Marketing Budget ROI New Initiatives by undul856


									                 Marketing Budget
                ROI & New Initiatives
Sample PowerPoint showing the presentation for the new scratch budget. It introduces new
expenditures and their expected ROI. It was from an actual presentation within the company,
but the company name, products and numbers were changed to make it generic enough to

We were grilled by the CFO during the meeting, but we got 100% of what were asking for—
specifically since we could show the expected return for every dollar requested.
      Marketing Objective & Approach
•   Our 2010 objective is to maintain existing business, while capturing new
    accounts to grow sales from $50 million to $59 million.
•   Our marketing approach includes:
     – Introduce a new product line with associated new revenue (Widget)
     – Introduce three major new product releases (Widget2, Widget3 and
        Widget .x)
     – Improve our pricing strategy w/Widget via promotions to better penetrate
        and re-capture market share (while protecting existing profits)
     – Increase our width of distribution (add more & better qualified resellers)
        and improve our reseller recommendation rate (better support, leads)
     – Instigate smarter promotions (Ads, events) to generate greater ROI. Cut
        those that do not perform
     – Utilize more promotional tools (PR, direct response, channel, roadshow,
        etc.) to generate more leads—while still requiring each program to
        maximize ROI
      Budget Summary – Expense/ROI
•   Channel Marketing – recruit new resellers, sell more through existing resellers
    (increase recommendation rate). Expense: $310k. Return $4.9 million.
•   Advertising – new product announcements, generate leads for sales and
    resellers. Expense: $416k Return $1.8 million.
•   Promotional PR – generate leads, credibility and awareness. Expense: $244k.
    Return $2.3 million.
•   Events – generate leads, customer, consultant, reseller and press meetings.
    Expense: $515. Return: Negative
•   Customer & Reseller Conference – customer, consultant and reseller support,
    pre-sell on-going releases. Expense: $440k. Return: Not calculated
•   Collateral – product catalog, price lists, CD’s (support material), reseller sales
    kits, product slicks, etc. Expense: $619. Return: Cost. Required to sell the
    products. Covers 30 of the 57 different Division products.
         Integrated Marketing – Premises
•   The initiatives & ROI is based on much of the work done internally. Head cuts force us to use
    external agencies, often increasing expenses 5 to 10x.
•   This is an ―integrated‖ campaign. Each initiative is designed to work in tandem with the
    others. For example:
     –   If we recruit new resellers, but can’t provide leads (by cutting ads), our expected
         ROI/reseller drops.
     –   PR will actually drive our sales more than advertising. However, press coverage is often
         highly influenced by ad placement (particularly with smaller pubs). PR creates the
         overall interest, with Ads differenting the product and showing where to buy (=leads).
•   It is expected that we will be smarter with our ongoing campaigns. Past examples: changed ad
    from ―brand identity‖ to ―direct response‖ format—increased leads 35x. Utilitized Web for
    resellers, decreased pricing list print & postage expense
•   ROI on leads is contingent on changing our internal processes and behavior (being addressed
    now). Better quality + better tracking = better follow-up = greater ROI
•   ―Total‖ new product revenue and ROI equals greater than the expected $9 million to meet this
    years budget. The additional ROI represents total revenue as a result of the specific campaign,
    of which the associated sales revenue may not close within the calendar year.
                     Channel Marketing
•   Objectives: Recruit new resellers (some have defected, others cover new
    verticals), improve existing recommendation rate, joint promotions, leads. The
    proposed campaign would bring us 49 new resellers (VARs) and $5 million in
    new revenue (over a 1 year period, with additional on-going revenue). Total
    expense, with a channel director ($150k fully burdened) = $310k.
•   Promotions
     – Advertising
          • 4 Ads – VARBusiness/Other ($3k each (designed internally)) = $12k
               – ROI: 10 ―qualified‖ responses / ad = 40 responses. 25%
                 conversion = 10 new resellers x $100k/reseller/1st year = $1
          • 4 Carddecks – VAR/System Int Specific ($2.5k) = $10k
               – ROI: 4 ―qualified‖ responses/deck = 16 responses. 25%
                 conversion = 4 new resellers x 100k/reseller/1st year = $400k
                Channel Marketing
• Promotions
   – Direct Response
       • 2,000 targeted locations – $8k
           – ROI: 2,000 x 5% response = 100 leads x 10% conversion
             = 10 resellers x $100k/reseller/1st year = $1 million
       • Reseller database list - $5k ROI: Needed to run campaign
   – Events
       • Reseller Roadshow (10 cities, $80k less contribution) - $25k
           – ROI: 10 cities x 25 resellers/each x 10% conversion = 25
             resellers x $100k = $2.5 million
   – Reseller Collateral ((brochure, binders) (2,000 x $50/ea)) - $100k
       • ROI – Necessary to run the program.
                           Promotional PR
•   Objective: To generate leads, credibility, and awareness. The recommend PR
    activity, at program cost of $144k, plus $100k weighted salary, would total
    $244k and would generate more than $2.3 million.
•   Items
     – Clipping Service ($300/mo + 1.95/Clip/100) - $10k
            • Potential Acme add-on discount
            • ROI: Cost needed to determine ROI response for all PR
     – External Agency (3 x $20k (Trade Show, Conf, Tour)) - $60k. ROI: Augment
       internal capability. Return is associated with Press hit ROI.
     – Reviewers Guide - $10k ROI: Increases our chance of a positive review—
       maximizing PR effectiveness
     – Press Tour – Widget (introduction, position) - $35k
            • 3 Cities, at least 3 Locations/City
            • ROI: 3 cities x 3 editors each = 9 articles x $2,500/hit (MQQ value) = $22.5k.
              The short-term ROI is a related article. The real ROI is the increased personal
              relationship, which increases our hits on an ongoing basis, since we got on the
              radar screen of the top editors.
                           Promotional PR
•     Items
       – Press Release – news wire services (each x $550 = $20k). ROI: The Press Releases
         are required to help generate hits

    Announcement Activity       # Releases       Total Expected               ROI
                                              Hits (25hits/Release)   (Based on $2,500/Hit)
    Product                         5                 125                     312k

    Alliance                        10                250                     614k

    Sales Wins                      20                500                    1,250k

    Leadership                      2                  50                     125k

       – Press Kits (1,000 x $4, Plus $5k x 3 Reprints) - $19k ROI: Cost. Materials required
         to run PR campaigns
       – The budget only accounts for the cost and ROI for each expense—which stands on
         its own. However, the overall expense also has a long and short-term residual
         effect since it helps ensure reviews, referencing, and Web hits.
                                                 Promotional PR
                   •   ROI Analysis (how to measure PR effectiveness)
                        –   The promotional goal is to maximize the budget to get the greatest exposure (# of impressions)
                            and ROI for leads. Choose medium. To reduce ads, we use PR, which is 15 times more
                            believable, yet 1/7th the cost. Ads help us get PR coverage and give phone # for direct response.
Sample Press hit

                                                                                                                       Compared to
                                                                                                                       Sample Ad
                         - A positive press hit has a greater value than advertisement. We use the ad “replacement” cost
                         to calculate ROI in terms of placement saving cost (what it would cost us to get the same
                         “impression” count via advertising).
                         - ROI for press is calculated with a formula called the “Media Quality Quotient” analysis.
•      Objective: We have 1 new product and 2 new major release launches in 2003.
       We expect to generate new sales via the new product and releases, plus
       penetrate 6 new vertical markets. Total expense is $416k, our ROI is 1.8
        – 6 different verticals, 1 ―best‖ pub per vertical, 6 placements each = 36 placements
        – 4 different horizontal (security) pubs x 6 placements each = 24 placements.
        – $6k each (with graphics/placement). Each launch campaign will run for 90 days.

      Activity         Total #         Expected # of          Close                 Avg $ Rev                   Revenue $
                     Placements        Leads (10/Pub)        Ratio %      Per Sale (15k + 5k Residual)

    Vertical Ad           60                 600               15%                     20k                        1,800k

    * We currently get 30 leads / ad. We are using 10 ―qualified leads / ad. Avg sale price, according to Les & current
    configurations, is $15k, plus $5k residual (software maintenance, upgrades, future sales)

                               59 sales of Widget3 equal $12.6k/sale. Widget2 is much greater.
•   Objective: Generate leads, setup customer, consultant, reseller and press
    meetings. Expense: $451. Return: NEGATIVE
     – Our primary show is ASIS. Additional events include Trade Show 1, Show 2, Show
       3, Show 4.
     – Our ROI is based on Trade Show 1 (where we have the most accurate data) and the
       ratio is applied to all.
     – In 2001 we generated 600 leads at Tradeshow 1. 75 were deemed ―quality‖. We
       cannot attribute a single sale to these leads.
     – Assuming we put the tracking systems in place (current initiative outlined in
       appendix), and assuming we use the same expected leads and close ratio as the ad
       campaign (conservative), we have the following ROI:

     Avg # Leads     Avg      Close Ratio    Avg Sales    Total Revenue   Trade Show 1
                    Quality                  Revenue                        Expense
         600          75         15%           $20k          $225k           $280k
                          Events Discussion
•   Based on current data, should we do Trade Show 1?
•   We’ve been at Trade Show 1 for 13 consecutive years. However, ROI ―kills‖ sacred cows (sacred
    cows make the best burgers)
•   Expected changes for Trade Show 1 2010, with refinements for 2011
     –   MUCH more aggressive at getting leads – show and daily goals
     –   Microphone stations to draw more attention to the demos
     –   Promotions to pull people to the booth (more traffic)
     –   Pre & Post Day team meetings with recognition for those that pull in the most leads
     –   A clear understanding of what we need to get out of the show (LEADS first, everything else
     –   A new lead qualification form (A, B, C) with ―real‖ qualifying questions (# doors/readers, #
         employees, time to decide, etc.)
     –   ―Everybody‖ works the booth to cut expense (no ½ days)
     –   New lead tracking process (template w/managerial information for follow-up) & internal buy-in
     –   Incentive plan with Sr. MarCom Mgr based on ―leads‖
     –   Reduce costs – smaller size, consolidation
                        Events Expectations
•    Following are the expectations for Trade Show 1 2010:
      – Increase the # leads from 600 to 1000
              • Microphones, promos, much more assertive and qualifying
      – Improve the qualification process, pass on tire kickers and seek out those most
      – Even still, with these ratios, the lead ROI is the lowest of all campaigns
      – We have to also track the value of meetings, press, competitive intelligence…
      – But, we must pull a better ROI or re-consider our ongoing participation
              • The concept of ―noticeable by absents‖ can be made up by re-allocating the
                money to more profitable campaigns, then setting up sales meetings with key
                accounts during the show, without the high cost of the booth
              • May consider ―off show floor‖ event

    Avg # Leads    Avg Quality     Close      Avg Sales    Total Revenue    Trade Show 1
                     (A,B)         Ratio      Revenue                         Expense
       1000            200         15%          $20k          $600k            $280k
               Customer Conference
• Objective: Customer, consultant and reseller confidence & support,
   pre-sell on-going releases. Expense: $320k. Return:
• I do not have enough data to calculate an ROI for this event.
          Research – ―Risk Reduction‖
•   Objective: Reduce the risk from missing the mark with our product lines. Total
    cost is $78k. ROI: The reduction in ―loss‖ sales resulting from not identifying,
    prioritizing and developing the correct features (from Win/Loss Reports).
    Microsoft, HP and other high-tech research ratio is 1% of sales. Ours is 0%. It
    will be 01% after we add this expense.
•   Activity / Investment
     – Analyst Reports (specific category information)
          • Two at 5k each
     – Usability Study – Widget software interface 10k
     – Focus Groups (identify key issues to test)
          • 1 ―set‖ external (3 locations) 20k
          • 2 sets Division 6k
     – Surveys (Prioritize features & Roadmap) 25k
          • 1 survey set for Widget 1/Widget 2/Widget 3/Hardware/Reseller
     – Consulting (survey setup, Business Intelligence setup) 3k
               Brochures & Catalogs
• Objective: To provide the appropriate collateral to position and sell our
  products. Currently our collateral looks very old (grey marble 70’s
  style), does not reflect the Acme brand, is not translated for
  International sales, has incorrect data/positioning, Cost: $619k
  (includes annual re-prints, design cost)
• A large portion of our on-going budget is re-prints, much like the
  packaging cost of goods.
• The budget only includes re-prints or re-do (new product revisions) for
  24 of the 37 Division products (avg cost $16k per 20,000 print run
  (avg #/year), plus $1,500 - $6,000 production/art/design cost)
• All re-prints and new pieces reflect additional design/production cost,
  since they will require new design work that uses the Acme brand
Industry Ratios – Marketing Only
 Marketing (Salaries, Overhead, MarCom (Ads,                           % of Company
        collateral, demos, PR, events)
Fastest Growing Companies                                                     12.7%
Most Profitable Companies                                                     11.8%
$25+ Million Companies                                                         8.8%
$20,000 or more Avg Transaction Cost                                           8.1%
>20% from Reseller Channel                                                    13.1%
* Source: Software Success, 3rd Edition, Software Industry Operating Ratios. Based on 122
surveys for the 1st eight months of 2001. Data is apx. 1 year old.

Acme / Division Marketing Expense % Ratio:
   • 2009-10
   • 2011
* We will use 9% as an acceptable ratio (we have over $25 million, but most revenue comes from
resellers). Even with the new initiatives, we are still below the industry ratios, based on all of the
data we could compile.
    New 2003 Revisions to Budget

• Play smarter
• Do something different – maintaining ROI
  – New Initiatives
     • Promotional PR
     • Research (Risk Aversion)
     • Channel Marketing – Reseller Programs
     • Webmaster – Online Marketing
     • Vertical Leads

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