Bottom line. The marketing budget in large organizations is set once per year and powers the sales pipeline. The challenge is that there is not as much time to analyze and commit to building the plan and aligning it with the go-to-market strategy as most marketers would prefer. So how do you make the most effective use of your marketing dollars?
Step 1) Setting The Budget
There are two schools of thought on approaching how to set the budget. One variation is what the marketing department and sales team needs and the other is here is what they get for a specific budget.
In the first approach the accounting department or Chief Financial Officer picks a number and passes it on to marketing wherein they have to adjust personnel to match the model. In the second approach marketing sets their desired need based on the company objectives for that year. Based on those objective the marketing team develops the plan and budget. But, how do you know where marketing should fit in the organization? One quick way is to do a count of employees in each department tied to cost.
Step 2) Setting The Timeline
The most important element of the marketing budget is making sure marketing is 6-12 months ahead of the sales cycle. This factors in the average lead time needed to close a deal. I have to reiterate how critical it is that marketing is spending program dollars in front of the sales cycle. In most cases the budget should be as granular as possible because its easier to account for the spend earlier than later. Seasonality is also critical
Headcount is a good category to start with and it’s wise to include a few sub categories such as:
- monthly base pay
- bonuses (annual, quarterly and spot)
- factor in raises from the month they will hit
- add in new hires and any planned departures
- travel and entertainment
- professional development
Step 3) Setting The Process
Systems are also needed and have to be accounted for. Each organization should factor those systems that give the highest ROI.
- Marketing automation software
- Database (buys, dedup’s, appends)
- Website builds and redesigns
- Productivity tools (phone call automation, sales and marketing portal)
- Metrics and dashboards
How to Create a Marketing Budget
To summarize setting the marketing budget is one of the most critical factors for planning the strategy for the entire organization and can make or break a companies revenue.
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