1. Understand Your Sales Funnel
The first step in creating a well-balanced marketing budget is to review your sales funnel, which will help you track how much money you’re spending, where it’s going, and how much revenue your marketing efforts are bringing in.
Depending on the tools you use, you should dig into your analytics by using your customer relationship management tools.
At this point, you’ll want to ask yourself questions, such as:
How many leads are generated each month?
How much does each new lead cost?
What percentage of leads are being converted into sales qualified leads?
What is your average revenue generated by each sale?
When you dig into this information, you’ll get a much better understanding of your cash flow and how your business is generating revenue based on your marketing decisions.
2. Setting Goals
Especially for newer businesses, it’s critical to understand that your business probably isn’t going to be wildly successful after your initial launch.
While this might be frustrating, it’s vital to have SMART goals in place, which will help you make overall better and more informed decisions about your marketing budget and ad spend.
A SMART goal is a goal that is Specific, Measurable, Attainable, Realistic, and Timely.
Rather than setting vague, imprecise goals, such as “I want to earn $100,000,” you’d set much more specific goals, like, “I will earn $25,000 by the end of each financial quarter, which will put my business on track to earn $100,000 by the end of 2021”.
3. Understand Trends
No matter what products or services you provide, it’s essential to understand both the current and future trends to expect in your industry as a business owner. Knowing what’s trending here and now ensures that you’ll be able to make smarter marketing decisions.
For instance, maybe there’s been a rash of new companies providing marketing automation tools, and businesses everywhere are investing in these tools.
As a wise business owner who knows about this trend, you’d potentially want to allocate some of your marketing budget to such technology. Alternatively, by understanding current trends, you’ll also better understand what to expect in the future.
Once again, this makes it easier to make smart, more informed decisions about your business’s current marketing needs and your overall budget.
4. Return On Investment
Marketing should be seen as an investment rather than an expense.
Therefore, you may need to tweak and adjust your marketing budget until every dollar spent on marketing campaigns brings in a return on the initial investment.
For instance, for every $1 invested into a PPC ad campaign, you’ll want to see more than $1 come back in terms of business revenue.
If we’re being realistic, your profit margins probably won’t be massive at first.
But over time, as you continue to monitor and tweak your marketing strategy, you should be able to gradually increase the amount of money you get back, which is referred to as your ROI or return on investment.
5. Balancing Your Marketing Budget
Marketing is often one of the biggest costs business owners will incur.
However, any money spent on marketing should always be seen as an investment rather than an expense.
When properly optimized, your marketing campaigns should always bring in a return on your investment.
Therefore, take the time to dig into your marketing and sales funnel analytics and understand where your money is going and how much is being generated.
Also, make sure to set SMART goals along the way, and you’ll easily be able to make smart, more informed decisions when creating your marketing budget!
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