Here’s how I begin to teach companies how to calculate the right marketing budget for growth:
- First, define objectives in the most specific way possible. Goals like “I want to be a household name in the X industry” is fantastically ambitious, but it’s not a marketing goal.
It’s a wish.
Define success in personal terms first: if all your wishful outcomes came to fruition, what would you do next? Acquire another company? Retire? Sell? Limit your involvement in a specific role (instead of doing everything)?
It’s remarkable to me how marketing strategies are pointed toward tactics that work in the short term - e.g., drive more traffic to your site - but also work against a long term personal goal.
Abandon the general. Specificity means decision-making and, yes, that’s hard. Keith J. Cunningham declares, in his book, The Road Less Stupid, that optimistic generalizations are the death knell of many a great idea.
- Be honest with yourself: what shows up as working and what are you holding onto until the wish comes true? Declaring excessive revenue expectations without backing it up with numbers instead of assumptions….well see my previous point about unbridled.
Truly appraise the range of opportunities--and be vigilant in picking the more realistic place to focus limited dollars and energy.
When I worked for large enterprise clients at a large advertising agency, we were typically handed a budget and asked to wrestle with strategies that could be sliced and diced to optimize spend and impact.
Smaller businesses I work with today (small to lower mid-market) are considering a meaningful marketing budget for the first time. And so, the question of “how much” and “on what” comes up at the outset of every project.
Have you determined the right marketing budget for your business?