“On the First Day of Planning, my client asked of me:

One Measurable Plan!”

What’s a Measurable Plan?  One with specific, quantifiable objectives, based on past knowledge of your company’s marketing and sales results and effectiveness.  When management delivers their sales objectives, be sure you’re ready with a grounded-in-fact budget proposal to achieve them . . .

Where the marketing budget begins  

If your company’s goal is to generate $1,000,000 in sales, and the average sale is $5,000, that means you need 200 sales.

  • This is NOT the time to rely on the average sale amount that everyone assumed was true during the year, or to use a “ballpark” number. Determine Total Revenue for last year and divide by Number of Sales to find out for sure.  If you want management to believe your numbers, they must be based on reality.
  • Total Revenue / Number of Sales = Average Dollars Per Sale

Last year, you may have generated a total of 1,500 new leads through webinars, white papers, enewsletter sign-ups, and other names you engaged with through social media.

  1. Those 1500 leads turned into 150 new customers for a 10% conversion rate.
  2. To generate 200 sales, that means you may need 2000 new leads (2000 leads @ 10% conversion = 200 sales).
  3. Your marketing budget last year was $15,000.  $15,000 brought in 1500 leads for a cost per lead of $10 ($15,000/1500).
  4. That means you’ll need a marketing budget of $20,000 to bring in 2000 new leads ($20,000/$10).

(In reality, you’ll want to look at additional sales from existing customers versus sales from new customers.  But to simplify the example above, we assumed all sales would be from new customers.)

This is the type of analysis that can be presented to illustrate that your budget is absolutely based on reality. CFOs will especially appreciate this level of detail.  If you want to preserve your marketing budget, this is the type of budget detail to provide.

Lead analysis by source

Know the Dollar Value of each Response.  If your average sale last year was $5000, and:

  • If 2% of those who downloaded a white paper consistently converted to sales, then each white paper download is worth at least $100.  ($5,000 @ 2% = $100)

If you spent $1,000 on an advertising test on a particular website, and generated 20 white paper downloads, you should probably expand the test.  ($1,000 / 20 = $50 per white paper download.)

  • If 5% of leads that came from conversations on social media sites converted to sales, then each social media lead is worth at least $250.  ($5,000 @ 5% = $250)

If you spend $1000 to train an employee to handle your social media relationship-building, and then want that $35,000/year employee to spend 20% of his/her time on social media conversations ($35,000 @ 20% = $7,000), that $8,000 investment needs to generate at least 32 new leads ($8,000/$250). (Over 12 months, that’s 2-3 per month.)

  • If 40% of those who attended a webinar consistently converted to customers, then each webinar attendee is worth $2000 ($5,000 @ 40%).
  • You sent a direct mail effort to 500 CTOs in 2011 for a cost of $2,000.  50 CTOs attended a webinar at a cost of $40/CTO.  You should expand your webinar efforts to this audience.
  • If 100% of prospects who made a visit to your plant to check out your equipment ended up purchasing, then each plant visit is worth $5000.

If you offered to pay travel expenses to bring prospects to your plant and the average travel expense was $1,500, you should probably expand that program.

By knowing the value of every response, you’ll be better able to cost-effectively allocate your marketing dollars – and prove your logic to your boss.

What’s your favorite tip for writing a measurable marketing plan?

If you need more detail on the planning points above, our new BEST-SELLING book, “The Results Obsession: ROI-Focused Digital Strategies to Transform Your Marketing” is now available on Amazon!

The Results Obsession Amazon Bestseller

Learn more about The Results Obsession and see the Table of Contents

The Results Obsession has an entire chapter devoted to marketing math and budgeting (as well as a chapter devoted to analyzing Google Analytics, email, and social media results).