No, you can’t just throw money out there and pray that it will bring you business.
Yes, you need a marketing budget.
It’s no secret that marketing is the key to growth for any business. Sure, your business may have done well on word of mouth for a while, or maybe you got tons of referrals, but every business eventually has to branch out if the owner wants to reach their goals.
Once you pick all that low-hanging fruit, marketing ensures you can reach what’s left.
A marketing budget isn’t just about figuring out how to get the most out of dollars spent. It isn’t just about finding the one thing that seems to be working and then pouring all available cash into it.
It’s not even about growth necessarily.
A good marketing budget is going to be centered around one thing:
Goals — not just profit benchmarks.
Why Goals Matter so Much
One common misconception in the world of marketing is that all marketing should be leading to maximum growth, that every dollar spent on marketing should show a return in the form of sales/profits.
Now that is a common goal for marketing, but it isn’t the only possible goal.
You might have other goals for your business. You might have growth goals, but you might also have a goal to turn your business over to a relative in the near future. Maybe you plan on exiting in 5 years. Maybe you want to find a way to reduce the time you spend on your business. Maybe you just want to grow a particular product.
If all your marketing dollars are being spent trying to just grow the business at all costs, you might have to put some of those goals on hold.
For example, if the relative who is going to take over needs a lot of training just to handle the business as it is today, maybe focusing on maximum growth isn’t the greatest idea right now.
Or if you’re trying to get that one product to take off, maybe you need to not be marketing so heavily on other aspects of the business and to focus your dollars on the product.
A budget takes all this into account. It looks at your goals and then prioritizes marketing dollars based on those goals.
Suppose your goal is to grow your own personal brand so that, when you exit, you’re able to take on consulting and speaking work. If that’s the case, your marketing dollars will have to be spent on forms of marketing that have a low ROI and take a long time to show a return (like content marketing).
From the outside, putting money into content marketing might not seem like the best idea for how your marketing budget could be spent, but since you have a clear goal and reason for it, then it makes sense.
Having your goals in place allows you to use your marketing data intelligently so that you’re not wasting money moving in the wrong direction (even if that direction is still technically a good one).
Essentially, it’s the first step toward building a marketing budget that’s unique to your business (and therefore most likely to succeed).
Get That Data
The fact is that most businesses don’t know what their marketing budget is really doing at the moment, not when it’s all siloed out.
Having an overarching goal for your marketing is important as it allows you to look at this data and ask yourself, “is our marketing, the way it’s set up right now, helping us reach those goals in the best way possible?”
Here are just a few of the numbers you need to have on hand:
- Customer acquisition costs
- Customer lifetime value
- Cost per lead
- ROI for existing marketing initiatives
- ROAS (return on ad spend) if any
- Website and social media data (conversion rates, total website visitors, total followers)
This helps you to see not only what you’re currently spending money on, but also how well each initiative is working and where opportunities lie.
For example, if your goal is to grow the business by a certain percentage in the next 5 years, and you know what your most successful marketing initiatives are currently, you can look at the possibility of investing more into those initiatives.
You might be killing it with Facebook ads, so maybe you higher an outside marketing team to manage your ads and get your ROAS up through campaign/conversion rate optimization.
That same review of your data might show that there are serious opportunities that aren’t being tapped. Maybe you find that, though you have a healthy amount of website traffic, that traffic isn’t being converted like it should be, presenting an opportunity for growth.
You might also find that money is being wasted. For example, maybe you’re spending too much money on content marketing and it’s not showing the return you hoped for. Maybe some of that money should be rerouted elsewhere.
Finally, you might learn that you don’t actually need to spend the money you’re spending — that you can get more with less if you do some optimizing, for example, or that you’re growing on target to meet your goals with your current budget and don’t need to invest more.
You’ll never know if any of these scenarios are taking place if you don’t sit down and look at the data.
Get a Marketing Budget Tailored to Your Goals
If you need a little help getting your marketing budget sorted out, we’re here to help.
We have a marketing budget tool we call The Budget Builder. We’ll help you identify your most important goals for your business, and then we’ll put together a unique marketing budget based on your data that will help you maximize your dollars and help you achieve those goals.