The importance of creating an annual marketing budget.
Marketing budgets have always been something that is difficult to figure out. Where do you start? What should you spend on? How much money are people willing to invest in your product or service? Figuring out a marketing budget for your business can be very time consuming, but there is a way that will make everything easier!
In this blog post, I’m going to walk you through the 5 steps of creating an effective marketing budget strategy from the get-go. This will ensure that no matter what type of company you’re running, you’ll be able to reach your customers more effectively than ever before!
This blog post is a must-read for all business owners who are struggling with how much they should be spending on marketing, or what their goals should even look like in the first place, whether you are working with an SEO agency or doing it yourself.
Step #1: Define your goals.
The first step is defining what it is that you want to achieve with this marketing budget strategy. What are the milestones that you would like to reach? Do they have anything in common, or do they all stand on their own? Try and be as specific as possible when thinking of your goals, as without goals and KPI’s it will be impossible to benchmark your financials and forecasts to accurately determine a budget you have to work with.
Step #2: Understand your Cost per lead, acquisition and cost per sale.
The next step is understanding your cost per lead, acquisition and cost per sale. This will give you a better idea of what marketing channels are making the most sense for your business and how much money they’re worth to you as well.
Step #3: Convert this information into leads needed or sales required to achieve goals
To make things easier on yourself, you should convert this information into leads needed or sales required to achieve your goals. This will give you a clearer idea of the costs that are involved in reaching these milestones and what type of budget is necessary for meeting them.
Step #4: Refer back to step one.
After completing steps two and three, refer back to step one. You should now have a better idea of what your goals are, and how much money is needed to achieve those milestones. The next step is using the marketing budget strategy that you created to determine where each milestone needs to be set in order for it to become achievable.
Step #5: Determine time-frame
The final step is determining the time frame. This is how long you’re willing to invest in this marketing budget strategy. If it’s just a short-term project, then your time frame should be around six months or so. However, if it’s something that could last for years on end, then you might want to take the next step and determine what type of commitment is necessary to get things going and make them successful.
Goal setting is a really important part of determining your budget. We have helped hundreds of business owners and it still baffles us, how many multi-million pound companies don’t actually have a marketing budget target to reach.
Generally, companies usually allocate around 10% of GP (gross profit) as a marketing and growth budget, but this will massively depend on your industry, margins and the types of products/services you offer.
If you are struggling to understand or work out how much you should allocate for your marketing, get in touch for a free workshop and consultation with one of our specialists.