Five tips for creating a B2B marketing budget

The B2B Marketing budget, it’s that annual activity that as a marketer you dread and as a Founder or CEO can become confusing - it doesn’t need to be this way. In a recent Gartner survey looking at marketing budgets for 2022 “results show that budgets have recovered somewhat, with the average marketing spend increasing from 6.4% to 9.5% of company revenue across almost all industries.” With things looking better out there, where do you allocate your spend? What should you spend? And how do you know if it’s working? 

We’ve put together our five top tips for creating a B2B marketing budget that satisfies marketing, Founders & CEO’s, your CFO and those all important Board members. 

1 | Where to start with your B2B marketing budget

Before you crack on with the endless spreadsheets there are vital conversations you need to have with your internal team to understand the following: 

1. How much money does the business need to make? 
2. How much of that is expected to come from marketing? 
3. What milestones do we need to hit? 

For example, for most B2B businesses that are Venture Capitalist backed it’s likely that you’ll be trying to double your revenue year on year so understanding how much of that revenue needs to come from marketing is critical in order to pull an accurate budget together. 

In a recent Forbes article, Toma Sabaliauskiene, Nord Security, commented: “The budget share will vary depending on the channel, but it’s important to keep in mind the bigger picture: the ROI target for sustainable growth. Whether it’s 115% or some other percentage, it is best to commit to that number early on and across all funnel activities.”

It’s a good idea to have people in the room who represent: sales, marketing and finance to have that conversation together. 

2 | Manage your stakeholders 

The budget itself is just one part of the jigsaw but each stakeholder involved has different needs and levels of understanding when it comes to a marketing budget, being conscientious and managing those relationships proactively will really help get people on side and waving the marketing flag further down the track. 

Here’s a quick guide for each player:

1. CFO - Your CFO wants to see that numbers are grounded in reality, even if you’re looking at small numbers and minimal performance those are important indicators. If you make assumptions they’ll need to know what the narrative is and how you got there. Top tip: ensure you have a process in place for reconciliation when it comes to monthly / quarterly / annual reporting with your CFO (you can thank us later). 
2. CRO - Agree upfront with your CRO what metrics you’re measuring and how this is a collaborative effort. Sales and marketing alignment is everything and ownership of the numbers sits in both camps. You need them on side! 
3. Founder & CEO - Unless they have a marketing background their knowledge when it comes to the data side may be limited, however, they’ll be your biggest champion if you can bring them along for the ride and support them to articulate the numbers. If you’re reading this and you are a Founder or CEO we highly recommend getting a data driven marketer ASAP don’t leave that all important higher too long… one of the greatest mistakes B2B Founders make is leaving marketing as the final investment.
4. Board - The Board wants to know about your ROI, trends and if you’re hitting the magic number (especially in SaaS) so don’t wait for them to ask for this - get tracking it now! They also want to see strong sales and marketing collaboration, your plan and how you arrived at it.  

3 | Get your marketing metrics together 

You must, must, must track your marketing metrics, and we don’t mean vanity metrics. We mean cold hard conversion rates, velocity and pipeline. Of course engagement and other metrics are important, but they aren’t necessarily going to bring you budget and business in the long-run. 

What marketing metrics should you measure

Start off by asking yourself what metrics you need to measure and why, this must also be aligned with sales and form part of your collaboration with that team. 

We’d recommend tracking the following: 

• ROI overall 
• Conversion rates through the funnel
• Cost per lead etc 
• Channel velocity
• ROI per channel 

Different marketing channels have different purposes of course, but you need to be able to show the impact across each. 

Consider your marketing channels in the round

Your inbound marketing channels all impact each other and sometimes showcasing that is difficult. That’s why sharing upfront with your stakeholders how that ecosystem connects is critical. For example, we all know switching off PPC will impact your organic search.

Map out how each channel connects to others in the round, this way even if you can’t see tangible pipeline impact for each channel everyone involved will understand how the spend in a certain area is still worthwhile for awareness, brand building and education. 

Metrics alignment with sales

This is an absolutely vital step for your B2B marketing budget! You have to make sure your CRO or senior sales leadership understands and is in agreement on which metrics you’re measuring and why, alongside agreeing to make these collaborative metrics and goals. 

Without that alignment this is where we find tension between sales and marketing and ultimately we have the same goal, we’re both here to sell and win so let’s do it together. 

Marketing budget and plan agility

Your marketing budget and plan should offer you space and room to pivot. The market can change overnight (as we saw with Covid-19) and if your plans are too rigid you risk suffering paralysis over any sudden shifts. 

At Budgets we recommend a quarter to quarter plan that factors in seasonality or other elements that are important to your industry and customers. 

4 | Scale for success 

Most, with the expectation of some B2B businesses start out utilising the Founders or those connected with the businesses network, this is a great place to start and advocacy can spread like wildfire. Early sales wins are key for building the business. 

However, there comes a time when your business is scaling, you’re hiring and you’re ready to put marketing in place. You’ve got to set-up the function for success, don’t benchmark your marketing against previous wins generated through advocacy and goodwill. 

It’s understandable that you need something to go off but ramping up your marketing spend slowly, working with your in-house marketing experts and listening to their thoughts on how to generate growth that is scalable will help set them up for success. 

5 | Track, track and track again

Once you’ve got your metrics together, budget sign-off and you’re ready to get going don’t forget to establish solid tracking for your metrics that can clearly demonstrate:

• Trends over time 
• ROI 
• Funnel performance and pipeline contribution
• Where you are against budget  

Develop a mechanism that allows you to easily look at your metrics and draw out success stories, wins and areas for improvement. This will help you maintain those all important internal relationships, make month-end reporting straightforward and get you more of that money you need to do some kick ass marketing.