How to Calculate a B2B Marketing Budget

Stop basing your marketing budget on guesswork. Start using goals and analysis.

If you came here looking for a rule-of-thumb recommendation for setting a B2B marketing budget based on revenue, that’s easy — you should budget between two to seven percent of your previous years’ sales.

Feels a little arbitrary, right? That’s because it is.

Alternatively, you could base your figure on what others are allocating for their B2B marketing budgets.

But with just a little bit of data, you can come up with a much more accurate way of calculating your marketing budget that takes into account your annual revenue goals, how many qualified leads it will take to hit those goals, and what mix of tactics you should use to attract qualified leads.

Get a grip on your marketing spend by downloading this definitive guide to setting your industrial marketing budget.

Setting a Goal-Based B2B Marketing Budget

If you needed to manufacture 1,000 stamped parts per day, you wouldn’t randomly buy pieces of capital equipment in the hopes that you’d eventually hit your goal. Marketing works the same way; you need to know what outcome you want to achieve in order to determine the tactics that will get you there.

To set a goal-based B2B marketing budget, you’ll need nine pieces of information:

  1. Annual revenue target
  2. Monthly sales needed to hit that target
  3. Average sale per customer
  4. Number of sales required to hit monthly sales revenue
  5. Average number of leads before closing a sale
  6. Leads required per month
  7. Inquiries-to-qualified leads ratio
  8. Inquires needed per month
  9. Cost per inquiry

Let’s use some real numbers so we can see how these pieces of information work together:

  1. Annual revenue target: $12 million
  2. Monthly sales needed to hit that target: $1 million ($12 million/12)
  3. Average sale per customer: $20,000
  4. Number of sales required to hit monthly sales revenue: 50 ($1 million/$20,000)
  5. Average number of leads before closing a sale: 5
  6. Leads required per month: 250 leads per month (50 sales x 5)
  7. Inquiries to qualified leads: 3 to 1 (One in every three inquires becomes a lead)
  8. Inquires needed per month: 750 (250 leads x 3)
  9. Cost per inquiry: $50

In the above example, you would need an average of 750 inquiries per month to hit your annual revenue target of $12 million. If you have an average cost of $50 per inquiry, you’ll need to spend $37,500 ($50 x 750) per month on marketing for a total of $450,000 ($37,500 x 12) per year, or 3.75% of your annual revenue target.

If you don’t know your average cost per inquiry but do know your average cost per lead, then just multiply your cost per lead by the number of leads required each month to calculate your B2B marketing budget.

If, on the other hand, you don’t know either your cost per lead or your cost per inquiry, you might want to consider a foundational marketing program such as this to start establishing some baseline metrics.

Choosing Marketing Tactics to Hit Your Goal

Now that we know how many inquiries we need, we have to figure out what tactics will help us meet our goal. It’s easy to get into paralysis by analysis at this stage due to the sheer number of marketing tactics available to choose from, such as:

  • Advertising
  • Branding
  • Content Marketing
  • Direct Mail Marketing
  • Email Marketing
  • Marketing Automation
  • Public Relations (PR)
  • Search Engine Optimization (SEO)
  • Social Media Marketing
  • Trade Shows
  • Webinars

The most effective tactics vary depending on your industry and audience, but for the majority of industrials, we highly recommend an integrated marketing approach with emphases in four areas:

  1. 30% of budget spent on website development
  2. 20% spent on advertising, SEO, and PR to attract leads
  3. 20% spent on lead nurturing via marketing automation, email marketing, and social media marketing
  4. 30% spent on content marketing (blogs, white papers, videos, etc.) to support your lead nurturing efforts

Website Development

Your website is the central hub for all of your marketing efforts. It’s where people go to see your products and services, send you inquiries and RFQs, and learn more about your company. Even if a lead discovers you via other means (e.g., a trade show or advertising), they will visit your website at some point in their decision-making process.

Advertising, SEO, and Public Relations

These tactics will help people discover you. Advertising produces immediate results and can include print ads, digital banner ads, and pay-per-click ads across networks such as Google and LinkedIn.

SEO is a longer-term lead generation strategy that can reduce your advertising costs over time.

PR is a high-risk/high-reward strategy that can generate buzz around your company, products, and services. It generally requires you to have established relationships with trade publications, associations, and media influencers.

Lead Nurturing

According to DemandGen, nurtured leads, on average, produce a 20% increase in sales opportunities vs. non-nurtured leads. Also, nurtured leads make 47% larger purchases than non-nurtured leads.

Lead nurturing is about developing relationships with buyers throughout the sales cycle and beyond. The best way to nurture leads is to remain communicative via email marketing, marketing automation, and social media.

Content Marketing

In order to nurture leads, you need to develop a steady stream of content that provides customers with the information they’re looking for as they source the types of products and services you offer. You should also plan to amplify your content marketing by promoting it via advertising and social media.

Creating Your B2B Marketing Budget

To get started determining your B2B marketing budget, be sure to download our B2B Marketing Budget Template. It’s a free spreadsheet that allows you to plug in budgets for various marketing tactics so you can create a highly accurate B2B marketing budget. Once you’ve filled out the spreadsheet, email it back to us and we’ll help you optimize your budget to achieve your goals.


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