Marketing and Sales System Budget
Depending on the size of your business you'll have a different approach to evaluating the cost and return of a marketing and sales technology project. It might be:
- Informal - based on gut feel and instinct
- Formal - so you can compare it against other projects and can look back at a later time to review.
- Strategic - it's something you feel you need to do in order to learn and to be seen to be doing something.
Preparing a project budget based on ROI
Attempting to work out Return on Investment (RoI) is useful, but it is often difficult to calculate and measure.
It comprises two parts; Return, and Investment.
The 'Return' element depends on the Goals and Objectives, and ultimately it's about achieving more sales revenue from a combination of:
- higher average order value
- more sales per period
- more up-sell and cross-sell
- better conversion ratio
- higher quality leads
- more leads
The 'Investment' element or Cost is typically:
- Software licence or monthly usage cost
- Support costs
- Hardware costs
- Training
- Set-up project activities
- Tailoring/Customisation
- Data load or migration
And the cost is not just what you pay out to suppliers when they invoice you. It's the internal cost of your time, and the time of your staff.
- Surfing, reading and researching
- Undertaking one or multiple trials
- Time to learn, and to fix issues etc
- Implementation support time
- Time to look at your processes
The Opportunity Cost element:
For example, if the 'cost' to the business of a marketing or sales person is say £50k pa. and the application could make them 10% more efficient or effective then the business benefit is £5k pa. If the business was prepared to spend say 20% of this on improved systems then the project budget would be about £1k pa.
Alternatively, if the 'contribution' to the business of a marketing/sales person is say £500k revenue at 30% marginal profit the benefit to the business of a 10% efficiency/effectiveness increase would be £15k pa. On the same 20% investment then the project budget would be about £3k pa.
Of course this assumes there is opportunity and work to be done, rather than the business is shrinking.
So there's two Opportunity costs to consider:
Internal vs External - what's the opportunity cost of the time of you or someone on your staff doing all the evaluation work, or get someone in to do it alongside you. Doing the work yourself takes your time away from what you do best, and what your clients pay you to do for them.
Now or later - what's the opportunity cost of delaying by a few months if you don't have the time now to put into the evaluation project. A delay will put back the benefit that the business will gain, by a corresponding period.
DIY, Assisted or Done For You?
It may be that you really enjoy and want to make time to undertake all this evaluation and implementation activity. Maybe you have a 'Do it Yourself' approach, either for yourself or for your business. It would be difficult for teh whole project to be 'Done for you' as some involvement will be needed. Thie middle way, involving specialist assistance is a great way to go though.
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