How to Set Your Marketing Budget – 2024 Tips

While all entrepreneurs understand the importance of marketing as a vehicle for business growth, expanding into new markets, and establishing brand loyalty among customers, many find it difficult to set up an effective marketing budget. By using marketing services provided by RevenueWire, you can more effectively tailor your marketing budget to achieve greater growth for your organization, as these methods can help you gain key insights into your target market and your customers’ behavior while identifying what marketing strategies work most efficiently in that market.

For smaller companies with limited funds, it may be difficult to justify and set aside an adequate marketing budget when only a small amount of funds may be available for this purpose after critical overhead expenses are paid.  Nonetheless, having a well-defined marketing plan that includes a breakdown of how you will spend your marketing dollars will go a long way toward helping you spend your funds more effectively, and toward helping you achieve your entrepreneurial goals.

1. Look at marketing as an investment

While many companies view their marketing plan as simply an operational expense, it should be viewed instead as an investment from which you expect a return. In fact, a good marketing plan can help your company to reel in a significant return on investment in the long run, as sales improve as a direct result of your investment in marketing. Think of this investment as essential to growing your business and increasing your company’s future revenues. An investment in your advertising success will also help you to make smarter advertising decisions, leading to greater growth for your company.

2. Understand your sales funnel

Understanding your company’s sales funnel is key to developing an effective marketing plan as well as a realistic marketing budget. The sales funnel refers to the series of steps that your potential customers take before purchasing your product or service. This concept is vital to consider when designing an effective marketing campaign, as it can give you a realistic estimate of the cost of facilitating the actual buying process for your customers.

Your sales funnel is identified by certain specific criteria that relate to the sales you are able to achieve online monthly. These basic questions can help you to better understand how your sales funnel works:

• How do your customers typically find you? Knowing this helps you to better reach them.
• How many monthly visits does your website receive? How can you increase traffic to your site?
• How many leads are you getting monthly? How can you increase this number?
• What percentage of those leads actually convert? How can you increase conversion?

In order to better develop successful strategies to achieve your business goals, it is essential to consider your sales funnel when planning a marketing campaign so that your campaign addresses and facilitates the conversion process for your potential customers.

3. Calculate your operational expenses

This is a very clear-cut factor to consider and is easily resolved by maintaining a spreadsheet or accounting program that calculates your company’s daily operating costs. When calculating the expenses considered in this report, remember to list both current and expected upcoming expenses. Include such expenses as rental or mortgage payments for office space, professional fees paid to contractors or consultants, branding content outsourced to professional content providers, web hosting, taxes, supplies, administrative expenses, and all other costs incurred as part of running your business.

You should also account for each of your costs when determining your marketing budget, in order to understand and appreciate the importance and value of each expense that running your business requires.

4. Know your competition

The first rule of gaining a competitive edge in business is to find out who your primary competition is in your target market. Take a look at their advertising campaign, and note the advertising venues that they use. Consider how they are investing their marketing dollars. Are they running primarily a digital ad campaign or are they using more traditional outlets such as print media? Are they advertising their brand across all marketing platforms, including radio and television?

By taking these into consideration, you may gain insight into the sort of marketing materials and campaign that will work best for your company at reaching the same target market. Although it is important that you learn from the examples set forth by your competition, you must make sure to produce a marketing and promotional campaign that in no way looks like a copy or an imitation of what your competitors are doing.

5. Learn to predict market trends

Market trends respond to a number of factors, ranging all the way from social and political current events to new developments in fields such as technology, fashion, and business. Understanding how market trends work, and having the ability to forecast future trends that may impact the purchasing behavior of your current customer base, will help you establish the marketing budget for current and future marketing campaigns.

Noting the marketing trends relating to volume and venues, as well as the types of ads that are currently working and producing conversions within your target market, can help you keep up with industry and market changes. You should also note how your competition is using media effectively to reach customers and consider investing similarly in media advertising.

This is where a marketing tool such as RevenueWire can help you make smart predictions based on past and current conversion trends.

6. Set realistic goals

Keep your goals realistic as far as the return that you can expect from your marketing campaign. Some questions to consider include:

• How much revenue do you need to generate in order to justify the investment in your advertising campaign?
• How many sales do you need to make in order to reach your income goals?
• How many leads would it take to actually produce that number of sales?

Also, consider your company’s long-term goals. Where do you envision your company five years from now?

While many brand executives commit the common mistake of thinking that their marketing budget can just be whatever is left over after daily operations, the standard recommendation is that companies earning less than $5 million annually should invest about 7-8 percent of their gross income in marketing efforts that can provide ongoing revenues that continue after one’s retirement years.

Although your marketing budget should be realistic and consider your current expenses and earnings, you must also factor in your future goals as well. Consider how your expenses will grow as your business grows and factor those increases in when preparing a marketing plan for the next five years or more.

7. Use your marketing dollars to grow your business

Whether your company is a small start-up or a multinational conglomerate, planning how much to spend on your marketing budget can feel like an overwhelming and difficult challenge for many entrepreneurs. What you have to keep in mind is that even if you are limited to a tight budget, by using your marketing dollars effectively, your brand can continue to grow.

The secret is to identify and pinpoint specific parts of your marketing plan that you are confident are most likely to produce the desired outcome and tailor your marketing budget so that you’re investing the majority of your company’s marketing resources into these profitable areas.  By learning to strategically direct your marketing dollars, as well as track the effectiveness of your marketing campaign, you can ensure your company’s continued success and growth for years to come.