Set a realistic budget and stick to it, and turn a cost into an investment.
Benjamin Franklin once said “By failing to prepare you are preparing to fail”. How right he was. A crucial part of business preparation is planning. Successful business planning includes budgeting.
By setting budgets for your marketing (and all other areas) you are paying close attention to the lifeblood of your business – cash! After a few months of budgeting, you’ll have a very good idea of what you should and shouldn’t be spending money on to help your business survive and grow.
It’s never too early to start working on your marketing budget for the year ahead. Use this guide to get ahead on your budget plans, and determine how you’re going to make the year a successful one.
Step 1: Review your past successes
Whenever we write a marketing plan, the first thing we look at is where the business has been and all previous marketing activity. Marketing is a balancing act, and when you’re investing money into your business it should never be a guessing game. To come up with a realistic and effective budget, you need to review your plans from years gone by.
Use data from Google Analytics, email marketing, social media and any other data source that you use to establish which sources are driving the most leads once you have the numbers, you can see which marketing channels are contributing the most revenue to your business.
Once you have this data, ask yourself:
- What’s working?
- What’s not working?
You can then establish the most effective marketing channels for your business, and see how much budget you’ve allocated to them previously. Use this to inform your new budget; if a channel performs particularly well you may wish to increase your spend there, whereas if you can see one area that’s not generating any ROI, you might want to cut it altogether.
Step 2: Determine your marketing goals for the year
After all, you can’t effectively plan your marketing budget if you don’t know where it’s all leading.
Your marketing goals should be SMART: Specific, Measurable, Attainable, Realistic, and Timely. With this information, you can understand the amount of revenue you will need in order to achieve these goals, and therefore the number of new clients or customers you need to earn.
Now you can start to break your goals down even further, setting success measurements for each marketing tactic. Be specific in terms of budgets and results. For example:
Channel: Social Media
Platform: Facebook advertising
Goal: 100 new leads per month
Previous cost per lead: £10
Budget: £1000 per month
Of course, these numbers are made up for the purpose of this blog. But by using data from previous marketing activity (cost per lead) and a realistic goal set, we are able to work out the required budget to achieve that goal.
Do remember to keep this realistic for your business though. If you usually get around 10 leads per month from Facebook, maybe increase your goal to 15 leads per month. If you jump straight up to hundreds of leads every month, you’re unlikely to get there and you’ll only be wasting budget.
Also, remember that there needs to be a degree of flexibility. Circumstances beyond your control, such as algorithm updates or even seasonal changes will affect your progress, and budgets may need to be adjusted accordingly.
Step 3: Stick to your budget, and review and measure progress
It’s important to stick to your budget once it’s written. After all, you allocated your spend for a reason – you looked at your financial information and data and decided that was how much you could afford to spend on marketing. However, it’s also important to constantly review and measure how effective your marketing is.
You may find after a couple of months that although email marketing used to give you a huge ROI, GDPR laws have affected your data list and you’re no longer seeing that return. If you’re not constantly reviewing your progress, you may not spot this and continue to waste budget. If you find that one channel isn’t working as well as you hoped, and another is outperforming your expectations, it’s probably sensible to adjust your budget.
Just be wary of ploughing extra money into a channel that you haven’t budgeted for. If you can prove without a doubt that adding to the allocated spend will proportionately increase ROI, then go for it. However, if you can’t, all you’d be doing is cutting into your own profits.
Effective marketing is vital for any business that wants to grow, and although word of mouth marketing is great, you can’t rely on it. The likelihood is, you’re going to have to put some money into your marketing. However, with an accurate budget based on data that isn’t stretching you financially, you’ll soon start to see the benefits. So set a realistic budget and stick to it, and turn a cost into an investment.