Planning and allocating a marketing budget is one of the most challenging decisions for a marketer or business owner. It can be time-consuming and require some difficult evaluation but with a plan in place, you’re laying the groundwork for future success. When we create marketing plans, we start by answering “what is a win.” So we always suggest planning with your expected ROI ahead of time. You can predict steady growth towards your goals, whether they be increase sales, decreased marketing expenses, brand awareness, etc.
Here’s how to start your planning:
1. Identify Objectives
What am I trying to achieve this coming month, quarter, or year?
Is it a revenue goal? (It usually is.) Is it an awareness goal?
Does that set you up to meet goals for the next 2 years? 3 years?
2. Use Past Results
Take a look in the rear-view mirror and assess the results from this past year and previous years.
Establish a baseline of what efforts were made, and what was spent in each area.
What worked in the past? What hasn’t worked? And why?
Identify the source of your current client base. Did most of your customers find you online? Then invest in more online marketing.
Identify your average deal/sale size and understand your lead to close or conversion rates.
3. New Methods/Testing
Try to resist the urge to just go with all of the marketing channels you used last year. Think about your target audience and their behaviors. Technology is always changing, and there may be new, better ways to reach them.
A small portion of your budget should be allocated for testing. Research new methods or channels you may want to try out next year. What kind of return can you expect?
4. Attract New Customers & Maintain Engagement
What methods will you use to attract new customers? How are you going to maintain engagement with your current client base? What are some ways you can increase their engagement?
5. Identify Resources
What resources do you need to accomplish your goals and objectives? Do you need an increased budget, staffing, focusing on new areas, or updating software?
6. Total Marketing Budget
Overall budget depends on the size of the company. Sometimes the budget is delegated by your CFO with little flexibility, while many marketing departments get to present an appropriate budget for approval. The most common “top-down” formula for creating a marketing budget is percentage of revenue. About 10% of annual revenue is about average for an established company. Startups wanting high growth may be spending 20%, or more, of their overall revenue on marketing. Think about your objectives for the year. If you’re aiming for 300% growth over last year, last year’s budget probably won’t be sufficient.
7. Budget Allocation
How budget gets allocated to specific marketing channels depends on the size of your company and how to reach your target audience. A tech startup marketing their new mobile app to consumers will be using different media than a healthcare B-2-B company.
You’ll want to build a case for how your programs are going to support the overall goals. Use your benchmarks and estimates to demonstrate how each investment translates into more leads and revenue.
You want to find the media mix that will get you the best ROI. Typical marketing mediums include:
Regardless of how you look at it, marketing is an investment. You can’t make money unless you spend it. It’s all about return on investment.
Focus on your end goals (break them into monthly, weekly or even daily targets) and use your expertise on your audience, and you’re well on your way to a successful marketing plan for next year.
Interested in our other marketing strategy posts? Here are others: