Do you know how much marketing you’re going to need to meet your 2015 revenue goals? To be as effective as possible, your marketing spend must be matched exactly to those goals and to your performance metrics—not someone else’s. In this webinar, you will learn how to calculate your cost per lead and how to translate that cost into your plans for 2015.
2. Not a budget
benchmark webinar
“If your business strategy is simply to copy
what others do, then by definition the best you
can hope for is to be a perfect imitation.”
- Jeffry Pfeffer
3. Agenda
• How much marketing do I need?
How much should you spend on marketing?
How many leads does your sales team need?
Calculating cost per lead & establishing a budget
• What levers do you have to drive change
• Q&A
15. How much should you spend on marketing?
• CAC Ratio is <1
• STOP!!!! Your model is broken and it needs to be fixed before
throwing good money after bad
• CAC Ratio is 1-3
• It’s possible you may be in a competitive mature market but, more
likely, you must make some improvements in CAC efficacy and/or
your product(s) to improve CLV
• CAC Ratio is >3
• Spend as much on customer acquisition as cash flow supports
(keep an eye on months to recover CAC)
• CAC Ratio is >10
• Beg, borrow and scrounge for every dollar and invest into
acquiring customers because you are sitting on a goldmine!
30. FREE TOOL and FREE SOFTWARE:
How many leads does your sales team need?
• Understand your CAC, CAC
Ratio, CLV and cash needs to
achieve
• Use funnel metrics to
extrapolate MQL requirements
• Get to cost per lead and
evaluate marketing mix
alternatives based on cost per
lead
Thanks everyone for joining us today.
Thanks everyone for joining us today as you I’m sure are finalizing plans for your 2014 budgets in sales and marketing.
Today’s webinar is not about trends or budget benchmarking… there are several good sources for that data and I’d recommend organizations like Forester, the Content Marketing Institutive, and Marketing-Profs to find that kind of information. Benchmark survey’s are great at comparing how you look vs. others but spending the same as the Jones’s next door doesn’t exactly ensure success… in fact it could set you up with a false sense of security.
In his book Hard Facts, Dangerous Half-Truths, and Total Nonsense, Jeffry Pfeffer of Stanford points out an inherent problem with benchmarking that if your business strategy is simply to copy what others do, then by definition the best you can hope for is to be a perfect imitation. I suspect none of you took time from your schedule today hoping to become ‘almost as good as the herd’. He goes so far as to say that what helps one company may actually hurt another.
So, more than simply creating a budget based on today’s digital marketing best practices or the comparable budgets of others, today’s webinar will focus creating a budget that underpins a sales and revenue plan.
More specifically, we’ll take a look at how much you should be spending on marketing at a high level, unpacking a method to see how many leads you actually need to produce from marketing, and arrive at a cost per lead model for budgeting. We’ll wrap on the levers you have to influence cost per lead and then take some time for Q&A.
If you’re more than 40 years old and sold technology and services like me, you’ll remember the days when marketing helped create awareness with trade shows, print media and direct mail. Then it was up to sales reps, like me, to call prospects and get a conversation going. Now I’m not saying that buyers really liked dealing with sales reps back then, but the buyer did NEED sales reps to share industry best practices, diagnose business problems, map out a thoughtful evaluation process, and, when you had a good relationship, architect the solution. An experienced rep with a good list could easily fill their calendar two weeks out in just a a day or two on the phone.
Well, today, that’s all changed. Its not that sales reps don’t still play a critical role in B2B, rather , its that marketing now must play much of the role that sales used to because the internet has fundamentally changed buyer behavior. Maybe the biggest shift marketers have to make, and I think this point is missed by most organizations, is understanding that this new world is NOT just using digital tools to automate and distribute 1:MANY messages but rather… this new world is truly 1:1 because no two buyers follow the same journey. Buyers today don’t start by picking up the phone and inviting sales to discuss a challenge they’re facing… they start with Google. From there, they read whitepapers, watch videos, attend webinars, read case studies, compare websites and even check references all before narrowing down which vendors they are going to talk to when they are near the end of their evaluation. So, it doesn’t matter ‘how much marketing you have’… if you’re not on that short list, your reps never even know about the deal that just went down in their territory.
The point here is that marketing needs to digitally replicate the conversations that used to happen on the phone or face to face with sales reps. Like it or not, Marketing is now in lead-gen.
So I have a friend who is the CEO of a $35M software company and he got this digital shift early on. He knew he needed… email, social media, a killer website, whitepapers, articles, blogs, videos, marketing automation, lead scoring, lead nurturing, and the list goes on right? Well my CEO friend brought us in because implemented all of this stuff and… while he thought he was over paying for what he was getting, he was willing to pay even more if it would grow sales. What you see here is quite literally a copy/paste from the budget he gave me. The only thing I changed was names of vendors and contractors to protect their identity. All in, his digital marketing effort was running just under a million $’s a year. They also did a few strategic trade shows but this was the bulk of their marketing spend.
I wont walk through all of the numbers but some of the notable line items are $18,000/mo on PPC (mostly with Google) which took up a big chunk but they were also spending $5,200/mo on their Marketing Automation Software. Now that’s a lot more than most organizations pay for marketing automation software but this was the market leader and they had a huge database they were marketing to. The real killer was the village of contractors, freelancers and vendors required to prop up the Marketing Automation platform that far exceeded 10x the software investment. Now, after a couple days of peeling back the onion, we did find several areas to improve their lead gen but generally speaking they had a pretty great ‘sales lead generating engine’ already in place producing hundreds of qualified leads each month… but, for a million bucks they better right?
So, with all of the money he was throwing at at it, my CEO friend intuitively knew he was spending too much for what he was getting. BUT, more importantly, he didn’t know exactly what levers to pull on to improve it and how much to invest in marketing to grow the business past their current state. And that’s where the concept for this webinar begins because this CEO is one of the smartest guys I know and he’s a sales guru and if he needed help, we figured others would too.
So lets start by trying to answer the basic question… How much should you spend on marketing?
So how much you should spend on marketing depends on ROI right? Well that’s certainly true but that’s not all. Let me ask you guys a question… would you give me a hundred dollars if a promised to repay you with a thousand dollars? That’s a 10X return right? Who wouldn’t say yes to that.
Well, what if I told you that I would repay you at a rate of one penny per day… that would take 274 years to payout the $1,000. Now today is not a lesson on NPV calculation of your marketing investments (kind of) but this does illustrate why we do need to expand on the pure ROI notion that many marketers rely on.
Trying to do this on your own is expensive. My friend did it and it cost almost a million bucks. We produced a webinar a few months ago that went into great detail the true costs of content marketing and came up with a number between $300k-500k… The challenge is that there are so many moving parts and resources.. You don’t need a full-time DBA, videographer, copy writer, designer, web developer, managing editor, social media specialist, content architect, marketing automation specialist, and on, and on… but you do need a fraction of all of each of those things. And here is the killer… if you miss a single ink in that chain, it all falls apart. A website without great content can’t convert. Great content without a great website and landing pages get freely consumed and you don’t know by who. A great website and great content without marketing automation leaves you in the dark and inability to nurture anonymous shoppers. Put simply, you have to do all of it and it all has to work together all the time with never ending execution.
That’s where Sales Engine comes in because we have this thing figured out and deploy our full time dedicated resources to you in a fractional way that allows our clients to lower their CAC by doing all of this for less than the cost of hiring a marketing manager. All right… enough about us… lets wrap up.