Creating a Data-Driven Marketing Budget for B2B Tech

Harnessing the power of data is critical for B2B tech and SaaS organizations attempting to define their marketing budget. If you are unable to assess historical performance, pinpoint critical metrics and align budgetary resources with your overarching business objectives, you'll never be able to get the ROI you expect from marketing efforts.

We see it time and time again: economic uncertainties, unexpected expenses or shifts in market dynamics can disrupt even the most well-planned budget and ultimately impact a marketing department's goals. So how do you go about creating a more data-informed marketing budget that has the flexibility needed to evolve when push comes to shove?

Data, data and more data

If you follow the data, you will always uncover insights that help drive informed decision-making—from identifying underperforming campaigns to allocating resources based on ROI projections, data-driven strategies empower you to optimize budget allocation and maximize returns.

Plus, this data can better inform experimental strategies or tactics you haven't tried. If you are combining industry insights, customer/audience data and performance metrics you'll have actual information that shows gaps and opportunities! Paying careful attention to your audience and performance will prevent you from what we lovingly refer to as "squirrel syndrome."

Squirrel syndrome is a silly way of saying: don't just test out new tactics without the justification. If you're shifting your strategy constantly to try the next, new, shiny tactic—you're doomed to fail.

Key Considerations

None of these should come as a surprise, but if you think through every facet of data, you're bound to discover intel you didn't even know you needed. 

Industry Insights

• Who are the biggest competitors in your space at the moment?
• What are their marketing tactics? Are they successful?
• Where are your competitors lacking, and can you capitalize on that via a new channel or content medium?
• Is your industry stuck creating monotonous content? How can you differentiate?
• What crossover is there with other industries?
• Are there any partnership opportunities with thought leaders in the space? 

Customer/Audience Data

• Who is your current audience? Is it the right one?
• What channels does your audience engage with? What about content types?  
• Do you want to expand your audience or drill down further?
• What is your current pipeline? Customer retention? Lifecycle?

Performance Metrics

• How do you measure your current marketing efforts?
• Do you have the right tools and reporting methods to accurately assess your success?
• What do your current metrics look like? What performs the best? Worst?
• What metrics do you want to gather/review? Do you have the tools needed to do so?
• Have you established KPIs based on your metrics and goals in the past? What about now?

If we had to create a golden rule for creating a marketing budget it would be this: if you can't measure your data, you can't report on it. If you can't report on it, the tactic is not worth pursuing.

You need to be able to mathematically prove you get a positive ROI on every dollar you spend, or at bare minimum, be able to report on the learning opportunity. Attribution is your key to creating your future budgets.

Are you going to be able to follow every single cent, probably not, but you need to be able to attribute an exact 1:1 ratio of dollars or extrapolate on the Average Lifetime Value.

Time for Some Math 

Now that you have your data gathered, we get to deal with some fancy numbers. Really its a simple calculation to prove your ROI on a specific tactic so you can define:

1. Should we continue using this tactic
2. Should we explore modifying this tactic
3. Should we switch to another tactic that provided similar/better ROI in the past

Try using this calculator if you get stuck, but let's take this PPC ROI calculation for example:

You can see that for each dollar spent on this PPC campaign, it generated $1.25 or a 25% positive return. If you do this for each tactic you use, you'll be able to benchmark your performance agains the industry standard, see any anomalies and decide whether you need to eliminate or modify the tactic.

Marketing and sales alignment

Once you've assessed your data of past/current tactics, it's time to chat with your sales team: what numbers do they need to hit? $1,000,000 in sales? More?

This is where the calculations we did a moment ago kick in.

If we know that the PPC campaign generated a 25% positive return, then we know we have to apply this in reverse to get the proper PPC budget. AKA your budget for that specific tactic would have to be at least $800,000 to hit your $1,000,000 in sales.

Now, no one in their right mind is putting all their bets on one horse like this—but it can help you start to create a formula for what to spend where and even give you the justification to:

• Up the budget on tactics that worked well
• Test new tactics in place of poor performers using industry benchmarks 

These calculations can become more and more complicated (spreadsheets aren't obsolete yet, folks!) so start simple and work your way up as you grow!