Building a Marketing Program or Campaign Budget: A Sample Template to Get You Started!

It never ceases to amaze me how many businesses spend so little time creating a budget for their marketing campaigns or lead generation programs. Often they are so caught up in the excitement of some new ‘tactic’ and want to get going with this new tactic or their under their under pressure to – “Make something happen!”, that they don’t take the time to properly develop a strategic plan and budget.

Many times I’ve looked at marketing plans, campaign plans and associated budgets of clients I’ve worked with or organizations where I’ve worked, and thought that they must have worked out their plans on the back of an envelope during a brain session at the local watering hole. And you can generally guess what happened to those campaigns and programs. I’m not just speaking about SMEs either; you’d be surprised how many large businesses suffer from the same problem.

Over the years, through bitter personal experience, I’ve learned that before you spend any money, time or energy launching a marketing campaign or program you need to spend all your time and energy ensuring you’ve covered all the bases in terms of costs and revenue projections in a budget to determine your overall Cost per Sale, before you pull the trigger spending any money. I call this getting dirty with the numbers.

I’ve found when I’ve prepared a proper and comprehensive budget; it actually drives the Strategy of the campaign or program. Often, the initial ideas I had are amended or changed because the Cost per Sale projected didn’t quite stack up. This was often due to the inter relationships between the costs and revenue involved. And quite often, I’ve ‘binned’ the idea because I just couldn’t make the numbers work.

Remember that old cliché – If you fail to plan, you plan to fail. Yeah, I can see you rolling your eyes now. Just keep in mind, the reason that cliché has been around for so long, is that it’s right.

From my experience, the reason many people don’t prepare proper plans and budgets is because they haven’t been trained in their use. Small business people particularly are quite good at the sales and customer service end of their business, but lack the understanding of how to develop proper budgets to get those customers in the first place. They aren’t alone either, as I’ve said earlier; many large companies have the same problem.

Simply put, a marketing budget is an estimate of projected costs to market your products or services. However, in my view it should also include the sales costs and projections to determine the revenue side of the equation. After all, we need to include all the sales, marketing, product and fixed costs projections together with the sales revenue projections, so we can determine the overall Cost per Sale and profitability of the program.

If you only cover the marketing side of the equation, without considering the relevant sales components, you’re just setting yourself up for conflict with the sales department. Ever heard the sales people say, “Hey, why’d you put those close rates in, we’ve never close at those rate before! And, you’re way off on the average sales value too.”?

It’s kind of like baking a cake, if you don’t include all the ingredients in the proper proportions, you’ll never get the outcome you had expected (or is that hoped for?).

To help many of you construct a Marketing Campaign Budget, I’ve included a sample for you below as a guide. Of course, be sure to get the help you need to ensure you’ve covered all the bases for your business. Yes, that means having the bean counters in your Finance Department or your Business Analyst go through your budget to make sure you’ve included all the cost items, and they’ve been costed realistically. If you’re a SME, use your accountant, that’s what their there for.

Now, when I say be realistic, this means to be sure that you’ve included all the costs associated with the campaign accurately and that the corresponding revenue is realistic. All too often, people forget to include all the costs involved in making a sale. And more often, people are too optimistic in their sales projections.

If for no other reason, think of this as taking out some job security insurance. Make sure they go over your marketing and sales projections and agree that they are realistic. If they suggest your projections aren’t realistic, have that discussion there and then; and agree on the figures first, before you pull the trigger.

If the Finance and Sales Departments have provided their input and signed off on the budget you make them partners in the process. It will be pretty hard for them to hide if things go ‘pear shaped’ later, especially if you’ve executed the marketing components properly!

One last thing about being realistic: Beware of spreadsheets; they can give you any number you want. Hey, we’re only human and under a lot of pressure to get something out there to get those sales!

This sample template is designed for a lead generation program to deliver qualified prospects to the sales team. The basics are included as a guide for you to understand the concept of building your own budgets to suit your purposes. With a few changes you can modify this to suit your needs.

Campaign Name Inputs Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec TOTAL
Sales Appointments 200 245 275 275 275 275 280 250 280 250 250 170 3,025
Net Closing % 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
Net Sales 50 61 69 69 69 69 70 63 70 63 63 43 756
Gross Avg. Sale Value 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Sales Incentives 50 50 50 50 50 50 50 50 50 50 50 50 50
Net Avg. Sales Amount 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950
Net Sales Revenue 247,500 303,188 340,313 340,313 340,313 340,313 346,500 309,375 346,500 309,375 309,375 210,375 3,743,438
Expenses
Personnel Costs:
Sales Fixed (3 reps) $90K pa 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 90,000
Sales Commission 5% 12,375 15,159 17,016 17,016 17,016 17,016 17,325 15,469 17,325 15,469 15,469 10,519 187,172
Telemarketing (5 reps) $175K pa 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 175,000
Marketing Management $75K pa 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 75,000
Payroll Taxes/Benefits 17% 6,920 7,394 7,709 7,709 7,709 7,709 7,762 7,446 7,762 7,446 7,446 6,605 89,619
Subtotal 47,629 50,886 53,058 53,058 53,058 53,058 53,420 51,248 53,420 51,248 51,248 45,457 616,791
Other Program Costs:
Product Costs $1485 /Sale 74,250 90,956 102,094 102,094 102,094 102,094 103,950 92,813 103,950 92,813 92,813 63,113 1,123,031
Lead Fees $65.31 /Apt 13,062 16,001 17,960 17,960 17,960 17,960 18,287 16,328 18,287 16,328 16,328 11,103 197,563
Equipment 100 100 100 100 100 100 100 100 100 100 100 100 1,200
Telephone Expense 200 245 276 271 275 275 275 240 275 240 240 100 2,912
Operating Expenses 50 50 50 50 50 50 50 50 50 50 50 50 600
Recruiting/Training 300 300 300 300 300 300 300 300 300 300 300 300 3,600
Professional Fees 0 0 0 500 0 0 500 0 0 500 0 0 1,500
Subtotal 87,962 107,652 120,780 121,275 120,779 120,779 123,462 109,830 122,962 110,330 109,830 74,765 1,330,406
Total Expenses 135,591 158,539 173,838 174,333 173,837 173,837 176,882 161,078 176,382 161,578 161,078 120,222 1,947,197
Cost per Sale: 2711.82 2588.39 2528.56 2535.76 2528.54 2528.54 2526.89 2577.26 2519.74 2585.26 2577.26 2828.76 2534.59
Cost Per Sale % 54.8% 52.3% 51.1% 51.2% 51.1% 51.1% 51.0% 52.1% 50.9% 52.2% 52.1% 57.1% 52%
Net Margin

A few tips in covering the bases

Sales Appointments:

Make sure the Sales Departments have signed off on the number of appointments you’ve projected for each month. They need to be sure they have the sales reps and administrative staff in place to service these lead commitments each month. Of course, the appointments you’ve scheduled need to be adjusted (and everything else), if the sales team can’t support the number of sales appointments projected to be delivered. This is a very good reason to get the Sales department involved from the onset of the budget process.

Net Closing %:

Again, have the Sales Department sign off on the close rates. Don’t be foolish enough to go it alone! You’ll see that I’ve ‘flat lined’ the close % across all months in the example. This was only to save me some time. Be sure that you check the historical close rates for these types of appointments for each particular month. Seasonal factors always come into play with close rates for many companies.

Net Sales:

When we say net sales, we’re talking about net business, the kind that allows you to bank the money! If you anticipate any cancellations or returns of any sort, you need to show these as Gross Sales together with your net sales as a new line item. In these cases, you would also have another line item for Cancellations, and then another for Cancellation %.

Gross Average Sale Value:

This is the average sales price sold to the customer. If you have any goods and services taxes to account for ask, the Finance department how to show this. At the end of the day to determine Cost per Sale and profit, you need to be working with net numbers.

Sales Incentives:

Do you provide any discounts if they buy on the day? Any promotional offers included in the purchase – if so, you need to account for these as well.

Personnel Costs:

In this area you need to cover all the human resource costs involved in the sales and marketing process for this campaign or program. If there are costs associated with Administration, these need to be included too. Just add another line item for each of these other staff costs. If you’re thinking about providing any performance based bonuses for the telemarketers, be sure to include this as a separate line item too.

Payroll Taxes/Benefits:

Another term for this line item is ‘On Costs’. These are all the additional costs associated with your staffing costs in addition to their salaries and commissions. This covers things like payroll tax, superannuation etc. Usually these on costs run around 17 – 18% of the salaries and commissions. This is calculated as a percentage of the sum of all the wages, salaries, bonuses and commissions. You need to get this percentage from the Finance Department or your Accountant, and then program it in.

Other Program Costs:

If you have any other costs for the campaign or program that aren’t related to Personnel costs, they go here. Just add a separate line item for each cost element.

Product Costs:

Product costs refer to the Cost of Goods of your product or service. Basically, this is what it costs your business to provide your product/service to your customer. Again, it’s best that you get this information from either your Finance Department or Accountant as well.

Lead Fees:

Lead fees in this example refers to the ‘all in’ cost of providing scheduled appointments for the sales team. You’ll need to include all the costs associated in generating those appointments outside of personnel costs. If there are any direct mail costs, online marketing activity like PPC etc, these go here. You’ll have to prepare a separate spreadsheet to cover all the associated marketing costs and activities here to determine the overall lead generation costs, show rates to determine net Sales Appointments etc then divide all those costs by the net Sales Appointments.

Cost per Sale:

Cost per sale is simply calculated as the total costs (Total Expenses) divided by the number of Net Sales.

Cost per Sale

%:

Cost per sale %, is the percentage of the overall costs against the overall revenue achieved.

Net Margin:

Your Net Margin is the net amount of money you have after all the expenses have been covered. It’s not net profit. You still need to account for other costs like Corporate contribution (other business overheads generally) and taxes. If you want to eventually show the net profit, have your Finance department or Accountant work with you to include these costs into your budget.

Due the different nature of everyone’s different businesses and the different ways each business account for their campaigns you’ll likely make a number of changes to this format to suit your specific needs. That’s to be expected.

The important things to remember is that you must ‘get dirty’ with the numbers first to make sure the campaign or program is cost effective. Make sure you cover all the costs and you’re realistic with your sales projections. Get buy in from your Finance and Sales departments; remember it’s a team effort!

And, as I said earlier, we only have so much time and energy, so make sure you invest your time and energy wisely before you spend any money!

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