Setting a marketing budget sounds intimidating, but it doesn’t need to be. In fact, you’ll be surprised by how empowering it is.
Small business owners know marketing is important, but they also spend a lot of time trying to justify their marketing costs. However, having a marketing budget that’s part of a marketing plan gives small business owners a roadmap for understanding how they’re spending their money and why.
Here’s your guide for how to get started.
Get To Know Your Sales Funnel
Your sales funnel represents the stages someone moves through to go from a stranger to one of your customers. Generally, a sales funnel consists of five main stages:
- Awareness Phase
- Interest Phase
- Evaluation Phase
- Decision Phase
- Purchase Phase
If you know how much it costs, on average, for someone to move through these phases, you have a rough understanding of how much money it takes to convince someone your product is worth buying.
- Where are your site views coming from? Identify whether the majority of your site’s hits come from blog posts, videos, infographics, social media posts, Facebook ads, Google ads, etc. If your views are coming from blogs shared on Facebook, you can increase the content you post there and reduce the money spent on less lucrative methods.
- How many of these views turn into leads? If you have tracking links on call-to-action buttons at the bottom of your blog posts, videos, or landing pages, you can gauge which site views are turning into leads. So if your budget is tight, but several methods attract hits, you can focus your spending on those things (i.e., blog posts, white papers) that lead to conversions and not just hits.
- How many leads turn into sales? Once someone is a lead (meaning they’ve handed over their email, name, other contact info), you can determine the cost of converting them vs. how much they end up spending.
Understanding these numbers gives you a baseline for how much it currently costs to win customers.
Determine Your Goals & How Much Manpower You Need To Meet Them
Now that you know how many hits and leads generate sales, set your goals, and be specific about what you’re measuring. If you decide to increase your leads by 50 percent, set a deadline so you can stay on track and know exactly what the expectations are. Being specific will allow you to do and determine a few things:
- Know how much to increase your budget for lead generating marketing strategies (like whitepaper creation) based on how much it cost you to generate these materials in the past.
- Assess whether the investment is worth it by having an exact target to meet.
- After you’ve stated your goal and understand how much you’ll need to multiply your current spending, you’ll need to assess your operational needs.
- Will your internal team be able to handle the increased workload, or will you need to outsource?
- If you choose to outsource, will you hire freelancers or an agency?
Tie Your Marketing Goals to Your Business Goals
Marketing should not be an afterthought, but it also shouldn’t be a fully staffed team that’s divorced from what’s happening in the business. All of your marketing goals should be directly tied to your business goals, and your marketing team should be regularly communicating with your sales team. This is why monitoring and measuring your marketing efforts is important. If you have a data-driven understanding of what your creative projects produce, you can set targets based on business goals.
For instance, if you decide that you want to increase sales by 15 percent by the end of the fourth quarter or choose to move into an entirely different market, you understand how much that will cost.
Don’t forget that the core function of marketing is to generate business. If you’re creating wildly creative promotions, but don’t attract your target audience, you’ve wasted money on irrelevant brilliance. A marketing budget helps you stay the course. The goals you set will prevent you from yanking money away from marketing during a bad month, and your data-driven plan will remind you that there is a purpose for every dollar spent.
Are you ready for a smarter way to engage with your customers?
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