The Science of Marketing

Yes, it’s indeed that time of year.  Around here - the leaves are slowly falling from the oaks, the mower deck is off and the snow blower is on the tractor, the golf clubs are in the basement (boo!) and budgets are due.

My fellow blogger, Todd, did a fantastic job discussing focus in the marketing budget process in his last blog post.  Now, I would like to take this one step further and pose the question: how do you know that your focus is on target?  Does it pass the red face test when your manager asks "is this going to do what we want it to do?"   This is especially important in the case of selling to multiple market segments.

Suppose you sell into four or five diverse market segments. Hopefully, you’ve been given a top down marketing budget number, one that is a percentage of projected revenues for the coming year.  You probably have an idea of how to allocate this budget across programs - AR/MR, events, web and collateral, direct mail/e-mail, advertising, etc.   But have you ever audited the marketing budget to align spend with expected revenue for each market segment?

I’ve developed a few budgets over the years in high tech B2B and while finance always has a bunch of fancy-schmancy accounting tools that can generate all manners of reports, I have always been frustrated by the lack of reporting that I would like to see. So, I created a simple scheme based on tried-and-true Microsoft Excel.

Allocate The Budget Across All Programs

List all the marketing programs and sub items in one column and put the estimated investment/what’s it going to cost in the next column.  The total of the second column should match the single marketing budget number you got from management.  You now have a high level view of programs, costs and total spend (aka, a budget).

Assign A Percentage Of Each Program To Each Segment

Now here’s the twist.  For each item, allocate percentage of the cost of each program to each segment (the total should be 100%, of course).  For example, if there is a targeted event, most likely one segment gets 100% allocation; if there is a slick corporate overview,  allocate its cost evenly across all segments.  From here you can estimate the marketing spend for each segment by summing the percentages allocated X program costs.

Compare To Target Revenues

Once you have the total allocated marketing budget for each segment, calculate the percentage of the total marketing budget for each.  Those percentages should closely match the percentage of predicted revenue for each segment.  For example, if you’re selling data solutions to the financial market and you expect 51% of your revenue to come from this segment, then 51% of your marketing budget should be targeted here.

While, this is no exact science, it’s an easy way to check your segments and see if your marketing dollars align with revenue goals.  If the marketing and revenue percentages are misaligned, you now have a process and method to modify your marketing budget.

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