You would not buy a car if you did not think you could afford it would you? You should not be embarking on marketing activities unless you have made sure you can cover the costs. Your marketing budget will determine how you can best implement the marketing strategy you have developed. And it will help you measure and judge success.
Putting together a coherent budget makes you take a hard look at your business and what you are trying to achieve. As a barre minimum before you start you need to undertake:
- A SWOT analysis. It might be relatively easy to outline Strengths and Opportunities that you can build on. Do not shy away from Weaknesses and Threats. Your marketing budget will be part of the campaign to avoid losing market share and revenue streams because of those Weaknesses and Threats. Make sure you know exactly what they are and when they are going to impact.
- An understanding of the Return on Investment from last year’s marketing spend. Einstein said, ‘The definition of insanity is doing the same thing over and over again expecting different results.’ It is imperative that you do not make the same mistake twice. Learn from the things that worked and do them again!
- A marketing collateral audit. Do not produce more of something if you already have enough. Make sure you are using the marketing materials you create. Why have you got 20 boxes of catalogues under your desk and why haven’t those blog pieces you commissioned been used as part of your content marketing strategy?
It’s not just the ‘fluffy stuff’
When you start to fill in your spreadsheet do not forget to list everything. Your budget needs to account for:
The systems to run your marketing activities. Remember that once you have bought these your budget will benefit going forward but do not forget to budget for upgrades as and when you need them, it will impact on your ROI:
- Hardware or software: a CRM, a Project Management system, new printer etc, etc
- Added software licences as you marketing teams grows
- Various software and application subscriptions
As well as…
The costs for all the tactics you are planning
- Advertising
- PR
- Conference attendance and travel (do not forget that you need to get there and might need to stay)
- Printed materials
- Online and offline design and development
- Telesales if that suits your business model
- Any freelancers you may need to fulfil your plans.
Make your marketing budget visible
- Do not just ‘give’ a budget to your marketing team. Involve them from the beginning. Teams are more invested in making plans succeed if they have been involved in the development of them.
- Do not forget the sales team. The sales team will be following up on all the leads and profile that your marketing will produce. It is imperative that they know exactly what is going to happen when so that they can maximise its effect. Align marketing and sales activity.
- Give your budget a proper structure and schedule when tactics will happen. This should avoid any nasty surprises crawling out when you start to measure Return On Investment.
- Share it widely. Explain what marketing is ‘doing’ to everyone. You will almost certainly discover that people will be interested and be able to make helpful suggestions. If you have space digital dashboard screens showing activities and results can motivate people throughout the office.
- If you have a financial director go through the detail with them. You will be surprised how helpful they can be.
Measure, measure, measure
Your marketing budget is NOT a pot of money that you dip into as and when you need something done. How are you meant to know how much of it you have left? Your budget needs to show exactly how much you are intending to spend on what and when. Once you have set up the spending plan and started working on it you need to start measuring:
- Intended vs actual spend – if things are more expensive than expected you need to change your upcoming plans to ensure no budget overspend. If you are underspending schedule other activities. There are no prizes for underspending a marketing budget, you are not maximising opportunities.
- ROI (return on investment) – what bang are you getting for your buck. Divide a campaign’s revenue by the marketing cost. Anything under 1 means you are making a loss and might need to amend your plans. Remember that revenue might come in over time, so it is wise to measure campaign ROI regularly and hopefully see it rise.
- Progress against KPIs and Goals – setting goals and KPIs is a Dark Art but it is necessary to watch them once they are set. The overarching business plan will have goals for month on month and year on year revenue. Marketing activity influences progress towards these goals; keep a firm eye on them and flex marketing tactics if you need to. Key Performance Indictors will be showing you the things which are the most important measures of success. This can be a range from number of new leads to number of conversions to number of website visits and so on and so on. As I said it is a Dark Art, but your marketing activity is measured against them; you need to understand them and be able to suggest changes.
Initially marketing budgets can be daunting. Once you have taken the first steps and overcome the fear you will find them an invaluable support for everything you do.