Using Data To Align Your Marketing Budget With Revenue Goals

It never fails. Talking to customers about their business projects for next year and that pesky word "hope" makes its way into the conversation. "We're hoping to do 20 million in revenue this year, up from 15 million."

We aren't knocking hope, but that's not a budgeting strategy. Without a solid marketing plan reverse-engineered from the actual data, your hopes and dreams won't be enough to hit your revenue goals.

So how do you build a results centered marketing budget that helps you smash those revenue goals and stop working "hope" into your projections? One that aligns your goals and your budget into one cohesive strategy? Let's start from the beginning.

Figure Out Your Current State

You must understand your current state funnel to see where your goals can land. Take a long look at the data for the full funnel — website visitors to new customers. See where those conversion numbers landed from last year and use that as your baseline for this year.

If you do nothing to your current funnel, you can expect roughly the same numbers as last year. You can predict the number of actual new customers as it stands with your current setup if you operate business as usual.

If you do this before the end of the year and see some growth coming in at the last minute, you may be able to build that into your projection for next year, but don't get excited. Accidental growth rarely meets the expectations most CEOs want when they talk about growing revenue the following year.

Figure Out Your End-State Funnel

Now that you have your business-as-usual projections, it's time to start putting together a plan to fill the gap between where you are and where you want to be next year. With careful planning and some experimentation, here's where the magic happens,

Based on your hypothetical goal, what would you need to do to the funnel to close that gap? If you did nothing downstream, what must happen at the top of the funnel? If you did change something downstream? 

You should be able to move between six and ten active levers, allowing a picture to emerge of what your investments will need to be to make those levers move. For example, if you've got a great sales team but weak lead generation, your investments will need to ramp up at the top to ensure that lead gen leads to even better sales performance.

This method helps you narrow the budget to something specific and measurable. If you invest in lead generation at the top of the funnel and still aren't hitting your goals, it's time to look at where the breakdown is happening. Maybe what you need is a better handoff from marketing to sales. Pivot and your budget is still aligned with your goals.

Bringing Budget And Goals Together

If your goals and your budget don't align, it's time to move the dial. If you can spare the budget, you'll invest more in your end state funnel to get to those goals. If there's no room in the budget, it's time to adjust your goals to help stair step you to those reach goals.

You may not have the budget right now to do $20 million in extra revenue, but you can build a marketing budget for $2 million this coming year. With your additional revenue, you can go bigger next year, and bigger the following. With the right projections and a results centered plan, your reach goals will soon be attainable.

Don't Throw This Step Away

Modeling these projections may seem simple — so simple that you're tempted to just do a quick exercise without looking at the data and run with it. Don't do this.

The modeling is complex, taking all your numbers and your entire funnel into consideration. You can't leave anything out when you're getting your baseline. From there, you must take a look at a new funnel inter-departmentally, getting everyone's input. Anyone who is a data stakeholder should be at the table.

The more accurate your projections are, the better able you are to find real solutions to meeting and exceeding your revenue goals. You'll see your shortcomings and weak areas quickly and have the benchmarks to figure out if you're focusing on the right tactics as you move forward.

If your goals and your budget don't align, it's time to move the dial. If you can spare the budget, you'll invest more in your end state funnel to get to those goals. If there's no room in the budget, it's time to adjust your goals to help stair step you to those reach goals.

Projects are always a risk, so don't make these decisions with insufficient data. We can help you build a robust funnel with a realistic budget to help you reach your goals using data-driven methods, not guesswork.

It's time to replace hope with a real plan.

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