What shape is your marketing budget?
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 | @bryonythomas | www.clear-thought.co.uk
Clear Thought Consulting works with small businesses, equipping them with the marketing strategies, suppliers, skills and set-up that they need to become bigger businesses. We do this by planning and delivering 12-month marketing transformation programmes – supporting a small business through a step-by-step process to making marketing pay. We firmly believe that when you can’t out-spend your competition, you have to out-think them.
Published on 9 July 2009
