How to slice up your B2B marketing budget.
Where to allocate your B2B marketing dollars for maximum ROI
Think of your marketing budget as a pie. Everyone wants a bigger slice. But this isn’t a family dinner and it isn’t your job to make everyone happy. Your job is to make sure your marketing is effective and impactful.
So how should you allocate your B2B marketing budget dollars to maximum your ROI? And how big of a slice is enough to get the results you need? In this post, we’ll discuss how to determine what amount your overall marketing budget should be and what marketing tactics you should be investing in to achieve your goals.
How to decide how much to spend on B2B marketing.
How much is enough? Traditional wisdom holds that the ideal marketing spend should be 10% of revenue. New companies trying to scale fast are typically advised to spend between 12–20% of their overall gross revenue on marketing. While established companies looking to increase profitability are told between 8–12% is just fine.
You may find it helpful to consider what other marketers are spending. According to The CMO Survey, marketing budgets across industries made up 11.1% of total company budgets on average in 2018; the breakdown in the B2B sector was a bit lower. And marketing budgets as a percent of overall company budget were 9.2% for B2B products and 8.9% for B2B services, while as a percent of company revenues, marketing spending was 6.3% for B2B products and 6.9% for B2B services.
These comparisons may feel reassuring, but we caution against using them as anything more than a reference point. Knowing what your peers and competitors are spending is interesting, but do you have the same challenges and ambitions?
Set and prioritize your B2B marketing budget to align with your goals.
Begin with the end in mind. It sounds obvious, but how you spend and what you spend it on should align with what you’re trying to accomplish. So, before you can set or allocate an effective marketing budget, you have to get crystal clear on your goals.
As a B2B marketing agency focused on accelerating sales and growth, we’ve learned that improving ROI only matters if that return on your investment is actually returning real business results. An effective budget outlines the costs of how you are going to achieve your business goals within a certain timeframe. Write down your business goals for the quarter, the year, and over the long-term.
To determine a goal-based B2B marketing budget, you need to consider the following:
- Your position in the market
- The biggest opportunities in your industry
- Your annual revenue target
- Monthly revenue required to hit that target
- Average sale per customer
- Number of sales required to hit monthly revenue
- Average number of leads before closing a deal
- Unqualified-to-qualified leads ratio
- Inquiries needed per month
- Cost-per-marketing qualified lead (MQL)
How to allocate your budget on the best B2B marketing tactics.
Once you have clarity on your goals, how do you determine the right way to achieve them? Especially when the list of marketing tactics and platforms seem to grow longer every day? When every guru and article online is screaming to shift everything from traditional to digital, it can feel overwhelming. We recommend taking a smarter, customized approach. That’s why at Blender, we focus on the 7 fundamentals of B2B marketing to determine the right marketing mix for each individual client.
- Before you spend another marketing dollar, invest in a smarter B2B marketing plan.
The first fundamental of B2B marketing is strategy for a reason.
To drive growth, every B2B company should begin with a customized marketing plan. Only then can you effectively and efficiently divide a budget to fuel your plan. B2B companies without a clear strategy executed as a comprehensive marketing plan are doomed to underperform by being reactive instead of proactive. Strategy lays out who you should target, where you can find them and what you should say to motivate them to choose you. Your marketing plan decides how to spend smart money to engage your target and measure results.
- A strong brand makes every marketing dollar work even harder.
This might be your secret weapon. Look at your competitors. How does the market perceive them? Branding is the only marketing tactic that clearly positions you apart from the competition, which makes your product or service an easier choice. Don’t ignore this edge. Sloppy, inconsistent branding kills sales.
- Your website should be your hardest working asset.
Make no mistake, every single lead will visit your website at some point during their buyer’s journey. Your site should do three things: resonate visually and inspire confidence, answer questions and build anticipation, and convert interest into inquiry.
- The only effective way to generate awareness is to advertise.
You need to get people’s attention before you can sell them. Before you can make a sale, you have to make a connection. You need to get people’s attention, and advertising is how you do it at scale. A great ad serves as the start of a conversation. So, if your advertising is intriguing, you will attract the market’s attention.
- Digital marketing is still the biggest opportunity in B2B.
Hands down, the best way to reach the right person with the right message at the right time along their buyer’s journey is digital marketing. It’s no wonder that spending on digital marketing is expected to increase from 44% of marketing budgets to 54% in the next five years, according to Deloitte’s CMO survey.
Yet digital remains the most underutilized tool in B2B marketing, because it is also the most complex. Just two examples illustrate digital’s advantages: pay-per-click (PPC) campaigns can yield high ROI quickly, and building a robust email list can be more valuable over time. It’s complicated, but it doesn’t have to be if you start simple and learn as you go. In fact, the ability to test and optimize is digital’s greatest strength.
- Events are still the best show in town.
Exhibitions still make up to 40% of B2B marketing budgets for a reason. Fishing where the fish are to make face-to-face connections can still be highly effective — assuming you aren’t just going through the motions. You must have a detailed pre- and post-event plan to make this spend worth it. Rely on a handshake to make a connection, but leverage technology to qualify and track your leads.
- Marketing should be aligned to your B2B sales cycle.
Buyers are doing their own research, so marketing must fill the role that prospecting and consultative selling used to play. Without sales and marketing alignment, your budget won’t go as far as it could. When your marketing and sales efforts work in sync and reinforce the same compelling messaging, you’ll see stronger results than any hodgepodge of tactics could ever achieve.
When it’s time to slice up the pie, remember marketing is an investment not a cost.
So, should you divide your budget equally between these 7 slices? Probably not. Or save half the pie for digital? Maybe. The only way to know for sure is it map out your business goals and a marketing plan to achieve them.
Don’t make the usual mistake — too many B2B companies consider marketing as an expense, so they review last year’s marketing expenditures and decide to spend more or less. Instead, your B2B marketing budget should be treated like an investment — one that will bring a quantifiable return over time.
Need help serving up the right slices? Schedule a discovery call to answer any questions you have.
Blender is a full-service B2B marketing agency focused on accelerating growth for clients in manufacturing, healthcare, software and professional services. If you have any questions, we’re here to help.
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