Learn to create a marketing budget
Your CFO will love this budgeting process!
Developing a budget for acquiring and retaining customers can be tricky. But with these four simple steps, you’ll be able to create a customer-focused budget that works for your business.
Talk to us about customer centric budgeting
How to get the budget you want and deserve for marketing
Sales and marketing budgets can be daunting to put together, especially if you’re not sure where to start.
Here are four steps to create a customer-based sales and marketing budget that your CFO will love:
Look at your historical sales and marketing expenses and allocate the percentages for every line item in each sales funnel stage.
Allocate people’s time spent on customers. Everyone thinks budgeting is just actual dollars spent, but that’s not the full picture. Now you have a total view of time and dollars spent on the customer-journey!
Determine revenue goal for each business segment. Is the growth plan to maintain, break-even, or grow significantly? Then define your suggested budget percent to revenue such as a range of 1% to 25%.
The final step brings it all together – your historical spend and staff time, revenue goals, and investment gaps. You likely are significantly under-investing in customer acquisition and retention. Fix it!
This process is a budgeting game changer! You will be surprised with how much more you are spending on customer acquisition rather than customer retention.
Your CFO probably won’t give you the full amount required, but now you can have deep conversations about prioritization and resource allocation. Instead of saying “I need more money”, you now say – “in order for me bring in X number of leads, it will cost this much, but I can’t get there with this amount.”
People Also Ask:
How do I create a marketing budget for my business?
In order to know how much money you can afford to invest in sales and marketing, you first need to figure out how much you’ve spent previously on acquiring and retaining customers. This includes all the sales and marketing costs associated with the customer journey as well as the time each team member spends on customers. Then you incorporate this historical data, understand your revenue growth targets and identify what the marketing budget gaps are to achieve your goals.
Your finance department will love working with you on this unique budgeting model process. To learn more about our proven budgeting technique, watch our informative video tutorial. In it, we walk you through each of the four-step process. [watch video]
Why is a sales and marketing budget important?
A sales and marketing budget is critical because it allows a company to allocate the necessary funds for activities that will bring in new customers. Marketing must generate awareness of a company’s products or services in order to generate leads that can be turned into paying customers. And once leads are generated, the sales team must have the funds to close deals and bring in revenue.
It’s critical for businesses to have a balanced budget that includes both marketing and sales spending, as neither function can be successful without the other. A solid marketing budget will help attract new customers, while a robust sales budget will ensure those customers are converted into paying clients
How is a marketing budget calculated?
We use a unique and exceptional four step process for calculating a marketing budget.
The first step in calculating your marketing budget is to identify your historical spend and allocate a percentage of that to each stage of the sales funnel. This will give you an idea of how much has been spent in the past and can provide a baseline for your budget.
Tip: It’s likely that you’re spending too much on client acquisition, but not enough on customer retention.
What is a marketing budget plan?
A marketing budget plan is a strategic guide for how much money a company will invest in sales and marketing over a set period of time. The plan identifies funds that will be used for customer acquisition and retention, as well as to support specific marketing initiatives.
It’s important to have a clear understanding of the company’s goals and target audience before developing the budget plan. This will help ensure that the right amount of investment funds are identified and allocated to reaching the desired business goals.
Once the marketing budget plan is approved and in place, it should be reviewed and updated regularly in order to track results and make necessary adjustments.
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Jessica Kelley
Founder and CEO
Jessica Kelley has more than two decades of experience in marketing and finance, with a focus on B2B and B2C channels. She has worked extensively within the healthcare, consumer, commercial, and software industries in diverse environments ranging in size from a $200 billion corporation to a startup firm.
Jessica is the founder of HPZ Marketing, an interim CMO and fractional CMO company and is certified by the Women’s Business Enterprise National Council (WBENC) as a Women’s Business Enterprise and Women Owned Small Business (WOSB). They provide interim and fractional executive marketing services to help businesses achieve marketing ROI with executable strategy and a relentless focus on customer acquisition and retention. Learn more about hiring a fractional CMO for your business.