B2B Lead Generation | Size of the Marketing Budget
I was recently asked this question by the VP of Marketing at a young software company
. “For a software company, what percentage of revenue should represent our marketing budget?“
Good question, but instead of a rough rule of thumb, Find New Customers suggests you do a few calculations to arrive at more specific outcomes.
- What is your revenue goal for the next 12 months?
- What percentage of that revenue has to come from new customers?
- What is your average deal size?
- What percentage of sales-qualified deals do you win?
- How many sales-qualified leads will you need to make the revenue goal?
- What percentage of marketing-qualified leads turn into sales-qualified leads?
- How many marketing-qualified leads do you need to make the revenue goal?
- How many raw opportunities do you need to generate to create the number of marketing-qualified leads needed?
- What is the marketing spend needed to generate a raw lead?
- Multiply the cost of each raw lead by the number of raw leads needed. That’s your marketing budget.
As you can see, instead of a rough guess at a marketing budget, you can actually calculate the budget needed to generate the new customer revenue needed.
What do you think? We love comments and those who share our content on social networks.
Jeff Ogden (@fearlesscomp) is the President of the B2B lead generation consultancy Find New Customers. Find New Customers helps companies dramatically improve revenue results by transforming the way they attract, engage and win new customers. Contact Find New Customers by calling (516) 495-9350 or sending an email to sales at findnewcustomers.com.
“If more companies listened to (Find New Customers) a lot more would be sold.” Dan McDade, Pointclear.
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Jeff Ogden
You missed two points:
1. 11: Double it. Things never work out as you think.
2. Lead generation is changing. Your whole strategy is based on leads to an appointment for your sales department. The number of companies using traditional buying methods is falling exponentially and thus you need to double it again as it will be twice as hard to get leads from only half the market. Or, of course, you could move away from “Marketing Makes Leads for Sales” to online engagement to reach the other half with a quarter of the budget.
Thank for the comment, Peter and good point. There is a saying “Everything takes twice as long and costs five times as much as you expect.
Everyone should read your reply. It is, as you say “twice as hard” as it used to be to get leads.
Jeff