You can set up your marketing budget in different ways
You can calculate the exact amount you will spend on marketing, or you can estimate a number (hopefully close to reality). One thing is important: HAVE a number in your head and in your notebook that you can calculate with.
How much does a customer cost?
If you have been doing marketing for several years or months, you can simply check out the numbers from previous months (I already talked about the value of measuring results – this is one benefit of measuring: you get exact numbers on how successful your marketing system is). Just divide the cost you spent on marketing by the number of sold products or the number of new customers. This allows you to calculate exactly how much it costs to sell a service, or get a new customer.
Now, multiply this number with the desired number of sessions or new clients in the next month or year. This is your marketing budget.
How much to spend on different marketing campaigns?
If you already have a value for how much you want to spend, divide your existing budget into three categories: traditional (offline), digital, and other. Then collect all of the performance metrics needed to assess the effectiveness of each campaign.
As a starting point, your “other” category should be no more than 10% of your allocation. It’s ok to have very few initiatives listed in this category. As the year progresses, this is the category you’ll rely on for variable expenses and for budget flexibility.
Next, based off of your previous year of metrics, allocate funds for both offline and digital initiatives. While this may seem elementary, for many people, it’s often the most overlooked, yet fundamentally essential, step.
Don’t use only traditional or only digital marketing campaigns. They work together, target different type of clients, and done right, they support each other very effectively. Use some traditional marketing techniques and some digital marketing approaches in your yearly marketing campaign.
Let’s look at an example where you want to spend an average $300 a month, which is $3600 a year, and how that could be allocated to get the best results and have the greatest impact:
Traditional = 30% ($1,080)
Print ad – $230
Direct Mail – $500
Business cards – $250
Supplement samples – $100
Digital = 60% ($2,160)
Social Media – $1,000
Adwords – $400
Email – $350
Videos – $410
Other = 10% ($360)
Now that you have the budget, you can start to nail down the details of the different campaigns.