Every year, marketers and business owners are tasked with sitting down to analyze their goals and figure out how to best budget for the most effective attainment of those goals. Identifying the magic number of dollars needed to achieve business benchmarks is tough enough; the exercise of determining where to place those dollars can create even more confusion.
While the classic marketing funnel that everyone knows and loves (or not) provides an adequate depiction of how to convert customers, the iFocus team utilizes a modern take on this funnel to remove some of the confusion in the process of determining budget allocations.
Tradition Has A Place
The traditional marketing funnel we all were exposed to in school contains quite a few assumptions. Perhaps most problematic is it assumes we all take the same path to get the point of purchase. Today’s marketing world is fragmented and customers can enter or exit the purchase path at any point. We’re hit with thousands of messages every day that can cause us to make snap decisions, making a linear path to purchase unrealistic for buying, and even more unrealistic for how to best use our marketing dollars.
Sometimes referred to as omnichannel, multi-channel, or 360 marketing, there is a place for these in a strategy conversation and even more so during and post-campaign launch to optimize based on actual data points. More to come on this in a future blog! However, budget allocation should be approached from a different perspective, one that allows us to look at the core tenets of how we should achieve our goals.
The Relay Race
When training for a relay race, the entire team must work toward the common goal of winning the race. There may be hiccups along the way—a dropped baton or a loose shoelace—but the goal is always the same. More importantly, every leg has the same weight and responsibility to carry the team to victory at the end.
Using this analogy, we can look at our marketing funnel horizontally. The idea of a relay race gives us the hindsight into previous marketing objectives, current presence for a brand in the marketplace, and the foresight into how to confidently allocate budgets to achieve the goals. Similar to a track relay, each part of the marketing relay carries equal importance for achieving success in your business.
Leg 1 Brand Awareness
Leg 2 Research and Interest
Leg 3 Lead Gen & Sales
Leg 4 Advocacy/Retain
To better understand this new model, take a look at the following example. Let’s say you have 100 potential customers to market to. 25 of them are in each leg of the race. When we train for a race we should all be training equally, so logic would tell us to spend 25% of the budget on every leg to train appropriately. Most marketers spend their money in Leg 1 and Leg 3, focusing only on mass media branding tactics and channels that easily show directly attributable conversions (usually digital). By doing this, you’re missing out on 50% of your potential customers! Think about that—50% of your potential market may or may not see you, and the waste accumulation here will add up dramatically over time.
Now let’s take the same 100 potential customers, all at different points in their purchasing pathway, including many that don’t yet know they need the product or service being offered. This time, we’ll spread our budget out more evenly—say, 25% to each portion of the pathway. Now all of our tactics in each leg are receiving equal training, and by the time our final leg comes around we’re more likely to convert those 100 customers instead of just 50 in the first example.
Not every business needs the same level of brand awareness—some may have a very strong brand presence in their specific geography, while others may need more focus on the awareness and research legs in a crowded industry (retail or home services, for example). Maintaining a budget in every leg of the race will give you the best chance at converting as a potential customer moves through their own path to purchase. We’ve found this to be the secret to long term success. The 25 customers from Leg 1 are more likely to remember you as they do their research (Leg 2) and eventually purchase (Leg 3), but only if you have some sort of presence in each leg.
As we saw previously in the omnichannel visualization above, many customers can move around during their path to purchase, and the path is not alway (in fact, usually is not) linear. This cluttered path gives us even more reason to allocate budget to train for each leg of the race. If a consumer knows they want to purchase from Company X, but as they’re researching that company’s products, they receive multiple ads for Company Z and begin researching them as well, the decision becomes much less clear.
The reality is we are all tied to a finite amount of monetary resources, but business goals always remain the focus. Allocate your budget in a way that drives you toward your goals and maintains your “race training” for the long run (pun intended). The finish line is there and the frequency of repetition along the way will undoubtedly help you win the race.