Marketing and your annual budget

It’s the start of a new year, and it’s typically a time of budgeting and planning for fresh business goals. One of the discussions I always have with clients during this process is about the distinction between allocating dollars on an advertising line versus a marketing line.

Advertising versus Marketing

For me, advertising lines fund events that cast the broadest net possible in hopes that potential customers will draw a connection between your goods and services and their needs. It’s the billboard that states: “We machine metals”.

Advertising is a broad big-awareness expense and has a “fingers-crossed” aspect to it. Conversely, marketing line allocations are purposeful and tactical support functions for your company’s sales team. They are the structures that drive successful execution of sales strategies.

Any sales strategy should have a healthy pipeline of qualified leads as an end-result. But it’s the nature of these leads that is important. Here are three things to consider:

1. The ultimate goal of a marketing proposal that supports a sales strategy is developing awareness in your target customer that you have a value proposition created just for them.
2. Your customer needs to self-deduce that your company has the credibility to deliver it and that you have no peers to compete with in this regard.
3. Finally, it should motivate customers to either reach out to you or initiate an action that progresses towards the closing of a sale.

That’s quite a lot to ask for when you are initially allocating dollars to a budget line, which is why marketing initiatives must be tightly connected to proven sales strategies.

How Mature is your Message

If the above fulfill deliverables of a marketing line, then the next question to ask is: what stage of brand maturation is your organization at?

Think of three tiers of maturity:

Value Propositions – Sells one client in a niche sales channel

Competitive Advantage – Sells all clients in a niche sales channel

Brand Recognition – Sells many clients across several sales channels

Depending on the maturity of marketing programs, a company may find itself at early stage (establishing a value proposition), or later stage (conveying an acknowledged competitive advantage), or as a mature organization that already has brand recognition. These are all branches of an ever-growing tree.

Sales teams that are engaged on a client-by-client basis are still involved with building a value proposition unique to each target. They haven’t deduced the common threads in their pitches that resonate with many clients. In such cases, there is opportunity to broadly convey a competitive advantage to this niche marketplace.

If an organization has already established a competitive advantage in its market, then marketing activities may be exploited at the brand level to further develop the maturation of the company’s image.

These are factors to consider when deciding which sales strategy receives marketing budget in order to achieve maximum scale in leveraging these dollars.

Regardless of which tier the organization is ready for, keep in mind that successful marketing programs result in prospective clients becoming cognizant that using your company’s services will make their organization more competitive and profitable.

How to Establish a Marketing Budget

Start with the sales team. What is the “go-to-market” strategy that they require funding for?

Identify where are they prospecting and what messages are they using. Are current approaches on quantifying return on investment (ROI), cost savings or service benefits being assigned uniquely? If so, what are the value propositions generated by your company that differentiate you from your competitors?

Can your team identify common benefits within a specific niche or sales channel that resulted in a closed deal? Is there a way to broaden these specific benefits and yet maintain their impact such that conveying the message would result in more motivated clients? Will the benefits identified effectively establish a broader competitive advantage in the target clients’ minds?

Finally, would expression of that marketing message prompt clients to reach out and seek to connect with the sales person?

If the company works through all of the above conditions, then as a general rule, five per cent of your proposed revenue line should be allocated to marketing for maintenance, and 10 per cent if you’re after aggressive growth.

Remember, a marketing campaign should target a lucrative niche where the tactical message is proven to produce sales activity. It should equally communicate that the use of your services will pass on a competitive advantage to a client’s business. A marketing line in your budget is paramount to driving the success of a sales strategy.

Andrew Wood has held senior positions in manufacturing, supply chain and other industries and sits on the TEC, Canada’s Trusted Advisors Council. andrewjwood@changeagent.ca.