When it comes to marketing, there are no one-size-fits-all strategies. Every strategy needs to be customized depending on the goals and needs of the company. Just like the strategy, a company’s marketing budget also needs to be highly customized.
Marketing budgets tend to be somewhere between 2% and 20% of gross annual revenue. That’s a big range. How does a company decide on their number? Here are some things to take into account when developing a marketing budget.
Organize and Analyze
First, you want to take a look at your efforts so far. Figure out what percentage you spent on marketing in the past few years. Has that number stayed steady, increased or decreased? What has been the outcome and how does it correlate with your sales numbers? If you’re able to track the performance of specific campaigns, that’s great. If not, then start tracking. The best data you can look at when planning is your own.
You also want to take into account how much time you and your staff has spent on marketing. You may only be paying a couple bucks a month on email marketing, but maybe it takes a staff person 10 hours to create and send an email campaign, and another 2 to analyze and report on it. If that’s something you would like to take off of your staff’s plate and outsource, make sure you take that into account when developing a marketing budget.
Make sure you have clear, time oriented goals. If you just want to grow, that’s not enough. Everyone wants to grow. How much are you going to grow by? What does your growth plan look like for the next 12 months, and how much money and time are you going to put in to get there? What is your ideal return on investment?
Once you have your numbers set, the next step is to find a marketing company that you can trust, and share these numbers with them. If they are the ones coming up with the marketing plan, they need to know your goals and your budget. This isn’t only so they can come up with the best plan, but also so they can measure their efforts effectively. When you outsource your marketing, the relationship should be transparent on both sides. You will need to share your vision with your marketing team, so make sure you are comfortable with them at the get-go.