5-Steps to Set a Data-Driven B2B Marketing Budget [2020 Edition]
Creating a B2B marketing budget is a serious endeavor. But, for some companies, a common strategy is to simply set their marketing budgets to be 10% of total revenue. In fact, a CMO survey in 2014 confirmed this, revealing that companies with less than $25 million in revenue spend about 11% of revenue on marketing, and larger companies spend about 9% of revenue.
Despite its commonality, those numbers might not be what your B2B business needs to grow and succeed. B2B marketing budgets should be strategic and data-driven. Marketing is not fluff, nor is it a simple thing that can be handed off to any young person with a Snapchat account. The reality is that a proper marketing budget and strategy are the bones of business growth and can lead to a significant increase in revenue. B2B marketing is unique, and your budget should be too.
Here are five steps that will help you craft your own strategic B2B marketing budget.
1. Solidify Your Sales Processes
Your sales process should be a fine-tuned machine. The details of which should be known before creating a marketing budget. Important details include the cost of getting a customer from one end of your sales funnel to the other, conversion rates for ads and landing pages, and how much it costs to generate each lead.
Be sure to treat online processes and traditional means separately. Modern inbound marketing funnels using blog content, Google Ads, email marketing, and e-books to produce leads require specific costs. Those associated costs are different from the costs of strategies involving cold-calling potential customers or sending physical marketing materials. All of these processes should be streamlined, measured, and scalable, with associated costs determined in advance, before developing a B2B marketing budget.
2. Know Your Limits and Production Costs
Scaling up isn’t always just about finding the perfect system or software to accommodate the growth. There are real limits to growth. Think about doubling the number of desks in your office right now. Would that be easy? Would your employees be as effective? Probably not. The reality is there are a plethora of things that get in the way of business growth.
Let’s say you sell $2 million in widgets every year. Next year you’d like to sell $3 million in widgets. That’s a 50% growth goal. But, your facility is operating at 90% capacity. There’s only enough physical space to meet a small portion of your goal. In order to meet the rest of your aggressive goal, you will need to purchase additional manufacturing space to accommodate the growth.
Information like that is crucial when planning for the future. B2B marketing budgets should be developed with that information in mind. Once you know your limits, you can set realistic goals.
3. Set Serious Goals
Goals should provide an endpoint by which you can measure your success. They describe what you want to achieve in a given amount of time.
“Be the biggest and best B2B supplier in the world” is not a goal, it’s a vision. There is no timeframe and “biggest and best” is not measurable.
“Increase revenue by $2 million this financial year” is a real goal. It has a timeframe and a measurable objective.
Goals are best devised using the numbers generated in steps 1 and 2 to predict the amount of investment needed to achieve the desired growth. Keep in mind, goals should be about what you want to achieve, not the tactics used to get there. The “how” comes later in the process.
4. Determine the Type of Growth Needed for Goals
Are you an upstart B2B manufacturer trying to shock the system? Or, are you building for the long haul? For the former, a loud, attention-grabbing, front-heavy marketing campaign may do the trick. For the latter, a long-term PR campaign to ingratiate your brand into the minds of industry players may be more worthwhile.
Once you understand the type of growth desired, you can begin thinking about tactics.
5. Plan Your Tactics
Tactics are the steps taken to achieve your goals. They are actionable and contribute to accomplishing the goal.
Here is an example:
- Goal: Attract 20% more engineering resumes to fill available positions this year.
- Tactic: Post an original video to LinkedIn every week highlighting our work and culture.
Here’s another example:
- Goal: Increase marketing referrals by 50% this year.
- Tactic: Send customers monthly reminders about referral program benefits through marketing emails, and track results to optimize messaging and timing.
Tactics should directly affect your progress towards one of your B2B business goals. If they don’t, your tactics should be reevaluated.
Need Help Creating a B2B Marketing Budget?
B2B marketing budgets should be data-driven. Budgets should be based on evidence and measurable results and should be treated as a serious investment in business growth. With the proper strategy, goals, and tactics in place, growth becomes much more attainable. If your B2B company wants to develop a strategic B2B marketing budget, send me an email anytime at barmbruster@WeTellYourStory.com
- Resident B2B expert
- First agency position in 1997, joined Nichols in 2002
- Splits time between creative leadership and account service
- Remembers every detail about clients and their businesses
- Coffee connoisseur, music enthusiast and fair-weather runner