Your marketing team members get all the love. They have great budgets, get their name in lights and have tons of support from management. For all their virtues there is one thing most marketing departments don't do well. Budget. Here are four key marketing budget numbers that all marketers need to pay attention to.
1. Costs: Income doesn't grow by how much you make, it grows by how much you save. This is no different with your marketing budget. Marketers spend tons of money on things -- media buys, advertising, staff, creative pieces, consulting, special events and more. No wonder marketing departments and accounting departments hate each other! Good marketers don't necessarily need to reduce their costs, but they need to make sure whatever they spend money on can be attributed to increased sales. Any marketing tasks that can't be attributed to sales should be looked at closer. Remember, marketing's job is to bring in opportunities for sales. Therefore, each expense needs to be scrutinized for how well it's bringing in sales opportunities.
2. Marketing-Originated Customer Percentage: Not all new business comes from marketing. Some are referrals, upsells to existing customers or other existing channels. If you want to see how well your marketing is doing at bringing the right people through the door then pay attention to the Marketing-Originated Customer Percentage. First divide new customers from leads by total new customers and multiply by 100.
For example:
Total new customers in a month = 25
Total new customers that started as a marketing lead = 10
Marketing Originated Customer Percentage = (10/25) X 100 = 40 percent
3. Customer Acquisition Costs: Some marketers, particularly those in tech, argue that this is the most important marketing budget number. Your customer acquisition cost is the amount your marketing department spends each month divided by the number of customers that come in each month. Managers often debate what marketing expenses to include in the overall 'marketing costs' total, but you should include all expenses. After all, the marketing department only exists to generate leads and acquire new customers. All of their tasks - donations, marketing campaigns, luncheons and paid-search ads are used to generate awareness and new customers for your business' product or services.
4. Buy or Build Costs: Marketing departments have small teams of people in-house that may be able to handle large initiatives like website rebuilds, content marketing campaigns, special event management and others. But should they? Would it make more sense to outsource some of the heavy-lifting on these activities to agencies or third-parties with more skilled resources? Especially if they could handle them quicker and cheaper. This marketing budget calculator helps you evaluate whether to 'buy' your next marketing project... or "build" it
Controlling your marketing budget is the key to marketing success. With so many consultants, agencies, products and services available it's very easy for marketers to go over budget in a hurry. Don't let that be you!