Revenue Marketing: Top 3 Ways to Justify Additional Marketing BudgetApr 04, 2022
Prove Marketing ROI to the C-Suite
CEOs and CFOs are notorious for putting extra pressure on marketing teams to justify their marketing budgets. As a result, marketers are constantly under pressure to prove the short-term impact of the spending, which often leads to the use of vanity metrics such as likes or impressions on a post.
Due to this scrutiny, revenue marketers have to justify their need for additional marketing to executives. One strategy towards convincing the c-suite that marketing has a long-term impact on the business is by proving what your marketing efforts will do for the company.
This means understanding what C-suite cares about and presenting your pitch for an additional marketing budget as the solution to what they want.
We have prepared three tips to help you justify the need for an additional marketing budget.
- Demonstrate the impact of your current marketing efforts on the ROI
- Calculate the potential revenue from additional marketing budget
- Illustrate how you will allocate additional marketing budget for maximum impact
Demonstrate the Impact of your Current Marketing Efforts on the ROI
Know & Grow Metrics that Improve Revenue
While your engagement levels might be high, what executives care for when you ask for additional money for marketing is the impact on ROI. They want to understand how you have spent the previously allocated budget and the effect it has had on the company's revenue and profits.
Fortunately, if you have implemented a revenue marketing strategy, you should have the data and tools to demonstrate the impact of your current marketing efforts.
If you haven't, then this is the time to sit down and gather all that data from your CRM. Clean up the data and calculate the impact of each marketing campaign on sales. Track which leads came through each marketing campaign, their conversion, and their value.
Revenue marketing metrics are your friend when it comes to proving the impact of your marketing efforts on ROI.
Here are some of the most important metrics:
Revenue marketing brings more predictability into marketing. You can calculate the likelihood of meeting your revenue goals based on your funnel volume. Say, for instance, you want to generate $100,000 in sales and need to close 1,000 prospects in the month.
Based on your sales pipeline coverage, your funnel volume can tell you how likely you are to meet that goal. For example, suppose your sales funnel has regularly attracted sufficient leads to meet or surpass the revenue goals. In that case, you can use these results to convince your company's decision-makers that an added budget would increase the ROI for the business.
Conversion rates reveal the performance levels at each stage of the sales cycle. Conversion rates include measuring marketing qualified leads, sales accepted leads, sales-qualified leads, opportunities, and closed deals.
Monitoring these conversion rates helps you identify where bottlenecks might exist in your sales cycle. But, more importantly, it enables you to determine the demand generation marketing budget needed to optimize the sales cycle and increase conversion rates.
Customer Acquisition Cost
The customer acquisition cost is the amount you spend over a given period to get a new customer. Therefore, the customer acquisition metric is vital in demonstrating the effectiveness and ROI of your marketing campaigns.
Customer Lifetime Value
While the customer acquisition cost signals how much it costs to bring a new customer, the customer lifetime value metric tells you how valuable a customer is when they make purchases from you.
Time to Payback
The time to pay back is the time it takes to earn back the customer acquisition cost. This tells you how long it takes a customer to be profitable for the company. Ideally, it should not take more than 12 months for a customer to become profitable.
Suppose your company has a low time to pay back. In that case, you can demonstrate how your revenue marketing efforts have contributed and the impact an additional budget would have on making your customers more profitable to the business.
Revenue from marketing
Increasing revenue is one of the goals of implementing revenue marketing operations in an organization. Therefore, the revenue directly generated from marketing efforts is the best demonstration of the effectiveness of your marketing efforts.
Using your CRM, you can track the progress of each prospect from the first time they interacted with your business to the time they made their first and subsequent purchases.
Demonstrating the impact of your marketing efforts on revenue is one of the best ways to justify your request for an additional marketing budget.
Calculate the Potential Revenue from Additional Marketing Budget
Create a Revenue Projection
In addition to demonstrating the current impact of your marketing efforts, C-suite executives want to understand how an additional marketing budget will change the company's trajectory. You can show this through revenue forecasting.
Revenue forecasting is a projection of a company’s future sales. The best revenue forecasting will be based on your current results with the current marketing volume.
It will also account for various short- and long-term marketing metrics such as the following:
- The average spend per customer tells you how many more customers you can expect to attract with the additional budget
- The cost per conversion. This metric lets you calculate the number of conversions you are likely to make in the future.
Here are some ways strategies to create a revenue projection:
- Review the sales and revenues from the previous year. Identify the sources of revenue and the marketing strategies that worked in the previous period. You should also identify the products or services that need more resources in the next year or period.
- Look at the industry trends and forecasts. The general atmosphere in your industry can provide great insights into what to expect from customers. Customer interests and behaviors are changing constantly creating the need for marketers to keep up. This is also a good time to look at what your competitors are doing, and the marketing processes that are working for their businesses.
- Calculate the projected marketing costs for advertising, promotion, sales staff, etc. This allows you to have an accurate and realistic budget for the next year or quarter.
- Build a revenue model. Your revenue model should include the metrics you will use and the key variables for each of these metrics. The revenue model tells you how many of your leads you can expect to turn into paying customers and the forecasted revenue.
Illustrate How You Will Allocate Additional Marketing Budget for Maximum Impact
Create a Revenue Marketing Plan
It's one thing to demonstrate your past results and calculate the potential of an additional budget. But it's a different ball game to illustrate how you intend to use the additional budget to make a difference for the organization.
One way to do this is to develop a revenue marketing plan outlining what campaigns you intend to run and the results you expect from these campaigns. Your marketing plan aims to show the steps you will take to ensure the added marketing budget drives results for the company.
The best plan should be based on data from your company’s CRM and industry benchmarks.
Here are some tips to keep in mind when developing your marketing plan:
- Study and understand your target audience, needs, and typical buying cycle. An added budget to your marketing efforts won't make a difference unless you know your audience and present them with messaging that meets their interests and motivations. Your current data is a great source to help you map out your buyer personas and segments and then focus your strategy at every buying cycle stage.
- Identify the marketing communication that has worked well before. Ideally, a large percentage of your marketing budget should be allocated to marketing methods with a proven track record. The remaining is dedicated to improving promising channels and exploring new marketing techniques.
- Demonstrate how sales and marketing teams will work together to implement the marketing plan and ensure its success. This includes identifying the objectives and KPIs for each department.
- Outline the marketing tools, strategies, and channels you intend to use and the impact of each on the business. The company's executive team cares about results. Therefore, your marketing plan should include your marketing mix and the added budget to meet these goals.
- Demonstrate how you will measure the results of your marketing campaigns. At the end of the day, once executives approve the added marketing budget, they expect to see an improvement in the ROI. This means that you need to have tangible metrics and KPIs that show you how far you have come in improving the company's revenue. It's advisable to evaluate your marketing performance at least each quarter to remain on budget and on track to achieve your goals.
Grow Revenue with Data
Marketing budgets often create friction between executives and marketing personnel. These budgets are large with multiple moving parts and the impact is usually measurable in the long term. It can, therefore, create anxiety when you need to request an additional marketing budget.
Fortunately, if you rely on a CRM, you can use the data from your tool to demonstrate the impact of your current marketing efforts. You can also use the same data to forecast future revenue and support your case for added marketing spending. Kudoz supports your efforts in having clean CRM data by ensuring that you never have a missing lead or leave any money on the table due to missing data.
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