And now for the final blog in our five steps to a strategic marketing plan: the budget.
In our previous blogs, we’ve covered:
- Blog 1: Determine Your Marketing Philosophy
- Blog 2: Determining Goals & Objectives
- Blog 3: Setting Marketing Strategies
- Blog 4: Determining Tactics
We encourage you to read through these blogs as they are all essential elements of developing a successful plan.
Step 5 – Determining Your Marketing Budget
If you Google the subject, you’ll likely find someone citing a rule of thumb for establishing a marketing budget to be somewhere between 2% – 5% of revenue. However, your marketing budget shouldn’t be determined by an arbitrary revenue range. It should be directed by your company’s goals and objectives for the future, by how fast you want to grow and how serious and ready you are to grow it. To help illustrate my point, consider the two business scenarios:
As the owner of a start-up company you have no customers, no brand awareness and no revenue. Logically, you will focus your business goals on creating awareness, securing qualified leads and acquiring customers. Since success is going to require aggressive growth through customer acquisition, clearly a marketing budget that is a reflective percentage of your revenue, which is zero, won’t work here.
Now several years later, your start-up company has grown into a $50 million dollar business. In fact, it has grown faster than your ability to manage and service all your new customers. A quick analysis tells you that the same internal infrastructure you’ve been using since your start-up days can no longer support and service your demanding customer base. Now, with more business than you can handle your business goals will change from what they once were as a startup. Rather than focused on growth and customer acquisition, they will become more focused on upgrading internal infrastructure to keep and serve the business you have. While this doesn’t mean you should stop marketing altogether, a less aggressive marketing approach is warranted and that comes with a smaller marketing budget.
But your marketing budget can’t be solely focused on just dollars. It also must consider time and resources. So before you submit your budget, you must also determine how many manpower hours will be required to manage and execute the plan.
So, for example, let’s say your marketing plan will require approximately 600 manpower hours to effectively manage and execute. Assuming the average employee puts in a 40-hour work week, that gives you 2,080 hours a year, per employee, to be carved up and allocated to make the company run.
Now, how many of those hours can be dedicated to your new marketing plan? Well, if the majority of your team’s time is already filled and you can only conjure up an additional 300 hours to dedicate to the execution of the plan, then the dollar budget doesn’t really matter because you only have enough time and resources to execute 50% of the plan.
This leaves you a few alternatives, with regard to plan execution: (1) Hire more people (2) Outsource more of the marketing work, or (3) Dial back the aggressive expectations of your business goals.
Come back next week for an essential Bonus Tip for developing a strategic marketing plan. And look for our e-book on the Developing a Strategic Marketing Plan in few weeks. Afraid you may forget? Subscribe to our blog to get the latest posts delivered right your in box.
If you’d like to learn more about how to develop a strategic marketing plan, feel free to send us a message or give us a call at 440-449-6800.