Best Uses for H2 2021 Budgets
Even when things appear to be going in the right direction, budgeting for marketing activities can be tough, especially in the second half of 2021. The death of third-party cookies has had a significant impact on marketing strategy, along with the ongoing COVID-19 pandemic. Nonetheless, the execution and strategy behind successful marketing campaigns rely on planning a solid marketing budget.
How to Plan Your Marketing Budget for H2
Here are some helpful steps for planning out your remaining 2021 budget.
Step 1: Set Your Marketing Business Goals
Base the results you want your marketing efforts to yield around your goals. Higher priority projects receive more budget than those that don’t contribute such growth. For instance, one plan can increase engagement on social media or drive more traffic to your website. Additional marketing objectives include driving more sales, increasing leads, earning more subscribers, and increasing brand awareness.
Step 2: Define Your Overall Budget
Look at your financial status for last year’s budget and get organized. Take note of steady profits and adjust any financial losses sustained during the year while determining any hidden costs such as promotions, print advertising, and social media. Your marketing budget begins to take shape after you establish overall fiscal health.
Step 3: Track ROI
It is crucial to figure out what your returns are any time you invest money. Measure the impact of your tracked marketing expenses and conclude whether or not your budgeting helped you accomplish the revenue you set out to attain.
Budgeting marketing spend is vital for your business to thrive. Analyze B2B marketing spend by industry to see how your numbers compare to your competitors. Equally important to the total spend is how B2Bs spend their marketing dollars. More than ever, there is a shared focus on content marketing, digital marketing, demand generation, and analytics.
Nurturing Old Leads vs. Strategies to Gain Net-New Leads
Create an ROI Framework
Traditionally, marketing is often viewed as a cost center. Marketing investment discussions concentrated on cost instead of return because marketers couldn’t successfully track and prove their contribution to the organization’s bottom line. Nowadays, marketing is categorized by data usage and a rising focus on delivering leads who become clients and increase revenue. Thus, your budget proposals should have additional resources that can help improve your KPIs that relate to business goals or sales productivity. Simply put, create a forecast for KPI increases, then sell your budget to achieve this objective; the storyline changes when you focus on ROI.
Separate Lead Generation From Branding
As we know, there are two general types of campaign expenditures: lead generation and branding. But why is branding so important for a company’s bottom line? Well, regarding how buyers make decisions, it is critical. After a problem is identified and there is an agreed solution, business buyers will develop a consideration set. Often, companies on the other end of that list struggle to influence the buyer’s decision. Branding is the most significant expenditure for companies hitting their revenue goals, but it is a problem from a measurement standpoint. Thus, it’s essential to designate a portion of your budget for branding, as it does affect your revenue. Keep in mind that you must also stress the impossibility of measuring specific branding initiatives.
Balance Lead Generation and Lead Nurturing
Lead generation campaigns are the easiest to measure and are designed to deliver a certain return. Future results of lead gen campaigns should be easy to forecast once you discover the correct campaign formula. So do you focus on acquiring new leads or nurturing the prospects in your database? In almost all cases, it is best to do both. However, based on your company’s situation, the distribution of resources between the two will change.
How to Calculate the ROI of Lead Nurturing
When a company makes a marketing investment, it should have an estimated return on investment to accurately frame the expectations with the marketing budget holder and the sales department. The sales team benefits from the investment and must produce a plan to support the program. Below is a breakdown of a simple marketing investment that focuses on hard costs to quickly establish if a program meets your marketing ROI goals. The scenario demonstrates the process and equation for calculating the ROI of a B2B lead generation campaign in 6 helpful steps. On your next lead generation investment, estimate the following data points to understand the ROI.
1. (TMC) Total Marketing Costs
In this example, the client will spend $8,000 on a lunch-and-learn event for new prospects. Note: This cost included the food, venue, door prizes, driving attendance, and the creation of marketing materials to promote the event.
2. (L) Number of Leads
They expected to get 12 new prospects to attend the lunch event at an upscale local restaurant.
3. (LO%) Lead to Opportunity Rate
They expected 25% of the attendees to become qualified opportunities within the next 30 days for this group.
4. (C%) Sales Close Rate
The sales team has an established close rate of 33% for qualified opportunities.
5. (ACR) Average Client Revenue
They know that the average revenue generated from a new client is $24,000 annually.
6. (GP%) Average Gross Profit Margin
The average gross profit margin for their solution is 35%.
With this data, a marketing director can easily calculate the ROI of any marketing program. Here is an example:
# of Leads (12) x Lead to Opportunity Rate (25%) = 3 Qualified Opportunities
3 Opportunities x Sales Close Rate (33%) = 1 New Client
Average Client Revenue ($24K) X # of New Clients (1) = $24,000 in Revenue
Est. New Client Revenue from Program ($24K) x Average Gross Profit Margin (35%) = $8,400 in Gross Profit
Gross Profit ($8.4K) minus Total Marketing Cost ($8K)/ Total Marketing Cost = 5% Return on Investment (ROI)
The equation can accurately be used to determine the ROI for any marketing program quickly. In the demand generation or lead generation realm, marketing investments should be directly tied to new business opportunities and new business revenue.
To conclude, maximize your marketing budgets by funding critical initiatives that drive your business forward. After all, the success of your company depends on it!