Start by researching your industry. In the simplest terms, your marketing budget should be a percentage of your revenue. A common rule of thumb is that B2B companies should spend between 2 and 5% of their revenue on marketing. For B2C companies, the proportion is usually higher, between 5 and 10%.
You should spend 2 to 5% of your sales revenue on marketing. Compared to those findings and the findings of many similar studies, 5% doesn't seem like such a large number. In fact, it seems quite reasonable. However, we should clarify that our 5% rule applies to most years, not all, and covers most of your marketing, but not all.
When you need to invest in the foundation of all your daily marketing activities, there will come years when you need to invest more. You'll probably have to exceed your 5% marketing budget to update your website once every three or five years. So, basic marketing costs aren't usually included in your 5%. Without a solid marketing foundation, your daily marketing activities will range from “ineffective” to “a waste of money.” Again, let's use websites as an example. We talk to a lot of catering companies and entrepreneurs who have websites that generate less than 5000 visitors a month, a perfectly respectable amount of traffic for many small businesses. However, consider if one of these websites underperformed and only converted 1 in 10,000 visitors to a customer (the conversion rate).
With 5000 monthly visits (which is a positive fact for many catering companies), a conversion rate of 1 in 10,000 would translate into a single new customer online every two months. Let's now think about an updated and optimized website for the conversion rate, a website that converts 1 in 500 visitors to a customer. That means spending 95% less to acquire each new customer. It's not always that simple, but we've simplified this example to demonstrate why it's almost always beneficial to exceed 5% of the marketing budget allocated to infrastructure investments.
If you're marketing with a fairly static annual budget, you're viewing marketing as an expense. Good marketers realize that it's an investment. The first step toward allocating the marketing budget is to determine your marketing objectives for the year. We recommend at least three objectives S, M, A, R and T. with predefined measures of success linked to each of them.
Do you have the basis to achieve your objectives? With the objectives set and the measures of success established, it's time to allocate your marketing budget. Remember that both are necessary to boost your growth (without traffic, even the best website in the world is worth very little). With established objectives and a solid marketing foundation (including a marketing strategy), you're ready to select marketing activities. How much do you spend on marketing? For our carefully selected list of the best catering content for each month. There is a general rule in the marketing world that you should try to spend between 2 and 5% of your sales revenue on marketing.
This 5% rule has been based on years of previous marketing experience and feedback from successful companies. While at first glance this 5% rule doesn't seem very generous, if you break it down, it's quite reasonable. This is because it should apply to most years, but not to every year. Approximately 5% of your sales revenue should cover most of your regular marketing activities. While there's no single answer to all of this, you can simply use the 5% rule, as mentioned above, as a broad, general approach to meeting your marketing needs right from the start, especially if you're starting from scratch, and then go a little deeper to plan your budget as you go.
The general rule is to spend 5% of your company's turnover on marketing. However, this varies significantly depending on the industry and the marketing strategy established by the company. Some companies spend more than 20% of their revenue on marketing if they try to enter their market quickly. Usually around 5% of sales turnover, but up to 20% or more of revenues for ambitious startups that focus on high growth and rapid market entry. Marketing technologies and automation are proving effective in combining the most effective marketing tactics (email marketing, organic search, social media marketing and content marketing) to achieve better results.
While the B2C product sector dedicates an average of 15.1% of its revenues to marketing budgets, the B2B product sector allocates a much smaller amount, 7.8% of revenues to marketing expenses. Many first-time business owners contact other companies in the field to ask them about their sales and marketing projections and, from there, estimate marketing costs. Now that you know the typical percentage of a marketing budget by percentage and revenue, the next step is to learn how to manage your marketing budget. The main advantage of using a sales percentage is that the marketing budget will increase or decrease with the company's sales revenue.
You should allocate a large part of your marketing budget to mobile marketing and especially to the best-performing channels. While many marketers already have a solid Facebook strategy, 25% of marketers surveyed by HubSpot will invest in the platform for the first time next year. Partnering with marketing agencies also gives you access to a team of specialists who can help you achieve your goals faster and not waste your marketing budget. In fact, 89% of marketers plan to increase or maintain their investment in influencer marketing next year.
You can hire an internal marketing team within your company, and the ongoing costs would be salaries; or you can commission an external marketing company to provide this service as your marketing partner. Once you convince the top management of what you need to execute your best strategies, you'll easily outperform other members of your industry and turn your company into a benchmark for how other teams should do marketing. However, when launching a new product or service, you might be interested to know that other companies will spend 50% or more marketing their new offerings until they are established. It's especially useful for small businesses, as they can base their marketing budgets on what they think the company can afford instead of on the company's sales.
