The questions I most often get asked about marketing budgets are:
- How much should I spend as a percentage of turnover?
- Should I benchmark against competitors?
- How much shall I spend on each discipline (PR, DM, Events, Ads, etc.)?
All totally reasonable questions… but what you should be asking is: what shape should my marketing budget be? Seriously, it is the most important question there is on the budgeting front. So, let me tell you what I mean.
A decent marketing programme is centred on a sales funnel, onto which you’ve mapped the decision making process for your target audience. (see previous posts Making Marketing Pay, and What to Say When).
FIGURE 1: Chart to show the influence of marketing spend across the sales funnel
From this you can put together a programme of activity that moves a person from awareness to a sale. Each marketing technique has a different level of influence at each stage of this process. You need to determine the level of influence at each stage, then apportion this across the funnel.
There are a few ways to decide the amount of influence each technique has:
- Workshop with the sales and marketing team to agree the apportionment
- Surveys or focus groups amongst new customers to get them to assess what they saw at each stage (this can be tricky, as people often post-rationalise decision-making, meaning that emotional triggers are downplayed)
- A best guess (hey, we’ve all got to start somewhere)
- A combination of all of the above
From this exercise you now have a powerful tool for designing programmes and allocating budget. Now analyse your budget in the same way:
- Split your spend into each technique
- Apportion this spend as per the influence amount you’ve worked out for that technique (for example, if you worked out that PR has 40% influence at awareness, 10% at interest, etc. your spend on PR should be tabulated to reflect that)
- You now have an actual shape for your budget
Compare your actual budget shape to the ideal budget shape you’ve established to maintain a free-flowing sales funnel. This allows you assess where you’re spending too much or too little, and to adjust your spend according to the funnel requirements.
Now, if you have a budget cut, or find a pot of cash, you again have a powerful tool to decide how to adjust your spending. The crucial factor here is to maintain the shape. So, rather than cutting a project that happens to be the right level of spend, you can cut evenly across the funnel ensuring that you’re not leaving any gaps.
By Bryony Thomas | Chief Clear Thinker | Clear Thought Consulting Ltd | www.clear-thought.co.uk
July 9, 2009 at 4:55 pm |
Great post. I absolutely love the logic of the approach, very clear and almost scientific. I fear the idea of workshopping with the sales team (certainly something we know we should be doing) is perhaps easier to say than to do.
Sales teams often have their own agendas, which we all know about, but hardly ever vocalise. Their priorities are not always in line with ours.
But I could go on about that for ages… I blogged about Rain-makers a while ago, I hope this is relevant: http://startupdonutblog.co.uk/2008/04/04/rain-makers/
July 10, 2009 at 7:09 pm |
Bryony, thanks for the tweet. Mapping marketing tactics and strategies to the decision process is key. Especially like the fact that you are encouraging marketers to spread their spend across the entire buying cycle, rather than just top-of-funnel activities (which most are doing today).
You and your readers may be interested in this: TechTarget recently published an outstanding bit of research (~1500 buyers) into which online marketing methods were most effective in each buying stage (awareness, evaluation, decision).
For a summary of the report AND a list of the top 5 online marketing methods cited: B2B Buyer Research: Which Methods, When?