As a business owner, surely you have a master budget that you keep track of and update regularly. For many firms, Marketing may just be a line item and a catch-all for anything marketing-related they plan on doing. However, if you want to better track your marketing’s ROI and take control of how your hard-earned revenue is being allocated, start by revising your budget.
Remember: all marketing is not created equal. The money you spend on Google ads is very different than the money you spend on sponsoring a community event. With that in mind, you may have multiple line items within your marketing budget for things like:
- Marketing Staff — this is anyone who works for your firm who handles marketing.
- Advertising/Lead Generation — This is where you’d categorize things like pay-per-click ads, SEO, or any kind of TV or radio spots.
- Events — Do you sponsor any local or industry events? The sponsorship and travel costs should go here.
- Software — It’s really hard to market without some sort of software helping you out. Maybe you pay for MailChimp, Hootsuite, or some other apps. Those charges go here.
- Offline Marketing — Do you have an aggressive direct mail campaign or a print newsletter?
- Referrals — What sort of investment do you make each month to obtain and nurture your referrals?
- Miscellaneous — It’s always good to have a miscellaneous line for those things that may not quite fall into any other category. Just make sure you stay consistent.
Are all of those things (aside from payroll) marketing activities? Yes, you want to make sure you’re intentional about where you spend your money. Don’t just throw money at the proverbial marketing wall and hope something works out. Have a specific budget within your master budget to track each activity.
What’s the point?
When you understand that various marketing strategies produce different outcomes and that your firm needs to market differently to people depending on where they are in their buyer’s journey, it becomes easier to break things down and track individual ROIs.
For example, you may be able to generate all the leads you need for just $1,000 each month. However, you’ve noticed that those leads take several months to convert. After some research, you learn that content marketing can help nurture those leads along, so you decide to invest in that. Being able to see that separated out and broken down in your budget will help you develop a better understanding of your ROI.
The only question remaining is how much money should be devoted to each line item. Unfortunately, there’s no magic answer because it depends on the size of the firm and its objectives. You should, however, be devoting about 10% of your revenue to your marketing activities. From there, decide what’s most important to you and start spending!