There’s no question that a marketing budget is key for implementing and executing a successful marketing strategy.
Plus, if you aren't tracking your marketing expenses, you won't have a grasp on how much it actually costs to generate the leads that are maintaining your business. Without a budget, you might be spending a lot more on marketing than you think — and you won't have an accurate assessment of the pay off.
You already understand the importance of marketing, but how do you build a marketing budget plan that makes every department happy? When funds are tight, the marketing budget is often the first to get clipped.
Don’t worry. Using the tips below, you can still meet your company goals and get every department on board.
What exactly is included in the marketing budget?
Marketing budget is a broad term — yeah, it covers marketing expenditures associated with advertising your company’s products and services, but it can also account for office space, salaries, automation software, organizational systems, and everything else associated with driving the marketing machine. Think about:
- Customer Relationship Manager (CRM) platform
- Software associated with development, design, automation, and production
- Video marketing
- Social media marketing
- Paid advertising
- File management
- Event marketing (trade shows, career fairs, presentations)
- Analytics and reporting tools
- Marketing research
There are seemingly limitless ways to spend your marketing budget. Typically, it starts with a percentage of the company's overall revenue — usually between 7% and 12%. Then that percentage gets divvied up for the various outlets identified as effective methods for getting the highest ROI on your marketing spend.
Collaborate Across Departments
Many companies have the habit of compartmentalizing roles. This is also true of the marketing department.
Branding shouldn’t be something just for the marketing department — it encompasses everything your company does, which is why it is essential for marketing to work fluidly with every department within your organization.
Your company’s brand influences how sales reps talk to prospects, how accounting sends out invoices, and how leadership communicates with the public.
With that in mind, engage with various departments to learn more about how they would like to be increasingly supported by marketing. Better yet, multiply your marketing creativity by tapping into the full braintrust of the company.
Know Your Historical Performance
Keeping a marketing budget can help to ensure an understanding of how much it actually costs to build brand awareness, generate leads, and close deals (because we all know that marketing plays a key role throughout the entire customer experience).
Use your historical performance as a benchmark for your upcoming budget proposal. You'll demonstrate real marketing value if you can speak in terms like Customer Lifetime Value (CLV) and Customer Acquisition Cost (CAC).
Honing in on CAC and CLV will help inform your understanding of how much your marketing strategies actually cost and how effective you’re being in driving ROI.
Cut Costly Legacy Marketing
Has your marketing team traveled to an industry trade show every year that costs thousands of dollars in fees, travel, and set up with little-to-no results? Consider this a lesson learned, and cross it off your upcoming marketing plan.
Get the biggest bang for your buck by only working on marketing plans that offer the best ROI based on your spend. Figure this out by taking a deeper look at your CAC for each marketing activity. How much does it cost to acquire loyal clients through social media versus direct mail marketing? Which marketing initiatives proved unsuccessful?
At the same time, some departments may push for continued presence at certain trade shows or events because they have seen results in the past, or simply because you’re there every single year. Use data-driven reporting to inform your recommendations and justify the tough decisions.
Focus on the Bottom Line
Now that you have spoken with every department, determined your CLVs and CAC, and understand your company's goals, it's time to align your marketing strategy to zero in on the bottom line. Marketing must demonstrate clear attribution to driving revenue and business goals.
By having a firm grasp on KPIs and collaborating across departments, the marketing team can articulate clear ROI and craft a marketing budget that has a little something for everyone.
A collaborative approach to building a marketing budget is the most effective way towards getting the budget you need to produce your desired results. Focus on metrics, proving ROI, and building a marketing strategy and budget that supports all departments.