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Even though many times there is more creativity in budgets than ads, the easiest way to get a marketer to groan is to tell them to do a marketing budget.

The Marketing Budget Process

The first step in establishing a marketing budget is to remember that marketing goals are simply a means to achieving business goals and should be viewed as such.  As with most things in life, almost anything is possible with enough time and money – it is just not a reasonable and sustainable approach.

For most companies, marketing is a method to get sales leads, so then the first question to be answered is:
What is the value of a qualified sales lead to your business?

If you already know – skip to the next paragraph.  If not, start by determining the average value of a sale, then subtract the fully-burdened (all of your expenses) cost of the sale, to get your profit per sale.   Now you know the estimated maximum to pay for a lead – you need to determine an amount less than this or you lose money.   All that said, this is a generalization – in the case of certain business conditions, like a start-up, many companies are on a (hopefully brief) the more you sell, the more you lose plan.  They just make it up in volume.

Next, determine how many leads you can reasonably handle and effectively close and your average close rate.   Now, just do the math to determine how many leads you need to fill the pipeline (if you can handle 5 sales per month and have 10% close rate, you need 50 leads per month).    Last, take the amount you have determined that is reasonable to pay per lead and multiply it by the number of leads you need to meet your sales goals.

That is your estimated optimum monthly marketing budget – if you pay more, you will be cutting into profits, if you don’t invest that amount in marketing, you will most likely be unhappy with the results.

Or  - you can do what most companies do – from the very large to the small  - and pull a number out of the air. Many times, this amount, is the amount “you can afford.”  This is reasonable – it is hard, especially in this time of restricted credit, to have money to spend that you don’t have.  However, at the same time, expectations need to be reset on the expected outcome.

Next up – putting that marketing budget to work with a tactical marketing plan.

Awareness

Definition: knowledge
Antonyms: ignorance, insensitivity, obliviousness, unawareness, unconsciousness
(Answers.com)

A marketing strategy is designed to outline a strategic process that allows businesses to concentrate their limited resources on the best opportunities to increase sales and achieve a sustainable competitive advantage in the marketplace. From the numerous potential opportunities that exist, a marketing plan can then be developed to provide a roadmap for the tactical initiatives that will be implemented.

At a high level, marketing opportunities can be compiled into three main categories:

• Awareness activities
• Offline marketing and advertising campaigns
• Online marketing activities

Today, we cover the first of the three:
Awareness activities

Awareness activities are just that – activities that build awareness of your product or service. They are most effective when targeted at a vertical market, an industry segment, or with advocates and influencers. The key here is exhibiting specialized or subject matter expertise within a defined area.

White papers: White papers are a powerful tool in establishing brand recognition and marketplace credibility. The most successful white papers are not sales brochures and do not mention the writer’s specific product or solution – they inform the reader of a specific trend or issue and identify potential new innovations or alternative ways to solve the problem.

Trade publications: Trade publications catering to identified verticals can be a great prospect for interviews and article submissions. This works especially well if used in conjunction with trade support – purchasing an ad for the purpose of building name awareness, while also requesting to be introduced to a writer to pitch the article idea.

Speaking engagements: Similar to trade publications, speaking engagements are a good opportunity to establish a presence within a vertical market. A call for speakers is normally listed on a conference website by the promoter about 9 months prior to the conference. Information is generally listed on desired presentation length, types of opportunities preferred, etc.

Press releases: Well-written press releases are a great marketing and search engine optimization/link building opportunity. Once the release is written, edited and ready to be published, it should be distributed to maximize awareness and create inbound links to the website, which should include social media sites like docstoc, posting to web sites, and using a PR distribution service such as PRWeb.

Advocates & influencers: As key industry contacts are established, utilization of these resources as influencers can provide one of the fastest ways to achieve recognition and credibility in the marketplace. Build a contact database , even if it is a spreadsheet, an regularly contact these important influencers.  Networking opportunities and speaking engagements at conferences and trade shows provide a great opportunity to meet and establish relationships.

Customer testimonials: Authentic customer testimonials that have specific and quantifiable information and data points can be one of the most effective marketing methods available. Don’t wait for your customers to volunteer their testimonial – most don’t. Ask them for it or, even better, write it for them and have them approve it.

Bloggers: Bloggers are industry experts (well, sometimes) with an easy method of access – their blog. Find bloggers in your industry or market, then subscribe and read the blog consistently before jumping in with comments. Once you have an idea of the types of discussions that occur, begin providing meaningful, relevant comments on posts. Be authentic and don’t add comments filled with links to your website or promoting your product.

Next-> Opportunities: Offline Marketing

- Generally attributed to either Albert Einstein or Ben Franklin

Remember back in the good old days when small business marketing was simple? Get a sign printed for the door, place a yellow page ad, maybe mail something a few times a year and then go to the annual trade show. Ahhh…. I can almost hear the click of the Selectric Typewriter as a secretary types up the new changes the year on the marketing plan.

Wow. What happened?

Oh yeah, that.

So, the question is this: How closely does your 2009 marketing plan resemble your 2000 marketing plan? 2005? 1995?

Two things close to the top of many businesses’ “I don’t want to think about it” list are marketing and change. But, if your marketing plan isn’t changing at the same pace the world is, you probably aren’t maximizing your marketing ROI.

Marketing is simply communicating to people why they need your product or service. To effectively communicate, you have to reach people where they are, in a manner that interests them. If your marketing tactics don’t change at the same pace that your market or audience is changing, then you’re left behind. To start, challenge every thing that you have done in the past. If the best answer for not trying something else is:

“We’ve always done it that way.”

“That’s what our competitors do.”

“Well, that ad is already done, so let’s just use that one.”

then, it’s time to question how your marketing budget and marketing plan can be re-vamped to more effectively deliver a better return on your investment.

Next-> Positioning and Messaging

Think of the discovery process method much like a brainstorming session ~ the goal is to obtain a large amount of information & criticism is not allowed (there will be plenty of time for that in the next phases). For items that require self, and/or competitor assessment, honesty is the best policy.

So, let’s get started gathering…

Marketing

• Create a list of previous & current marketing tactics (online & offline)
• Gather previous market research obtained in the last 12 months
• Compile examples of marketing collateral, presentations, etc.
• Create a library of press releases, newsletters, etc
• Pull together website and/or blog information & statistics for the last 12 months
• List trade shows & industry events
• Do you participate in any co-op, partner or affiliate marketing programs?
• Assemble ROI information.

Products or Services

• Outline the products/services offered in 1 page or less
• Describe the key product benefits and competitive differentiators
• Accumulate relevant product documentation (descriptions, feature lists, etc)
• What are the top 5 most profitable products offered?

Sales

• Identify lead sources and, if possible, lead generation ROI
• Document the sales process on one page with approximate timeframes for each phase of the sale process
• Describe pricing rationale, previous use of incentives, discounts, etc.
• Assemble previous sales statistics for the last 2-3 years (separate new & existing customers)

Existing Customers

• Examine your customer database – what information is being collected & is it accurate?  If available, analyze industry information by SIC or NAICs code, geography, etc.
• Brainstorm with the sales team (if applicable) to create a profile of your current customer – who is the hunter, the buyer, the influencer?
• What are their likes, dislikes, buyer motivations, etc.?

Competitors

• Identify your top 3-5 competitors
• Summarize each competitors’ strengths & weaknesses, customer base, marketing tactics, online presence, etc.
• Create a competitor comparison grid. Across the left, list your company & the competitors identified above. Across the top, list the key elements of why prospects purchase from you – product, price, availability, customer service, etc,)
• Assign a competency ranking of 1-10 (10 is best:think bowling, not golf) for each company & element.

And last….

What is a (reasonable) definition of marketing success?

Next -> Defining Features and Maximizing Benefits

Over the next series of posts, we will cover the various aspects of developing a marketing strategy and then creating a tactical marketing plan.

• The Discovery process
• Defining benefits & features
• The Buying process & the participants
• Who are your customers?
• Markets – SMBs, verticals, specialties
• Competitors – learn from them
• Marketing insanity
• Positioning & messaging
• Opportunities: Awareness, Offline & Online
• Developing a marketing budget & a tactical marketing plan