How is your marketing budget formed? The answers from B2B companies vary - from a certain percentage of sales to historically determined figures that seem fair to key stakeholders.
Matching your growth targets with the number of leads
These approaches may work in some instances, but in many cases, a more strategic approach is required to accelerate success and achieve projections. Each year, it’s important to start from zero budgeting and access the opportunities that can deliver the greatest revenues and profitability and then budget accordingly.
Unfortunately marketing budgets are often the first to be cut in periods of uncertainty, which typically becomes a self-fulfilling prophecy – sales will decline.
Remember the famous statement by Henry Ford – "A man who stops advertising to save money is like a man who stops a clock to save time."
With 2018 approaching fast, it is crucial to align your marketing activities with your growth targets, and there’s no better way than to turn to mathematics.
Getting the basics right
Marketing campaigns generate brand awareness, educate prospects about existing and new product offerings and convert sales leads – all the while promoting cross- and up-selling opportunities. With limited resources, it’s important to define priorities for 2018 and then determine the scope of marketing/sales support activities. The formula below is a good starting point:
(Desired revenue) = (Sales leads) x (Conversion Rate) x (Average Revenue per Customer)
For example, you would like to generate an additional 1 million from marketing activities in 2018. Your average revenue per customer is 10,000, while your sales people convert 1% of all leads that enter your CRM. In this case, the number of sales leads to be put into the sales funnel should be 10,000 per year or 835 per month.
1,000,000 = 10,000 leads x 1% x 10,000
Based on this formula, there are three possible ways to reach your target growth: generate more sales leads, increase your conversion rate and/or increase your revenue per customer. Let’s look at each of them in turn.
Drive those leads
There are many ways to generate sales leads: landing pages, webinars, trade shows, publicity, advertising, direct emails, in-house shows, search engine optimization and Google ads. Analyze what worked well in the past for your audience, share experiences with your peers or employ experts to get the number of leads required (835 per month in the current example).
Keep in mind cost per lead, which varies from industry to industry and from channel to channel, as well as your sales team capacity. If you only have 10 sales people, it is unlikely that they can process 10,000 leads per year. In this case, marketing automation can help you nurture leads through the funnel and pre-warm them, saving time and effort for your sales specialists.
If your website is already getting a lot of visitors but only a few of them become your customers, it is time to have another look at your personas, identify their true needs and challenges and create content that truly resonates.
Furthermore, marketing automation can help you better manage your existing customer base through meaningful and relevant experiences, driving conversions up. Remember, it is five times cheaper to sell to an existing customer than to attract a new one for the same product.
By providing timely, relevant and fresh content tailored to market demands, you can enhance prospect engagement with a brand while retaining existing customers and boosting their loyalty.
Increase revenue per customer
Cross-sell and up-sell to new and existing customers to boost your return on investment from marketing activities. Train your sales people, partner with up and down supply chain vendors and utilize marketing automation to its highest capacity.
Analyze, draw conclusions and act accordingly
By measuring and analyzing each step of your marketing activities, you can ultimately reduce your cost per lead and invest in channels that truly work. Using trackable URLs, Google analytics or other tracking tools, you don’t fly blind in the complex world of marketing.
No marketing resources in-house to put a solid plan in place? Contact ABI and let’s explore next steps to help you achieve growth targets in 2018.