Setting Your Marketing Budget: 5 Key Steps to Take
Originally published: April 04, 2021 08:23:42 AM, updated: April 04, 2021 09:25:10 AM
In the digital age, the significance of marketing has soared to new heights. Vast new, tech-savvy audiences and innovative technologies present unprecedented marketing opportunities, as well as unique challenges. However, despite its evolutions, marketing remains static in its goals; it seeks to drive more sales in a cost-effective manner. To ensure the latter, marketing depends on optimal return on investment (ROI), which in turn necessitates optimal budgeting. This is arguably always a challenge, regardless of one’s business’s size, industry, or scope. Thus, let us explore five key steps to take toward setting your marketing budget wisely.
Setting Your Marketing Budget
There are multiple benefits to budgeting your marketing efforts effectively. It helps ensure proper budget allocation, informs long-term strategies, and offers an investment into business growth. With these in mind, every step of the process is crucial and can have overarching effects.
#1 Set SMART goals
The very first step, typical as this suggestion may be, is to outline your goals thoroughly. Setting clear, measurable goals from the beginning will help identify your exact needs and allow you to monitor progress. This philosophy behind setting goals is typically defined in the S.M.A.R.T. acronym:
As such, goals like simply “boosting user engagement” doesn’t adhere to SMART goal standards. Being SMART, this goal would be broken down and formulated like this instead:
Moreover, it is noteworthy that marketing goals will vary significantly and require different approaches and budgets. In brief, consider three among the most common ones:
Boosting user engagement
As outlined above, boosting user engagement is a common, multi-faceted goal. It lays the foundation for more profitable marketing through customer segmentation, customer retention strategies, and more. To engage your clients as much as possible, your strategy may range from on-page SEO to loyalty programs and more.
Raising brand awareness
The perennial goal of marketing, raising brand awareness is crucial toward improving online visibility. It helps generate more qualified leads that drive conversions and sales. Such strategies may include social media marketing, PPC advertising, and more – each with its own budgeting needs. Adhering to SEO ranking factors is also a typical practice toward this goal.
Finally, it may be that a marketing campaign successfully raises brand awareness and incites engagement, but conversions still underperform. In that case, strategies will typically steer closer to refining one’s sales funnel and improving high-value converting content. Enhancing the overall user experience (UX) also overlaps with conversions but usually comes with higher budget demands.
#2 Establish your sales cycle
Having outlined how establishing goals is crucial to setting your marketing budget, the next step is to establish your sales cycle. This will help inform your decisions, monitor your efforts, and readjust your budget accordingly.
The sales cycle is typically divided into 4 phases:
Notably, some marketers may fuse the consideration and decision phases. Moreover, subscribers of the flywheel model may expand on the action phase to include post-sale engagement.
In either case, establishing your sales cycles should let you pinpoint exactly where your budget needs to be allocated. Customer segmentation tools like Customer Relationship Management (CRM) software can also enable customer journey mapping, allowing for funnel refinements.
#3 Conduct a SWOT analysis
On the subject of introspection, you will also need to conduct a thorough analysis of your business standing. Such analyses typically subscribe to the S.W.O.T. acronym:
Especially in the context of setting your marketing budget, these insights allow for a better overview of your competitive position. This is why competitor analyses frequently follow SWOT analyses, as companies monitor their competition. These practices can help you better evaluate which tools and strategies work best for your field, informing budgeting decisions.
#4 Analyze industry trends
Delving into outside opportunities, then, it is equally crucial to analyze industry trends. Such trends may be circumstantial, like the currently ongoing COVID-19 pandemic, seasonal, or natural and gradual. Significantly, technological innovations may also fuel industry-wide trends for marketers to monitor.
Perhaps the most notable type of technological trend lies in marketing automation. Indeed, such software as CRM often provides email automation tools, and other marketing automation assets abound. Similarly, an eCommerce store may now benefit significantly from live chat, while B2B agencies may hyper-focus on select social media. It is thus imperative that you identify such trends to inform your strategies.
#5 Formulate your marketing plan
Finally, having covered all of the above, you may begin to take action on your findings. Here, you may formulate your marketing plan with some critical questions in mind:
Having analyzed your competitive position and industry, you should be able to formulate a specific plan with specific costs. With a concise plan, you may then begin setting your marketing budget accordingly.
To summarize, budgeting for marketing is a long process that requires due attention. It requires specific, SMART goals, a clear sales cycle, SWOT analyses, industry insights, and a solid plan. These factors will help outline your marketing needs and optimal budget allocations for maximum cost-efficiency.
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