Did I hear a groan?
If you operate on a calendar year, you know that the minute Starbucks starts selling Pumpkin Spice Lattes that’s your cue to start the budgeting process for next year. Most of our advertising clients seem to dread this process, and I understand it can be stressful to put lots of numbers in little boxes and hope there’s something left over in the net profit line item when you’re done.
However, I actually love the budgeting process because it does two things:
A new budget gives us the opportunity to question everything we’ve done in the past
Let’s grind down into what worked, what didn’t work, what was measurable, what had traction, were there trends, are peaks and valleys explainable? Picking the marketing activities apart into tiny pieces allows them to be under the microscope, ideally with the least amount of emotion attached. Decide what pieces make sense to repeat and what must go.
A new budget is a blank slate of possibilities
What are the new goals for the year and what are the best ways to attain those? Researching and collaborating can lead to fresh new ideas that just may break through in exciting ways. It can be scary to try new things, but the world of advertising changes every single day and doing the same things you’ve always done just simply aren’t going to be an efficient or effective strategy.
Let’s think about your marketing budget as an investment versus a cost center. If you were going to invest those dollars, what would your expected rate of return be? What is your risk tolerance? What are the market conditions? What are your competitors’ marketing strategies and how do those impact your business?
I know. What you really want is a simple worksheet that can help guide your process. You’re in luck; I’ve got that here.
Let me walk you through it:
First, think about your projected gross sales or revenues for next year. This number could be higher or lower than the current year but should be a realistic target.
Consider the Numbers
Second, calculate the 3%, 5%, 8% and 12% options against your projected gross sales or revenues and plug them into the lines provided. This creates a scale for you to evaluate what might be most suitable to your current business condition.
Think About the Nature of Your Business
If you are primarily a business-to-business operation, then your budget can possibly step down to the next lowest percentage. If you are a retail, consumer-driven business, you would want to consider moving up a percentage or two.
Consistency is Key
Finally, it is important that your business is solvent enough to sustain this budget over a 12-month period of time. Unless your business is extremely seasonal, you are going to want some consistency throughout the year so that your efforts gain traction during the typical sales cycles.
See, that wasn’t so hard, was it? I hope this worksheet helps give you guideposts for your budget planning process.
Remember that your marketing and advertising efforts are designed to fill the top of the sales funnel. What you do with that potential customer from that moment forward comprises the customer journey. If your business doesn’t have a smooth sales process, then you won’t realize the anticipated ROI from your marketing budget. Stay tuned for my next blog that will help you refine the customer journey for your business!
–Jane Olvera Quebe, President