A new year comes with a set of new goals and opportunities for your business to accomplish. In order to start and then maintain these goals throughout the year, you’ll want to set a budget and plan to ensure that you can achieve them. This is where a marketing budget will come in handy for your business!
Marketing budgets help to document how much your business plans to spend on marketing over a period of time, this can be a month, quarter or year for example. By breaking down your budget into sections, you’ll be able to better understand where your money is going, what is working and what isn’t, and whether or not the goals that you’ve set for your business are actually achievable. There are many moving parts that go into a marketing budget. You’ll want to pay attention to paid advertising, marketing tools, website maintenance, and much more. This all might seem overwhelming, but don’t worry! We’ll give you a breakdown of the most important aspects of a marketing budget to create the best plan for your business!
Break Down the Costs
Before deciding how much to invest in your marketing, it’s important to understand how much a sale is really worth to you. Take a hard look at the numbers, including your gross margins (net sales minus the cost of goods sold) and customer lifetime value (the total worth of a customer to your business over the lifetime of that relationship.). The higher the gross margin, the more your business will retain, helping you to pay for other expenses like marketing. The more valuable a customer is in the long term, the more you should invest in attracting and retaining them.
Know the Audiences & Their Buying Cycles
No matter what business you’re in, you’ll need to pay attention to the audience that you’re marketing to. Knowing who you’re marketing to, where they do their purchase research, and what their buying cycle is, are all important pieces of the marketing budget puzzle. If you’re focused on retaining repeat customers for a product or service with a short buying cycle, you’ll need to strategically budget for very different marketing services and tactics than if you’re marketing to a brand new audience for a purchase that has a long buying cycle. You’ll need to budget more money for newer audiences and those with longer buying cycles, without neglecting those with shorter turnaround times.
Understand ROI Timing
Not all marketing strategies will pay off in the same time frame. SEO is notoriously known as a long-term investment that can take weeks and even months to generate ongoing growth. Social media and advertising initiatives are often put into play when a quicker turnaround time is needed for results. You can’t put all of your eggs in one basket in terms of your marketing budget and expect to see sustainable success.
According to the 2021 CMO Survey, organizations typically spend between 10.4% and 13.7% of their total business budget on marketing. Remember that this number will vary depending on how much you are able to spend and how much capital is backing your business.
With differences between businesses of what they are selling and how much they are able to spend on marketing, you can see that there isn’t one solid plan that can be followed. Taking the time to understand your business and the goals that you can set is the most important step in ensuring that you can meet or exceed your expectations! As you set your budget, it’s important that you keep checking it throughout your monthly, quarterly, or yearly plan to see where you are hitting your goals and which strategies are paying off. Don’t be afraid to rearrange your marketing budget based on results. If one campaign or marketing channel is delivering outstanding results, invest more there, or use the same concepts on other channels.
Continuous Marketing Budget
Starting and stopping your marketing budget won’t allow for continuous market penetration for your business. By running a continuous marketing budget you will be able to make small improvements to your strategy instead of making major changes. With these small improvements, you’ll be able to increase your accuracy in targeting your audience and your messaging while also improving your product or service.
Overall, with a continuous marketing budget you’ll also be able to increase customer satisfaction with your business, retain them as lifelong customers, and can also provide quality leads to your sales team. This will help to create a cohesive marketing budget that will ensure the best results for your business!
Set Up A Marketing Budget
Setting up a marketing budget for your business will allow you to set reachable goals and can add overall value to your business. Every business will have different factors affecting their choices when it comes to setting budget goals, choosing which marketing channels are best, and deciding how much they can invest to truly make a difference for their business.
A solid plan will keep you from making knee-jerk reactions or spending dollars on the media that has the most persistent salesperson. Oftentimes a media plan is established with a contingency amount so that you can take advantage of opportunities that pop up or test new advertising mediums but be careful not to make too many last-minute decisions on advertising spending. In general, the best course is establishing a thoughtful, well-researched marketing budget upfront; giving it a chance to perform; track results; and then make adjustments as needed.
Finding the right path for your business and having a team that knows how to measure those goals will be the most beneficial for your business as you reach new customers and retain existing ones. Creating a marketing budget doesn’t have to be hard when you know what you’re doing and why you’re doing it!
Are you ready to set up a marketing budget, or need to better understand the steps to do it? Understanding the process and approach is one of our specialties, and explaining everything to you so that you can also understand is important to us as well! We’d love to learn more about your business and your audiences to show you how we can take your business to the next level with a budget that will make your business flourish!