Blog entry excerpted from the Marketing chapter written by Jennifer Beever in The Book on Business from A to Z
Business owners and marketing managers often ask how to figure out what their marketing budget should be. Here’s a classic marketing consultant answer:
“It depends.“
Your marketing budget does depend on a variety of factors, including your lead generation return rates and lead-to-buyer conversion rates. These factors constitute the science of calculating your marketing budget – without them you will have to resort to art in the form of estimates or guesstimates.
The Science of Calculating Your Marketing Budget
Yes, marketing can be scientific! If you understand your buyer’s buy cycle, you can calculate exactly what you need to spend in order to generate the revenues you need.
Start with the end in sight – how much revenue do you need to generate? Then, knowing your average sale and conversion rate, figure out the number of leads it will take to generate the science.
Don’t know your buyer cycle or have historical data like conversion rates? Unfortunately, you are not alone – many companies don’t. Your science is about to become more art, in the form of a guesstimate. Guess or estimate these rates and numbers, but make a change and start today to track your actuals. Next year you’ll be in a better position to be a marketing scientist rather than an artist.
Finally, you need to plan the right tactics to generate the right number of leads. Again, use your historical data – what tactics produce the best return on investment (ROI)? If you don’t have that information, hire an expert who does.
New Incite offers strategic and tactical marketing planning services. Contact us today for more information!
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