is key to increasing the size of your business and ultimately growing your revenue.
6. Know when it’s time to start over
What works in marketing at any given time can change based on trends and what’s going on in the world. For example, many successful marketing campaigns had to be put on hold during the COVID-19 novel coronavirus crisis in order to stop brands from coming across as insensitive or tone-deaf. Conduct market research, never stop exploring how to best reach your prospective customers, and adjust your marketing as appropriate, and you can reliably outperform your competitors for years to come.
Read the full RevenueWire blog here: https://www.revenuewire.com/performance-blog/6-tips-to-effectively-determine-your-marketing-budget/