When talking to a prospect, one of the first questions I ask is “what is your marketing budget?”
Oftentimes, this question is met with an uncomfortable pause. And, before you know it, the conversation quickly turns into a game of poker.
Many times, businesses flinch because they don’t have a marketing budget at all. Instead, they are on a fact-finding mission to determine how much different marketing tactics will cost and they don’t want to take a wild stab.
Other times, businesses are afraid to reveal this number because they don’t want to show their hand. They’re afraid if they’ll share this important piece of information, that we’ll spend all of their money.
But, here’s the thing — that’s exactly what a budget is for. It’s how much money you’ve allocated to spend on your marketing efforts.
Yet, so many businesses look at marketing as an afterthought or instead of something that’s planned for and budgeted out.
Businesses have money budgeted for everything else, why not marketing?
Why Businesses Need a Marketing Budget
Look at your business goals. If your company wants to increase revenue, improve profit margins or speed up the sales cycle, then marketing can help.
But, you can’t do that without resources dedicated to it. While that makes perfect sense, oftentimes, companies spend money on marketing without allocating a budget for it.
This can lead to reactive decision-making as opportunities arise. Let me be clear — this approach won’t help you reach your goals.
But, that’s why it’s important for you to come to the conversation with an idea of how much you’re willing to spend before you look to an outside marketing resource to help you.
Building a Marketing Budget
There are plenty of resources that can help you determine how much to spend on marketing and PR. Most articles will tell you to spend anywhere from six to 20 percent of your revenue. Or, as Chris Penn says, spend on marketing and PR until you hit diminishing returns.
How much you spend on marketing can depend on a lot of factors — your industry, the size of your company, your goals and how long you’ve been in business.
But ultimately, only you know what your company is willing and able to spend.
Once you do, a digital marketing firm can help you determine the best way to spend that money. And, once you get started with your marketing efforts, you can work with your agency partner to make adjustments as needed.
Why We Ask About Marketing Budgets
The reason we ask about marketing budgets is because it helps us get a better understanding of a company’s needs and if we’re in a position to help.
If prospects don’t tell us what they’re willing to spend, we end up playing a guessing game trying to figure it out or proposing something that may be beyond what a company is comfortable spending. All that does is waste our time and yours.
I tell clients and prospects that I can advise you how to spend $500, $5,000 or $50,000. But, I need to know what I’m working with before I can tell you how to spend it.
Even if you don’t have a well-defined budget, you likely have a rough idea of what you’re willing to spend. Letting a marketing firm know that on the front end can help guide the conversation and help you find the right team that will fit your needs and budget.
But, if you haven’t taken the time to do this homework and build out your marketing budget, you might not be ready to hire a digital marketing agency.
Do you have a well-defined marketing budget? Why or why not?
Why do you think so many companies don’t have marketing budgets in place?
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