How to Calculate Your 2013 Marketing Budget

January 15, 2013 2 Comments
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I’m going to show you exactly how to calculate a marketing budget for 2013

An earlier post entitled “How Big Should Your Marketing Budget Be?” covered two ways to calculate your marketing budget - a rough estimate and a calculated approach.  But I was disappointed to see that almost all of the discussions on LinkedIn was about the problems with the rough estimate approach - high variation, industry differences, etc. It seems few know how to calculate a marketing budget.

Case in point, the comment below shows a calculation based on last year’s results.

LinkedIn Groups
  • Group: BtoB Online
  • Discussion: How Big Should Your Marketing Budget Be?

There are simply too many variables across businesses and industries for there to be a single standard - either for the amount or the process for determining same. What is standard is - track results and report to senior management, “Here are our results with the current budget. Here is the projection for how we can contribute more with an increase of x%.” You can only ask for more if you optimize that you get on day one.
Posted by Dan Prince

This led to a conclusion:

Most seem not to know how to calculate a budget.

So in this post, I’ll show  you how it’s done - how you can calculate your market budget. I hope it helps you. Please let me know in the comments.

Let’s take the example of a San Francisco based venture-backed software company we’ll call Super Duper Software - who sells large enterprise deals to companies.

How to CALCULATE the Super Duper Software marketing budget:

The CEO of Super Duper Software meets with the board and promises to deliver $25MM in new customer revenue for 2013. The board accepts her promise. She leaves the meeting, walks up to her Chief Marketing Officer (you) and says “What do you need to deliver on my promise of $25 million in new customer revenue?”

Now we have what we need to calculate. You can determine EXACTLY what you need, if your assumptions are correct.

  1. Convert Revenue to Deals.
    Divide revenue by average deal revenue.  (We’ll assume the average deal size is $250,000, so we need to close 100 deals in 2013 to book $25MM in new customers revenue.)
  2. Convert Deals to Sales Qualified Leads.
    We win about 1 out of 3, so we need 300 Sales Ready Leads to close 100 deals.
  3. Convert Sales Ready Leads to Marketing Qualified Leads.
    MQLs convert to SQLs on a 5 to 1 ratio, so we need 1,500 MQLs in 2013 to get 300 Sales Ready leads.)
  4. Convert Marketing Qualified Leads (MQL) to Raw Sales Leads (We’ll assume it takes 20 raw leads to get one MQL, so we need 30,000 Raw Sales Leads to get 1,500 Marketing Qualified Leads.
  5. How much does a raw sales lead cost?
    Multiply the cost by the number of raw sales leads needed. (Let’s say it costs about $250 to get one good raw lead - using Webinars, email, marketing automation, personnel, benefits. Multiply $250 by 30,000 and you get…)

The marketing budget you need to deliver $25MM in new customer revenue for the year for Super Duper Software is $7,500,000!

As this illustration showed, it is quite easy to derive a marketing budget based on calculations. So stop guessing and calculate your marketing budget using this model.

What do you think? We love comments and those who share on social media.

Jeff Ogden, the Fearless Competitor,  is an award-winning B2B marketing and sales expert - who works for The Pedowitz Group. You can follow Jeff on Twitter at @fearlesscomp.

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Filed Under: Marketing, Self Education Tagged With: management-best-practices, , marketing-campaigns

How Big Should Your Marketing Budget Be?

November 14, 2012 4 Comments
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I get asked this question all of the time. “How much can I expect to get in my marketing budget?”

So I decided that the sales lead generation company Find New Customers would help you answer the question: “How Big Should My Marketing Budget Be?” After all, it takes money to do great marketing and you need to get budget approval.

How much of a budget is reasonable for you to ask for?

There are two ways to arrive at a marketing budget:

  1. Use a rule of thumb
  2. Use a calculated approach
One is simple and quick, but not very accurate. The other is much more exact, but more work to compile. Let’s examine them:

Rule of Thumb (Rough approximation)

Companies spend on average between 3% and 7% of revenues on marketing. Smaller firms have lower revenue, so they invest a higher percentage in marketing. So a $10MM in revenue firm could expect to have a marketing budget of around $700,000. But a billion dollar firm would expect a marketing budget of around $30,000,000. (Thank you Rene Bonvanie for correcting my math.) This approach gives you a rough guess of what the budget should be. Thanks to @sandraz and @pauldunay for these numbers.

Calculated Approach (Specific result)

This is what I call a “How many leads do you need? approach. “Mac” McIntosh offers a sales lead calculator spreadsheet that helps us use a more scientific approach. Using this method, you answer a series of questions including:

  • What is your company’s gross sales revenue target for the fiscal year?
  • What percentage of your sales should come from marketing leads?
  • What is your average sale size?
  • What is the percentage of sales opportunities your company will win?
  • What percentage of your inquiries (marketing responses) will become qualified leads?
  • What response rate do you expect?
  • What is your expected cost per marketing contact (touch)?
  • How many salespeople need to receive leads from marketing?

Download the spreadsheet and fill in your answers. The marketing budget will be calculated for you.

The advantage of the calculated approach is that it yields a much more specific answer than the rule of thumb approach. We thank Mac McIntosh for this information.  Learn more at this Demandcon article

How Leads Impact B2B Marketing and Sales Alignment

No matter which approach you choose, we hope this helps you calculate a reasonable marketing budget for your business.

What do you think? We love comments and those who share on social media.

Jeff Ogden, President of Find New Customers is an award-winning B2B marketing expert. He was named a top 25 Sales Influencer for 2012 by OpenView Labs. He was also named one of the Top 50 Most Influential in Sales Lead Management by the Sales Lead Management Association. And this blog was named the top B2B blog of 2012 by BuyerZone. He also holds a degree in Marketing from the University of Notre Dame.

Filed Under: Self Education Tagged With: , management-best-practices,

Focus.com goes out of business, but Marketing Made Simple TV thrives

September 17, 2012 Leave a Comment
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With Focus.com folding, more and more companies are turning to Marketing Made Simple TV to drive results.

“Marketing Made Simple TV is great content for us, great PR for us, and it’s useful for creating leads too. Best of all, it delivers ongoing results.” - sponsor of Marketing Made Simple TV

I had an interesting conversation with a top executive of a marketing software firm. She told me her firm had been planning to advertise with Focus.com, but since Marketing made simple tv logoFocus.com is going out of business, they’d like to try sponsoring Marketing Made Simple TV. As always, the show is thrilled to win new sponsors, but I didn’t like the reason.

(It was confirmed by Jill Rowley of Eloqua who spoke with Craig Rosenberg and confirmed that Focus.com has shut down. Thanks, Jill.)

I’m saddened to see them go.

This marketing software company is taking marketing dollars earmarked for Focus.com and moving them to Marketing Made Simple TV. The business results delivered by our broad syndication and awesome guests produce remarkable numbers for “seed nurturing” - and our Calls to Action with content creates sales leads.

Maybe you should move your marketing dollars to Marketing Made Simple TV too. Eloqua did. InsideView did. This company will soon.

One of the main reasons why companies sponsor Marketing Made Simple TV is our broad and wide sponsorship. As a result, as many as 500,000 people each week are exposed to the show. (This number is way too low. The show actually reaches over 1,000,000 each week.)

To learn the value offered by this popular show, including our remarkable syndication approach, visit:

Sponsorship/Advertising Opportunities on Marketing Made Simple TV

Check out this screen capture of a sponsored show (sponsored by Eloqua) Note the Call to Action and the yellow button. Clicking the button takes the viewers to the sponsor landing page, where they register with the sponsor.

Paul Dunay show

What do you think? We love comments and appreciate those show share our posts on social media. And you can reach the host of the show at host at marketingmadesimple.tv

Filed Under: Marketing Tagged With: management-best-practices, , , marketing-campaigns

Lead Generation Tactics and Spending from MarketingSherpa

August 9, 2012 Leave a Comment
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This chart by MarketingSherpa explains where lead generation budgets are being spent. As you can see, website optimization, social media, SEO and content marketing are the top four. Print advertising, tradeshows and Direct Mail are the bottom four.

But I don’t just report the news. I tell you what I think.

  • Content marketing should be at the top. It is an investment, but pays BIG TIME in the long run. Check out the e-Book by Eloqua and Kapost “The ROI of Content Marketing.“
  • I understand that direct mail is low, but there is a simple fact that makes it very attractive. The mailbox is empty. The email inbox is overflowing. That makes targeting the mailbox a very effective tactic, if used well.
  • SEO is too high. The updates from Google killed traditional SEO - especially keyword optimization and inbound links. You should still optimize your content, but if you are not publishing a blog daily, you are not doing SEO.
  • Webinars are way too low.  They make great content marketing events.  They are also powerful, if well executed (such as a big name speaker, chapter indexed recordings. We recommend you read Avitage’s New Approach to Webinars for fresh insights.
  • Mobile is WAY too low. Fact is all of your prospective executive buyers have smartphones today. It is the best way to reach business executives. Check out Marketing Made Simple TV with mobile marketing expert Christina “CK” Kerley for more.

And if you wish to see a different view of the world, look at what MECLABS found as top tactics. Social media - number 2 in MarketingSherpa is dead last in MECLABS.  I think it was Will Rogers who said there are three kinds of lies: Lies, Damned Lies and Statistics.

Through extensive marketplace research, the MECLABS team has identified the top 10 lead generation tactics for 2012, used by marketers each and every day.

  1. Search engine optimization (SEO)
  2. Paid search (PPC)
  3. Webinars
  4. Website optimization, management or design
  5. Tradeshows
  6. Email marketing
  7. Content marketing
  8. Direct mail
  9. Mobile marketing
  10. Social media

What do you think? We love to read comments and appreciate those who share on social media.

Filed Under: Marketing Tagged With: , lead-generation, lead-nurturing, , , sales-challenges

The Real ROI of Content Marketing

August 7, 2012 Leave a Comment
patience-is-a-virtue1

Successful content marketing for sales lead generation requires investment and lots of patience

Let me quote from a post by Joe Pulizzi of the Content Marketing Institute entitled “Content Marketing and the War of Attrition.”

“There are a lot of reasons why content marketing doesn’t work for some companies. If we were making a list, they would include:

  • A lack of understanding reader/customer needs
  • Focusing on the wrong metrics and objectives
  • A soloed approach to content marketing
  • Poor execution
  • Bland storytelling
  • Lack of authenticity
  • Creating information that, simply put, is not helpful or engaging
  • Sales pitches disguised as content

And the list goes on…

But the biggest culprit (and it’s not even close) is a lack of consistency, and, in some cases, a content stoppage. (Companies give up too soon.)

Research from IBM in 2010 stated that about 80 percent of corporate blogs never post more than five entries (hat tip to Rebecca Lieb). That is a truly unbelievable stat…a stat that gets to the heart of the matter. (The award winning sales lead generation blog Fearless Competitor has over 1,700 posts to date.)

Content Marketing is a War of Attrition”

Here are lessons from the Eloqua/Kapost ebook: The ROI of Content Marketing

“In the first 5 months, cost per lead drops by 80%.” That’s certainly true, but the cost is very high to start, as companies invest in staff, writers, research, etc.

Content is also an asset, as opposed to paid search, which is an expense. As the ebook says, once you’ve built up your audience, you own it. You now longer have to pay rent to media. (Google) But it takes time for the asset to build up. In fact, this ebook found the cost per lead from content marketing passed the cost per lead of paid search in month 19. In subsequent months, the lead grew bigger and bigger, but keep in mind that your business must stick to content marketing over the long run (over a year and a half) before you really start seeing a return.

“The number of leads per $1,000 in content marketing starts very low. (In contract, PPC gives X leads per $1,000 consistently.) But at around 19 months, as the content marketing operation builds its audience, the number of leads per $1,000 surpassed that of paid search. As the audience continues to build, the effectiveness of content marketing continues to grow while the need to continue to pay for leads remains the same. After 36 months, content marketing has generated 31 leads per $100 spent - 330% greater than paid search.”

330% better than paid search sounds great. But remember, you’ve been doing content marketing consistently for three years!

To sum up their findings, content marketing needs to become a business process - one that you do on an ongoing basis for years.

“The point is that those who embark on content marketing must understand that is a long-term effort, requiring a significant investments of time and resources before results can measure up successfully.”

The bottom line is that content marketing works great for companies willing to invest in content marketing and stick to it for three or more years.

What do you think? Does your company make the investment and have the patience to succeed with content marketing? We love to read comments and appreciate those who share on social media.

And you can watch the great content marketing roundtable with Joe, Jim Burns of Avitage and Doug Kessler of Velocity Partners UK below.

 

Filed Under: Marketing Tagged With: content marketing, , management-best-practices, , marketing-campaigns

Are you a manager or director of Marketing? Check out CMOs Speak by Silverpop

July 9, 2012 Leave a Comment
CMO survey (1)

This new white paper from Silverpop, penned by Jeff Ogden of Find New Customers (His fourth white paper to date) shares ideas and insights from some of the top CMOs in America. If you are a director or manager of marketing, it  delivers key recommendations you can use in your business today.

For digital marketers, the shifts in social and mobile are profound. You’re dealing with a vastly different customer – one who’s empowered with information and communication tools like never before.

Gain fresh ideas and insights from some of today’s smartest marketing leaders about how to navigate this crazy new world, including:

  • Articulating the voice of the customer
  • Rethinking basic building blocks around buyer behavior
  • Embracing peer engagement
  • Innovating faster and committing to change

Download this free white paper at

CMOs Speak: Navigating the Crazy New World of Marketing Today

What do you think? We love to read your comments and appreciate those who share on social media.

Filed Under: Marketing Tagged With: , management-best-practices, , marketing-campaigns,

Making a Marketing Reality Check

June 26, 2012 Leave a Comment
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Business has only two functions - marketing and innovation - Milan Kundera, Czech Novelist

You should see a key section of the sales book I’m currently reading  - Rules of the Hunt (Click the link to read the author’s interview with Jill Konrath) by Michael Dalton Johnson, founder and CEO of SalesDog.com

The section of the book on marketing struck a nerve with me and maybe it will you as well. (Marketing, especially B2B lead generation, is our specialty at the sales lead generation company Find New Customers.) As a top sales expert and business executive, Michael is well-equipped to advise companies on marketing strategies for sales lead generation. His key point is that marketing is not best left to amateurs.

Here’s this section of the book I want to share:

___

Making a Marketing Reality Check

“It’s remarkable how many people think by starting a business, they have somehow become marketing experts.

The basic concepts are simple and easy to understand, but like many things, the devil is in the details. The old adage about poker comes to mind. It take a minute to learn and a lifetime to master.

While marketing doesn’t take a lifetime to master, unless you have a few years of successful marketing experience, you don’t know much about marketing.

I suspect that businesses lose millions, perhaps billions, each year, both from the cost of paying for marketing that doesn’t work and sales lost by amateurish marketing.

Hire or retain a marketing professional (like Find New Customers) to manage this all-important function. A marketing pro will accelerate your business growth and
generate revenue for you far in excess of the cost. Of course, you will have questions. You will want to see plans, budgets and projections, and you will want to be kept informed, but resist the urge to second-guess or meddle in the details.”
___
Great tips, Michael.  In fact, when Find New Customers was working with the Marketo client, Protegrity, they violated all this advice.  Despite sharing plans, budgets and projections, they constantly second-guessed and meddled in the details. The budget fell on deaf ears. Their content marketing budget was zero. Nothing could get done. Don’t behave like they did.

What do you think? We love comments and those who share on social media. We also invite you to share your email address, so you can get our weekly newsletter. And check out our SCORE Demand Generation program.

 

Filed Under: Marketing Tagged With: , lead-generation, management-best-practices, , marketing-campaigns, sales-challenges

Top Challenges in B2B Content Marketing

June 9, 2012 1 Comment
buyer personas drive content

This is a guest post penned by Jeff Ogden of the sales lead generation company Find New Customers for Marketo.

A poll taken by MarketingProfs unveiled the biggest challenges marketers have with content marketing. The challenges include:

  1. Producing engaging content (36%)
  2. Producing enough content (21%)
  3. Budget to produce content (20%)
  4. Lack of C-level buy-in (11%)
  5. Producing a variety of content (9%)
  6. No answer (3%)

In his latest vlog, Jeff Ogden (the Fearless Competitor) expands on the top two challenges incontent marketing. Read the the summary, or watch the video, below.

How do you produce engaging content?

You must do something that the audience enjoys and connect with them on an emotional level. People enjoy learning something unexpected. Start by brainstorming, even suggest crazy and unusual ideas.

How do you produce enough content?

The key to creating enough content is to take stock of what you have and find ways to repurpose it. Think of using different types of media. Think of turning a blog into a poll then announcing the winners of the poll through a weekly video.

 

Filed Under: Marketing Tagged With: content marketing, management-best-practices, , marketing-campaigns

Marketing Automation does not make you smarter, better looking or a better marketer

May 5, 2012 2 Comments
young attractive woman looks into a mirror

Find New Customers is working with a software firm in CT with their sales lead generation programs. They suffer from a few problems that hamper there sales lead generation efforts:

  1. Little to no engaging content
  2. No lead scoring
  3. No marketing calendar, budget, etc.

But, this firm does have a state-of-the-art marketing automation software, Marketo.

I was struck by what I found there. It’s certainly not Marketo’s fault, but the bottom line is this:

“When it comes to sales lead generation, buying software does not make you smarter, better looking or a better marketer.”

Software is really easy to buy, but creating great sales lead generation programs is really hard and not for the faint of heart.

Check out our SCORE Demand Generation Program if you face these challenges.

What do you think? We love comments and those who share on social media.

Jeff Ogden, President of Find New Customers is an award-winning B2B marketing expert. He was named a top 25 Sales Influencer for 2012 by OpenView Labs. He was also named one of the Top 50 Most Influential in Sales Lead Management by the Sales Lead Management Association. And this blog was named the top B2B blog of 2012 by BuyerZone. He also holds a degree in Marketing from the University of Notre Dame.

 

Filed Under: Marketing Tagged With: , management-best-practices, , marketing-campaigns

Check Out “5 Keys to Successful Lead Nurturing” sponsored by @datadotcom

April 25, 2012 Leave a Comment
Lead Nurturing
5 Keys to Successful Lead Nurturing

View more webinars from Find New Customers, Inc.

This is the webinar I did for Data.com last week. 5 Keys to Successful Lead Nurturing, presented by Jeff Ogden, President of the lead generation company and global marketing firm Find New Customers. With to thank DataDotCom for making this possible.

Jeff Ogden of Find New Customers is a professional writer, speaker and hosts two online TV shows, Mad Marketing TV and Marketing Made Simple - due to premier soon.

What do you think? We love to read you comments and appreciate those who share our posts on social media.

Filed Under: Marketing Tagged With: , lead-generation, lead-nurturing, lead-scoring, management-best-practices, , marketing-campaigns
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