How much of your revenue are you investing into your marketing?

How much of your revenue are you investing in marketing? 

Perhaps you aren’t using % of revenue as a measurement or are not even recording your spend, And for every business this figure will be different. 

According to the CMO Survey in 2016, businesses expect to allocate 6.9% of their revenue to marketing activities and we would agree with this, having regular discussions with organisations that sit around the 5-15% mark, fluctuating in relation to objectives, growth curves, sector and size of business. 

However, the amount allocated must ultimately return a multiple of your outlay for it to be seen as an investment and not a frustrating cost, and there are some standard metrics that are useful for calculating ROI, including customer acquisition cost, retention rates, lifetime value and for ad campaigns, return on advertising spend (ROAS). It doesn’t need to be overly complex and with a good accounting software, the use of the correct tools for tracking your data touchpoints and some solid advice from experts where required, you can begin to plot a route to ROI. 

"More often than not, prospects that we engage with, are not investing enough in their marketing to see a return on investment, therefore view it as a cost rather than a valuable investment. When we delve deeper into spend versus return, we can plot an accurate an realistic route to developing a marketing campaign that pays it's way."

This is an important point, in that return on marketing spend shouldn’t be measured on initial return, instead balanced out against the lifetime value (LTV) of a client instead. 

In any eventuality, you should prepare for an initial hit on your cash flow and allocate the patience to see a marketing plan through to completion. This is where working with trusted partners is crucial. See our article here on why agencies are failing their clients.

As part of our 30-day warm-up period when working with new customers before we embark on a 90-day campaign, we spend a significant amount of time on plotting a clear route to ROI, and explaining our forecasted return on investment, with data and confidence to back up our assumptions. A critical part of this process is setting realistic expectations with clients, so that they understand the time and cash flow that will need to be bridged towards campaign success. So many agencies over promise and under deliver, and its a lose, lose all round.

This is the magic of our focused campaigns, and in some instances a campaign ROI may be forecasted to happen at the 6,12,18 month mark, however we always integrate what we refer to “accelerators”, which are key campaign elements that can drive significant return early on in a campaign, effectively scooping up the low hanging fruit and building confidence in our abilities with clients. 

What’s your number? If you need support in establishing this number, or pressing play on campaigns that can deliver ROI, then it may be worth enquiring about our next 90-day sprint intake.