How Much Should I Spend on My B2B Marketing? (Part 1)

by Jennifer Beever

Blog entry excerpted from the Marketing chapter written by Jennifer Beever in The Book on Business from A to Z

How much should you spend on your business-to-business (B2B) marketing budget? The answer requires a combination of science and art.

In this post I will show you how to arrive at a marketing budget, using existing sales and marketing data as an example. In real life, you may choose to calculate separately for each product or service, as each may have different variables.

Calculating Your Marketing Budget – The Science

First, you will need to know your revenue goal for the upcoming year. That is not historical – that’s a forecast amount based on opportunities in the market and your capacity for growth. You also need to know your average sale in dollars. Next is the tough piece of data – what is your conversion rate from prospects to customers? This is where you need some history – at least a few months of experience to estimate this number. In the long run, if you are to know your conversion rate, you need to track each sales opportunity and its outcome. With all of the above information, you can back into a calculation of the number of leads you must generate to achieve your forecast revenues.

sales funnel

Does the science end here? Not exactly.

Calculating Your Marketing Budget – Adding Art to Science

Now comes the hard part. To generate the number of leads you have to have to get enough sales, what marketing tactics are the best? This is where you have to know what form of communication your customers want, where they like to go, and the best way to get in front of them. Hopefully you have this information, because you’ve tracked your historical marketing performance and have some data to work with. If you don’t know, hire an expert!

Once you have a list of tactics, cost them out, including all labor, materials, outside services, etc. Each tactic must have a lead generation objective that you are going to track (generate 100 inquiries; get 20 people to call; get 50 people to sign up for the webinar). Add up all your marketing costs, and that is how much you will spend on your marketing.

How much will you really spend? It usually comes down to a budget and what you can afford. But this exercise at least takes some of the unknown out of marketing budgeting and provides a scientific approach.

For more information about budgeting and planning your marketing tactics, contact New Incite! We’ve been doing this for almost 30 years and have lots of experience to share.


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Best of B2B Marketing Zone for February 9, 2012 « Sales and Marketing Jobs
February 11, 2012 at 2:10 am

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