If your marketing budget is just a vague figure floating around in your head, here are some ideas to help you.
Marketing is a necessary business function, akin to finance and customer service — but I'd argue it’s equally important as those. Crafting a marketing budget is vital because it forces business owners to consider the cost of getting sales.
Here’s some advice for creating a budget that can work for you — and lead to more sales.
Have a Plan
Creating a marketing budget requires more than just arithmetic and accounting. Outlining your business goals shapes your thinking about the marketing collaterals and activities you must focus on. Three useful tactics to guide you are:
1. Define Goals: Ask yourself and teammates questions such as: Should the company expand or retain market share? Should you seek new customers or focus on getting more revenue from existing customers? Such questions will guide how you apportion marketing dollars and focus your campaigns.
2. Evaluate Spending: A common yardstick for defining marketing spend is to use 7% to 10% gross revenues for a small business, 4% to 6% for an established business that wants to expand, and 3% to 4% for an established business that wants to preserve its position. This assumes you have the funds to cover your expenses, including marketing.
3. Brainstorm Strategies: Rank all possible means to implement your marketing plan based on available funds and human resources. Focus primarily on tasks that are easy to execute, yield results and are least expensive. Develop your marketing budget from here.
After implementing your marketing budget, monitor its results so you can fine-tune spending and actions appropriately. Establish a benchmark system, and use it to define the success or failure of each marketing campaign.
You could begin with low-cost strategies such as Google ads or general search engine optimization (SEO), assuming you have a website, then advance to larger-budget campaigns. This might include more expensive activities like radio and/or print ads or trade shows, providing the initial effort is successful.
Try implementing a six-month trial for each approach, after which you should gain enough awareness to know whether to tweak, increase, or cease. Such monitoring shows the costs and outputs of each activity and eases budget impacts. If money is lost on a certain campaign, the total yearly budget may not be adversely affected.
Producing a pragmatic marketing budget enables you to monitor and compare campaign results on a per project and yearly basis. By using this data, businesses can improve performance by allocating funds to the most effective marketing channels.