Create a customer-based marketing budget
Your CFO will love this customer-centric budgeting process
Developing a precise and detailed marketing budget can feel overwhelming, but it’s simpler than you think. These four steps will guide you in crafting a customer-focused budget that fuels your business success.
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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 including awareness, interest, satisfaction, and repeat sales.
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 marketing budget percent to revenue such as a range of 1% to 25%.
The final step brings the analysis together – your historical spend, staff time, revenue goals, and investment gaps. You likely are significantly under-investing in customer acquisition and retention. Fix it!
This budgeting process is a game changer, giving you a clear picture of where your money’s going. You might be surprised with how much more you are spending on getting new customers rather than on keeping current customers.
Furthermore, you can have much more productive conversations with your CFO about marketing budget prioritization and resource allocation. Instead of just asking for more money, you can show them exactly what you need to achieve the marketing goals. You now say – “To get bring X number of new leads, it will cost this much. With the current budget, I won’t be able to hit that target.”
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, start by looking back at your past sales and marketing expenses. This includes everything you’ve spent to get and keep customers, including the time your team spends on them. Combine this data with your revenue targets to pinpoint the marketing budget gaps to achieve your goals.
This budgeting methodology is a win-win for you and your finance team. To learn more about this proven budgeting technique, watch this video tutorial to walk you through the of the entire four-step process. [watch video]
What is a marketing budget plan?
A marketing budget plan is a strategic roadmap outlining how much a company will invest in sales and marketing activities within a specific timeframe. This plan allocates funds for both acquiring new customers and keeping existing ones happy. It also identifies resources for specific marketing initiatives aligned with business objectives.
Before creating the plan, it’s important to understand the company’s objectives and target audience. This helps ensures the allocated budget is sufficient to achieve desired organizational goals.
Once the marketing budget plan is approved, it should be reviewed and updated regularly to track progress, results and make necessary adjustments.
How is a marketing budget calculated?
It is a unique four-step process for calculating a marketing budget.
The first step in calculating your marketing budget is to analyze historical spending and break them down by each stage of the sales funnel. This will give you a starting point for your budget and may reveal areas where spending is unbalanced.
Tip: Many businesses overspend on getting new customers and underspend on keeping their current ones happy.
Read the blog on how-to create a customer journey budget.
Why is a sales and marketing budget important?
A sales and marketing budget is vital for business growth because it ensures you have the resources to attract new customers and convert them into paying clients. Marketing must generate awareness and leads to help turn prospects into paying customers. Sales then turns those quality leads into opportunities and closes deals, converting potential into profit. Businesses must have a balanced budget that includes both marketing and sales spending, as neither function can be successful without the other.
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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.