Does Your 2013 Marketing Budget Support Your Revenue Goals?
If you’re like most business owners or marketing executives, in 2012 you looked at your marketing as a cost center. We've all done it. You assumed your marketing would cost you more than you could measure that it added to your bottom line. History and experience told you that is how marketing should be considered.
So you created a budget sometime in Q4 2012 and allocated ‘spend’ based on what you believed it would take to achieve certain unmeasurable objectives like increasing visibility, improving awareness or launching a new product, taking into account competitive market conditions and business goals. If you did this, your 2013 is going to be a lot like 2012 and marketing will again be a marginally valuable cost center. Is this kind of marketing effective? Is it making your business more competitive? Does this kind of marketing support your revenue goals? What if instead you required that your marketing investments were directly tied to revenue or better, more revenue than they cost?
Marketing Should Take a Cue from Sales in 2013
When I first started in sales, most people at the time assumed that selling success was largely a genetic thing. Some people were just naturally talented revenue generators just like some people seem to be born as gifted artists or musicians. You either had it or you didn't. But Xerox and others challenged that perception with the idea that all successful sales people had certain behaviors in common and that those behaviors could be taught, developed, improved and repeated. Successful selling was a process, not an art. Over time the entire CRM industry evolved from this one simple notion. Similarly, it’s a trap to assume that successful marketing is an art. Doing so leads to the idea that marketing should be viewed as an unmeasurable or subjective activity and a (bottomless) money pit with no hope of measurably contributing to revenue. On the contrary, successful marketing results from a process that you follow faithfully and refine continuously.
Successful marketing, like successful selling can also be measured. Having a measureable process is the first step to transforming your marketing from a cost to an investment. That’s not to say that successful marketing doesn’t require capital investment or time. It does. Just as you spend money to hire a new sales person, you will have to invest in your marketing… but your expectation, just like your expectation for that new sales person, is that you will soon see a return that is greater than your investment.
There is an ROI for Marketing
In sales we talk about process in terms of a funnel. At the top of the funnel are a lot of unqualified opportunities. People who do not know enough about you or you about them to make a buying decision. These represent potential – as in potential revenue. The selling process is designed to qualify potential and convert potential into revenue, which is the goal at the bottom of the funnel – or the end of the process (enlightened sales and marketing types will argue that the first revenue you receive from a customer is only the beginning of a larger revenue cycle… I agree… but that’s not the subject of this blog). We talk about how efficient a funnel – or sales cycle - is in terms of the time and dollars required to move
opportunity from the top to the bottom.
In marketing, we also have a funnel and the funnel represents a process, but the objective of the process is to attract increasing numbers of prospects and to generate Sales Qualified Leads (SQLs). In this view of marketing, SQLs become the input to the sales process, which now begins with a qualified opportunity and is therefore much more efficient than it would be without marketing. So the measure of marketing ROI becomes the number of dollars spent to create a continuous flow of a specific volume of SQLs. Because this is now a process you can a) refine it b) improve it c) increase output by increasing activity. So to a large extend now you can increase the number of SQLs by increasing activity in your process, i.e. spend or budget.
The goal of your measurable marketing isn’t going to be increased visibility or improved awareness. Your goal is to create a predictable number of SQLs for a specific level of investment. You want more SQLs, ramp up your investment. The good news is that sales will tell you what a sales-qualified lead looks like. In addition to the usual information like name, company name and contact information, qualification will include information like most pressing problem, size of budget, timeframe for purchase, and required signatures on a purchase order. So the job of your measurable marketing process for 2013 is to design a series of engagements that enable you to determine these qualifying pieces of information.
Your Website Must be More Than a Brochure
Where will you create these opportunities for engagement? On your website, in an email, on social media. Just as in direct selling, each engagement moves you a little closer to earning the right to ask for the business. What is the currency of these exchanges? Content – as in blogs, white papers, video how-to’s, webinars. The idea is that you’re going to exchange a piece of non-salesy, educational content for a piece of qualifying information. Over time and over a number of exchanges – this is your funnel or marketing process – you will build a profile of your prospect using the information you gather. Once the prospect has provided enough qualifying information, they become an SQL that is provided to sales for revenue generation.
How Much Should I have budgeted for 2013?
In your old way of looking at marketing – as a cost center – the answer to your question was “as little as possible”. That said, what should you be budgeting? A MarketingSherpa survey found marketing budgets ranging from 11 percent of sales for companies with fewer than 100 employees and 6 percent for companies with 1000 plus employees. A free tool from BrainRider provides an easy way to budget and analyze your marketing budget allocation. For purposes of comparison, B2B found that half of companies are increasing their marketing budgets in 2013… but the real answer to the question of how much you should budget for marketing is… it depends on how much you want to increase revenue… because with measurable marketing delivering SQLs, marketing is part of the revenue equation.
What if I Didn’t Budget Correctly and I’m Playing Catch up?
Simply taking the anemic 2013 budget you created when you thought marketing was a fluffy, check-the-box activity and redirecting it to measurable marketing activities like content marketing, marketing automation and website SEO isn’t going to catapult your business into the pantheon of marketing successes. It’s just not going to happen like that.
If you’re playing catch up because your competition has already figured out that content marketing attracts qualified opportunity or that marketing automation software like Hubspot makes marketing effective and accountable or that sales qualified leads do increase sales efficiency, you’re going to have to either set your expectations low or double down to make rapid investments with initial associated negative ROIs depending on how aggressive your plans are. But a choice to invest in content marketing and marketing automation is the first step toward marketing support for your revenue goals.
By delaying these decisions, even by a quarter, you are putting your company further behind and making it less likely that you can ever be competitive… but 2013 can be the year that you transform marketing from a cost center to a revenue contributor. If you’d like to begin exploring the details of how this can happen in your company, check out our free Inbound Marketing Executive Blueprint or try our no-cost Inbound Marketing Experience.
How did you budget for marketing in 2013?