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5 min read

How do you calculate the investment of your Marketing Plan

The budget or investment of the marketing plan is one of the key factors for achieving the objectives. In the digital channel it will help us to create a sales forecasting system as long as we measure the performance of all marketing actions. 

According to the latest CMO study (Deloitte, Duke Fuqua Business School and American Marketing Association), B2B Product companies invested on average 5.4% of their revenues in Marketing, reaching 7.1% in B2B companies that sell Services.

The system we propose to you is to analyze what results we are going to have and what investment we have to make to carry it out. This is something mathematical.

But first we must carry out a process of introspection to know what metrics we should analyze, what ratios we should extract and have an attribution model to know the performance by source or channel. Let's start by knowing what the objectives are.

the objectives

If we do not set objectives, we will not know what our goal is and therefore we will not know what we will need to achieve it.

These are our objectives:

  • A qualitative objective: Design a continuous improvement system, creating and implementing a marketing plan with performance metrics for all actions.
  • A quantitative objective: To have your own conversion ratios and the main conversion metrics and lead and customer acquisition costs. 

In order to know the budget and investment of the marketing plan, we need:

  1. Analyze which metrics or KPI's we will measure.
  2. A sales forecast system.
  3. Knowing the performance of our marketing plan actions by channels and sources.

Below we will go into detail on these 3 keys.


the metrics

In order to measure the ROI of Internet marketing actions, there are metrics that allow us to measure the results. Below we list the main metrics and then move on to the formulas.


CTR – Click Through Rate

It is the most important metric in web traffic acquisition campaigns. It is the result of dividing the number of clicks we get from a campaign or commercial action by the volume of impressions. 

It also measures the effectiveness of the SEO Strategy if we take into account the CTR of the clicks we get from organic traffic over the impressions achieved by this channel.

Contact Conversion Ratios ->Leads->MQL’s->SQL’s->Deals->Clientes

These metrics are the basis for the calculation of our scorecard of objectives, results and forecasts of lead and customer acquisition. And in this way we will not only have a forecast table of future sales, but it will also give us the key to how much to invest in our Marketing Plan.

Although the amount of investment needed to achieve the objectives are not the same in all sectors, if we do not have customized metrics and ratios, we can calculate an initial starting point with standard digital marketing conversion ratios or general benchmark:

  • From 2% to 3% conversion ratio of Visits into Leads
    From 3% to 5% conversion ratio of Leads to Customers

Although these general figures are useful to start with if you do not have any reference, the best thing to do is to start measuring and having your own metrics, whose continuous growth will become a new challenge.

LTV – Life Time Value 

It is calculated by multiplying the profit I make on average sales, multiplied by the average recurrence rate of acquisition of our products/services over the life of the customer. Although a one-year horizon is usually taken as a time measure. 

For example: A company with an average profit margin per sales of €500, with a recurrence ratio of 3 sales per year, would have an LTV of 500X3= €1500.

CPL – Coste por Lead

It is calculated by dividing the total marketing investment or campaign by the number of leads obtained. Remember that a lead is not a contact. A lead is a person who has shown interest in your product/service.

Example: If in an Inbound Marketing campaign we have invested 2.500€ and we have obtained 20 leads, the CPL of the campaign would be 2.500/20=125€.

CAC – Coste de Adquisición de Cliente

It is calculated by dividing the total marketing investment or campaign by the number of customers obtained. 

If we think of the same example above, if out of those 20 leads we have achieved that 5 are our customers, the CAC of that campaign would be 2,500/5= 500€.  

Ratio LTV:CAC –The return on investment or ROI ratio

If we put these two metrics in equivalence we will have a ratio that will tell us if a specific campaign or marketing plan is profitable or not.

In the case of the example we have a LTV:CAC ratio of 1500:500, which taken to the minimum expression would be a LTV:CAC of 3:1.

If we leave aside the acronyms, what this ratio tells us is how much each new customer we acquire costs us in terms of the average profit that a customer brings us. Following the data in the example, acquiring a new customer costs us 33.33% of the budget of the average profit margin per customer. If the ratio were 2:1, the cost would be 50% of this margin.

There is NO LTV:CAC ratio that serves as a benchmark for all activities. While in B2B services of SaaS platforms there is a minimum ratio of 3:1 from which we consider a campaign or plan to be profitable, in the rest of activities and business models, everything will depend on the average net profit margin. 

Forecast sales system based on conversion ratios

We already know what metrics and KPI's to measure to know the performance of the marketing plan. Now, how can I get an idea of how much I need to invest to achieve my objectives and be able to tell the Management Committee how much money we need to allocate to Marketing?

The answer lies in the sales forecast system. We invite you to use our Google datasheet template so you can create your sales forecast system based on targets and conversion ratios. This way we can have in advance the revenue forecast and from this data analyze how much we want to invest in our Marketing Plan. BOOM!

With this template you will be able to obtain a month-by-month forecast based on investments and returns achieved, as you can see graphically in this image:

Hoja de cálculo sistema prevision ventas y calculo inversion marketing

Click on the image to access the spreadsheet, IMPORTANT! Do not edit it directly, make a copy beforehand (File/Make a copy) so that you can later edit and customize it. 

To have a sales forecast model, objectives and investment budget like this, the first thing is to have as soon as possible an information and monitoring system of the results of the actions of the marketing plan through a reporting system that takes into account all these metrics. We will get this data from Google Analytics, Google Search Console and CRM. 

Marketing plan performance by channel or source

Users and visitors to our website and campaigns arrive through different channels or sources: SEO, SEM, Direct Traffic, Referral, email marketing, social networks. 

To have this performance of the marketing plan by channels we need to know our lead and customer attribution model. The most common is that the last channel or source visited, prior to conversion, is attributed to the same. So if a contact knows us through an ad in Google Ads, but finally becomes a customer thanks to an email marketing campaign, this last channel is considered as definitive to get the customer. This makes sense, although it is worth thinking about it because each activity and each company is different.

If we know to which channel each lead and/or sale is attributed, we can calculate the profitability of each channel or source. Here is a simple calculation as an example:

Principales métricas por Fuentes/Canales - Como calcular tu inversión de Marketing - Hayas Marketing

The metrics we are using to measure profitability are mainly Cost per Lead and Cost of Customer Acquisition. And we see that for each channel or source we have its performance based on its effectiveness in generating new business.

This data gives us a detailed view of the performance of each channel and therefore we can allocate more resources to the channel or source that works best and abandon or take actions to improve the ratios in those channels or sources with the worst ratios. 

If the decision is to improve these ratios and metrics, these are some of the ideas and actions we can take.

  1. With cross-selling and up-selling actions.
  2. Improve conversion ratio from MQL to SQL, creating Inbound Marketing campaigns more focused on the consideration or decision stage, such as a "Case Study" or "Case Study".
  3. Automate your CRM marketing processes
  4. Optimize the lead qualification process
  5. Increase the quality of lead magnets
  6. Create content of real value for our Buyer Persona
  7. Optimize the sales process in the CRM by creating our Playbook
  8. Localizing content by country to increase engagement by "local tuning".

I hope you found this article useful. If you want to learn more about any concept or have any questions please do not hesitate to contact us.

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