Most small business owners understand that they need to spend money on marketing but knowing where to spend their marketing budget can trip up even the smartest business owners.
We’ve put together a marketing budget framework to help you allocate your marketing resources for maximum return.
As you use this guide, let us know if you have any questions. We would be happy to help!
We’ve put together a marketing budget framework to help you allocate your marketing resources for maximum return.
As you use this guide, let us know if you have any questions. We would be happy to help!
Define Business Objectives
Set a firm foundation by clearly outlining what you want your marketing to accomplish. Do you want to drive brand awareness, generate leads, acquire new customers, improve retention, develop brand advocates, launch a new offering, or expand to serve a new audience?
Yes, you can pick more than one. No, you can’t pick them all (unless you have a massive budget and tons of staff… and if you did, you wouldn’t be here reading this resource).
Next, prioritize your top objectives and then assign them a weight to use within your overall budget. For example:
- Customer acquisition
- Customer retention
- Lead generation
Understand the Funnel
Break the customer journey down and allocate your marketing budget across these stages based on the top priorities you identified in the previous step.
Broadly speaking, your customer journey will likely follow a path that looks something like this: Awareness > Consideration > Conversion > Retention > Advocacy. However, the specifics at each stage of the funnel will look different depending on the industry, business model, product/service mix, and customer demographics.
Allocate your budget across these the key activities needed to drive growth at each stage. These marketing activities may include:
- Content marketing
- Email marketing
- Online advertising
- Customer loyalty programs
- Subscription services
- Referral programs
- Affiliate partnerships
- Influencer marketing
- Community event sponsorships
Then evaluate whether the share allotted to each activity is enough to be effective in that effort. Where the “piece of the pie” falls short of what’s needed for a specific activity, ask whether the overall budget can be increased or whether some finds can be pulled from another activity.
Align with Strategic Pillars
Next, identify your top 3-5 core initiatives that fuel your main business objectives regardless of the channel. Some examples may include:
- Thought Leadership Content
- Brand Positioning and Messaging
- Lead Generation
- Conversion Optimization
- Customer Experience and Retention
- Business Partnerships and Community Growth
- Insights and Data Optimization
Ensure your marketing budget is properly distributed across these strategic pillars based on the weight you just assigned to each business objective. (For example, Thought Leadership Content 30%, Conversion Optimization 25%, Customer Experience and Retention 20%, Brand Positioning and Messaging 15%, Lead Generation 10%)
When in doubt about funding a particular activity, ask whether it relates back to your strategic pillars. If it doesn’t support your core business initiatives, don’t do it! Just because something is new or trendy doesn’t mean you should invest in it …even if “everyone else” is doing it. Stay focused on your unique business goals and strategic growth pillars to spend wisely.
Clarify Cost Buckets
For each marketing activity understand what kinds of expenses you’ll incur across internal costs (staff, technology, business infrastructure, measurement) and external costs (media spend, sponsorship fees, etc.).
Planning for the breadth of these expenses upfront reduces the likelihood that you’ll overspend or launch a new initiative without the necessary budget needed to support it well.
Build in Flexibility
Never max out your budget! Always leave a 10-20% cushion for contingency needs in case the strategic plan you put together missed something or actual costs end up being higher than your forecasted costs. If your plans go off without a hitch, you can always use these funds to scale up what’s working!
When you need help developing a digital marketing strategy and allocating sufficient budget to it, we can help! We can take a look at what you’re currently doing (and spending) and make recommendations on how to improve your marketing efforts with the goal of improving ROI. Contact us today to start a conversation!
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