Most businesses can have trouble when it comes to monitoring their marketing spend, and this is mostly because of a lack of budget organization in the company. Although this might seem like an easy problem to solve, letting it go on without doing anything may harm your marketing and sales approach, especially nowadays when everyone's average marketing spend increases almost every year.
If you don't organize your budget immediately, you might have difficulty monitoring your additional marketing expenses for the year. It may even cause you to lose money on marketing instead of using it to gain more revenue. As a rule of thumb, marketing strategies should start with a clear and well-informed budget. If you can't come up with a value, you can use historical data from your company or competitor analysis.
This will help you understand how much you should set aside for your marketing campaigns. It's also important to continue monitoring your expenses as the year goes by. Doing so will allow you to see how well your strategy is performing and make changes whenever necessary. Here are some ways to effectively monitor your company's marketing budget.
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Set a Firm Budget Structure
Allocating your marketing budget can become tricky, especially when it comes to larger companies. This is why it's important to set a firm budget structure to avoid any confusion.
One way to do this is by separating your budget into two parts: the fixed and the variable. Your fixed costs are those that remain the same regardless of how much you spend on marketing, such as salaries, office space, and rent.
On the other hand, you can organize your variable costs based on your business goals and model. For example, if you're handling an eCommerce site, you're more likely to organize your budget to account for your different product lines. While if you're in the B2B industry, organizing your marketing budget per vendor might seem more beneficial for your business. Other ways you can organize your marketing budget include the following:
- Product
- Region
- Market segments
- Vendors
Separating your budget will allow you to effectively monitor your marketing expenses. This allows you to easily see if you're spending too much on one aspect of your marketing strategy and make any necessary adjustments.
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Understand Your Company's Spend Culture
Monitoring your company's marketing spend means that you need to understand your organization's spend culture. This will help you create a budget that is both attainable and realistic for your company.
There are two main types of spend culture often practiced by companies. The first is the administrative spend culture wherein strict procedures with several approval stages are in place for purchase requests. This structure makes for a more controlled environment but may also lead to a slower decision-making process.
The second type is the democratic spend culture. This model allows departments to set their purchase procedures without needing approval from higher-ups. While this type of culture may lead to faster decision-making, it might also result in a less controlled environment.
By looking at the spend culture of your company, you can determine how the budget is being spent on tools used in different processes, the manpower required for operations, and hiring different agencies. With this knowledge, you can understand the limits, controls, and visibility of your marketing budget, which makes monitoring it much easier.
Follow the 70:30 Budget Rule
Embracing a proportionate budget rule allows you to have some room for flexibility and innovation when it comes to your marketing strategy. This is because you're not allocating all of your resources to just one area. The 70:30 budget split is a guideline that suggests that 70% of your budget should go to tried-and-true methods while the remaining 30% can be used for new ideas and experimentation. You can also use the other 30% of your budget in case something came up or an unexpected opportunity arises.
This rule allows you to have a balanced marketing strategy. By allocating the majority of your budget to proven methods, you can be sure that these will continue providing results. At the same time, by dedicating a portion of your budget to new ideas, you're giving yourself room to be creative and try out different things. Doing this will also help you monitor your marketing expenses more easily. Now, you only have to worry about how you're spending the other 30% of your budget because you know that majority of it is being spent on proven marketing methods.
Track Impact on Revenue
Most of the time, you measure the success of your marketing strategy based on how many leads you generate. However, experts say that you shouldn't focus solely on leads. Instead, you should look at the leads you generate and how they impact your revenue. This is an important perspective to have because generating a great number of leads does not always equate to good business. Focusing solely on leads may also give you the wrong information as to how well your marketing strategy is doing. To see the impact of your leads on your revenue, you should use specific metrics to determine which leads turn into sales or conversion. You also need to monitor and measure conversion rates and analyze the percentage of people that convert in every stage of the sales funnel.
Invest in Technology to Measure ROI
It's important to track your marketing activities and determine which of them generates business. To do this, you need to build a planning and tracking strategy and stick to it throughout your marketing campaign.
You should also invest in technology that allows you to track every lead no matter where they are generated. Using a visualization dashboard can help you trace where leads come from, whether they're from your email campaign, social media campaign, word-of-mouth, or web generated, and allow you to see which channel works best for your business. This will give you an insight into how well you're using your marketing budget.
Use a Marketing Dashboard
Another kind of technology you should invest in is a marketing dashboard, which allows you to track, analyze, and measure your marketing efforts in one place. You can also customize a marketing dashboard based on your specific needs. For example, you can use a social media dashboard if you're focusing on social media marketing.
A marketing dashboard is beneficial in tracking the different metrics in your marketing campaign. Monitoring these metrics will allow you to gain more insights into how you should spend your budget:
- Traffic metrics: This includes your website's impressions, the number of visitors at a given time, and where these visitors are coming from. Your traffic metrics can also give you more information about your visitors' age, gender, and other data.
- Retention metrics: Your retention metrics can tell you how well your marketing efforts are working. This metric focuses on how much time users spend on your website and what pages they visit.
- Conversion metrics: You can use a marketing dashboard to measure your conversion rates, number of leads, and click-through rates, which can indicate how effective your marketing strategy is.
Aside from these major metrics, you can personalize a marketing dashboard to display other components of your strategy, including the following:
- Social media metrics
- Content marketing metrics
- Customer satisfaction
- Customer retention
- Referral acquisition
- Cost per conversion
- Cost per lead
- Cost per sale
- Number of clients
- Customer lifetime value (CLV)
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Monitor and Adapt
Once you have all of these in place, it's important to monitor your marketing progress and adapt as necessary. Doing so allows you to see which methods are working and which ones aren't. It also allows you to save on costs by cutting down on activities that aren't providing results. Make sure to review your marketing campaign regularly and make changes as needed. This will help you ensure that your marketing budget is being well spent. It also helps you avoid being in the red by year-end and losing more money.
Use Your Marketing Budget Wisely
Monitoring your marketing budget doesn't have to be a difficult task. By following these tips, you can easily keep track of your expenses and make sure that your money is being spent wisely. Implement these tips today and see the difference it makes in your marketing campaign.