How to Build a Marketing Budget: 3 Steps to Help You Plan for 2021
Developing your marketing budget
Budgeting can be a challenging process in a normal year. Many organizations estimate their marketing budget based on the previous year’s budget and mark it up by a percentage. 2020 has brought nonstop changes, which may make the budgeting process more complex than ever before. The business environment has changed, as a PSP or supplier, your direction may have changed and how you approach the market and the tools you use has definitely changed.
Below are three steps to define your 2021 marketing budget
- Revenue-based planning
There are several considerations that a company should account for when determining its budget. The size of the business, your growth expectation, new product launches, and the markets you’re currently serving and new markets you’re entering. All of these things will impact your budget. Consider these two guidelines, since there are no hard and fast rules for budgeting (your requirements will vary based on specific organization goals):
- 12-20% (of net sales) for new entities looking to build awareness
- 6-12% (of net sales) for established organizations
- Three areas of revenue generation - Customer Retention, Growth, Acquisition
From a marketing perspective you will need to deploy tactics and strategies in each of these areas to generate revenue. Depending on your business focus for growth, there are up to three areas that require resources and budget:
- Customer Retention, keeping those customers that you worked so hard to acquire. Plan for loyalty programs. Loyalty leaders in their industry grow revenues roughly 2.5x as fast as other companies.
- Customer Growth, expanding the product and services your customers buy. Cross sell offerings via multichannel programs are effective.
- Customer Acquisition, growing market share by expanding your customer base. This is the most resource intensive area of the budget. It costs to build awareness and it’s a longer process.
- The spend
Costs include, but aren’t limited to, the following and should be included in the marketing budget:
- Multichannel outreach programs
- Website updates
- Content creation – case studies, videos, etc.
- Social media
- Sample kits
- Events – on-site and web-based
- CRM services
- Loyalty programs
Your budget has a limit. You will likely need to consider and estimate costs for internal resources for their time and external resources with fees for service. Use it wisely.
As you track your progress and evaluate program effectiveness throughout the year continually revisit your budget. Track marketing spend on a monthly or quarterly basis to evaluate programs and revise strategies.
Just like your marketing strategy and marketing plan, communicate with your team. Inform other departments of your planned programs. Are you looking at a new CRM? Engage with sales and customer service since a CRM will impact their line of business.
2021 is sure to be a year of highly creative programs with associated budgets to attract prospect and customer attention.
Not sure how to begin your marketing budget? Is now the time? Visit my website, KimberlyMeyers.com or call me direct 646.320.8854 for more information. Let’s connect.
Kimberly Meyers is the principal at Kimberly Meyers & Associates, a marketing consulting firm. Kimberly is a Marketing VP for hire. She develops marketing solutions based on strategic assessment of her client’s business, sales and marketing requirements. She lives by the philosophy of ensuring the appropriate message and content is delivered to the target audience – always, focusing on customer needs and satisfaction. Kimberly welcomes your connection at email@example.com.