How much should you, as an SMB leader, allocate for marketing? I’m going to lay out a process to help you figure it out.
First, some context. Most B2B firms invest roughly 6 to 16% of gross annual revenue in marketing. That said, spending varies by company size and industry so I recommend researching benchmarks specific to your space.
Here is a general view on average budget levels as percentage of GAR*:
Maintenance mode: 6%
Maintenance to low-growth mode: 9%
Maintenance, growth, & investment mode: 12%
High-growth & investment mode: 16%
*While these are broad guidelines, I recognize that annual budgeting is a C-suite collaboration which will impact how you budget for your critical areas of your business.
Many B2B companies are underbudgeted for marketing relative to their growth and revenue goals. Buying behavior continues to shift, which requires an aligned strategy between marketing and sales to support revenue pipelines. Understanding your customers’ buying processes and where and how they get their information is important when thinking about budgeting.
Here are three ways to get you started in figuring out the right marketing spend for your SMB:
- Top-down: Start with revenue goals and allocate a percentage that aligns with growth targets.
- Bottom-up: Define the outcomes your marketing efforts need to deliver, map the programs required to accomplish it, and fund the work accordingly.
- Stepwise: Increase last year’s budget in measured increments to expand reach and pipeline.
You can also apply this thinking to your other budgets such as sales and operations as you plan your annual spend to support your business growth.
