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Home Business Leadership

Ask the Business Coach: How much revenue should I spend on marketing?

October 20, 2021
in Business, Features, Guernsey, Isle of Man, Jersey, Leadership
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Channel Eye has joined forces with Royston Guest, leading Business Growth Coach and CEO/Founder of Pathways Global, in our series, ‘Ask the Business Coach’

Business Growth Pathways logo

How much money you should spend on marketing is similar to asking – how long is a piece of string? There isn’t one size or one number fits all for this question.

The general rule of thumb is to spend 5% of your business turnover on marketing, but this varies by industry and the marketing mix and strategy adopted.

The big three takeaways!

  1. Only when you understand lifetime value can you determine what you’re prepared to spend to acquire a new customer.
  2. Growth ambitions, lifetime value and available cash are three critical factors to determining marketing spend.
  3. Your marketing mix plays a crucial role in deciding where you spend and how much you need to spend.

Episode timestamps

  • [0.43] A traditional view might suggest that a B2B business should spend between 2-5% of their annual revenue on marketing. For a B2C business, slightly higher at 5-10%.
  • [1.25] Another way to look at it is by understanding your growth ambitions and then understanding what marketing spend you’re going to need to fuel that growth. Plus taking into account what a customer is worth, what is their lifetime value?
  • [3.05] A third question to answer is how much cash are you willing to spend – how much have you got available and happy to plough into acquisition?

Do you have a question for the Business Coach?

Send your questions to askthebusinesscoach@channeleye.media


Missed a previous episode? Catch-up and watch the series here.

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Royston Guest

Click here to see all of Royston's articles and here to find out more about Royston and Pathways Global

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