“Where do I start?” That’s typically the first question I get when a client is about to begin the daunting task of developing their annual marketing budget.
While there are no hard and fast rules on how best to establish a marketing budget, I usually recommend starting by asking a series of questions — about the company, the competition and customers. Here are five questions to ask to get your budget discussion started.
01
What’s the state of your marketing engine?
02
How long have you been in the business?
03
What are your sales and marketing goals?
Once you have some rough numbers in place, a good next step is defining your sales and marketing objectives. What does success look like a year from now? For some companies, success may be a 10% to 20% increase in sales. For others, success may be landing one big fish. By defining your end goal, you can start laying the groundwork and begin outlining tactics. Once you have goals established, be sure to share them with your team and check back throughout the year to ensure you’re on track.
Also, your objectives and goals of any marketing plan should include what KPIs will be used to ensure success. For example, if 20 new clients are worth $20 million to the business, and if you can attribute your marketing efforts to driving qualified leads that turn into those 20 clients, would it be worth investing 5% of that value to acquire the business? Set expectations as to your costs per lead and track that constantly.
04
What do your customers’ buyer journeys look like?
How do your customers find new business partners? If it’s primarily online, then allocating a large proportion of your budget to digital outreach is a smart choice. But if your customers rely on old school one-one-one sales, then you may need to bolster your sales tools. Chances are, you’ll probably require a mix of online and offline tactics to reach your customers. If you’re unsure about customer buying patterns, then I suggest you start with the development of audience personas. This can help define customer pain points, outline business needs and paint a picture of your customer’s overall mindset.
05
How competitive is your industry?
Remember: Math is hard.
Developing a marketing budget is not easy. You have to look at a number of factors and data points, all while managing demands from players within your organization, from the CEO to the sales team. It takes hard work, research and some good old-fashioned guesstimating. So go ahead and get a first draft on paper and then refine from there. Seek advice from your counterparts in similar companies. Share a draft with your sales team. Or better yet, share your marketing budget with your agency to get their feedback. We do it all the time and we’re always here to help. Good luck and happy budgeting.
