B-to-B Digital Marketing: Setting a Budget

Digital marketing is a business development activity which means it should directly or indirectly generate revenue. For trainers, consultants, and professional coaches that sell their services to other businesses, the contribution typically comes in the form of leads. Since marketing’s goal is to generate revenue the budget should not be set higher than a reasonable projection for generated revenue. Establishing a clear vision of projected return on the digital marketing investment serves to set a budget cap that makes facilitates profitability.

To set a budget start from the end state and work backwards. Here are the steps and an example of how to work backward:

Step Description Example
1. Start with an estimate of viable prospects in your market. 10,000 prospects.
2. Estimate the number of prospects that might become a lead based on industry data. The below chart is broken out by industry for website visitors so it’s best to halve these numbers as half your prospects likely will not even take an initial step of engaging your marketing channels. 6% is average, so let’s work from 3%. 300 Leads.
3. Divide that number by the number of years you believe it will take to engage your entire market. Be realistic, anything less than three years is aggressive. 5 years for full engagement, so 60 leads per year.
4. Divide your leads by your average rate of turning an interested party into a real sales opportunity via a meeting or phone call. Hopefully your leads will be more engaged than average leads and meet at a higher rate but use the average to stay conservative. A 30% meeting rate results in 18 meetings from the leads.
5. Divide your meetings by your close rate. 33% close rate is 6 sales.
6. Multiply your expected number of closes by your average sale. $6,000 average sale is $36,000 in revenue.
7. Use ¾ of that number as your annual budget cap to give some buffer for marketing to generate positive ROI. $27,000 (¾ of $36,000).

In this way you are providing a guideline on how much you can spend on digital marketing and have it remain profitable. Remember, it’s a guideline and doesn’t mean you should spend that much. It means that’s your cap. For example, if you are a sole trainer, consultant, or professional coach with annual revenues of $100K, it wouldn’t make sense to budget a third of your revenue to digital marketing.

Also keep in mind that this would be your total expense, so marketing tools, data, and labor would need to fall within these parameters.

The primary reason for this guideline is to avoid setting your digital marketing up for failure. Many trainers, consultants and professional coaches get caught up in branding themselves or their business without considering the potential return. If you set a budget that is higher than a reasonable expectation on your return then the marketing effort can’t fulfill the baseline goal of being a business development activity.

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