The Dreaded Marketing Budget for Engineering Firms and Other Related Industries

by: Francine Carb

 My clients who are in professional services industries, like engineering, architecture, and construction, often ask about marketing
budgets. How much should they be? What should they include? And does our firm even need one?

After seeing my clients struggle with these issues for many years, I’ve devised a very reliable, widely accepted formula. Try it and I
think you’ll be satisfied, or maybe even happy, with the process and the answers.

First, take your forward-looking year’s forecasted revenue projection. For this example, let’s use $25 million for fiscal year 2015.
Much literature has been written about what percentage to use—typically from 3% in manufacturing to 20% in the software
business, but neither really makes sense until you dig deeper. So let’s continue.

Then, take 10% of that number (which is really an overall average from multiple industries), so that would be 2.5 million dollars.
Stay with me—that’s not your budget number. The 10 percent number is the baseline upon which to “normalize” it for your specific
firm. It gets a little more complicated, but worth the effort.

Now, take a weighted average of the margin for each business unit. For this example, let’s try the following:

Business unit 1’s margin is 50%, but only contributes 10% to the business
Business unit 2’s margin is 10% and contributes 50%
Business unit 3’s margin is 25% and contributes 20%
Business unit 4’s margin is 15% and contributes 10%
Business unit 5’s margin is 20% and contributes 10%
Do the multiplication and add the results:

5% + 5% +5% + 1.5% + 2% = 18.5%

Now you can apply this realistic weighted average margin to the $2.5 million dollar baseline above, which gives you $462,500. Now,
that feels like an appropriate budget for a $25M engineering firm with the margins depicted above, doesn’t it?

So, how should you allocate that budget? Here’s where the “art” comes in. First of all, do not allocate it by the contribution from each
business unit. In fact, using the example above would put 50% of the budget to Business Unit 2. That would be a mistake because that’s
the part of the business that pretty much runs on autopilot—it doesn’t need marketing.

First, look at the foundational marketing elements of your firm and see if they need an upgrade or refresh. For instance, if you need a
completely new website, you likely want to apportion a sizable chunk of that budget to get your digital brand back on track. Next look at
tradeshows and conferences, those usually consume a big portion of the budget. Now, with what’s left, you should look at those business
units, initiatives, or innovations and are likely to attract the most new business and create campaigns around them—whether they take
the form of advertising, email marketing, thought leadership programs, blog series, microsite, or others.

This is just the beginning, but I hope this helps you get off to a great start. And if you need some help implementing those new marketing
initiatives, do not hesitate to give us a call.

Watch Out Marketers, It’s the Millennials Turn to Take Center Stage

by: Francine Carb

It’s time to realize that changing demographics in the workplace are causing a change in leadership. Millennials, who have been acknowledged as being the most educated, tech-savvy, connected, thrifty, and socially conscious generation ever, are becoming the prime candidates for promotions at every company whether entrepreneurial or corporate. So as a B2B Marketer, you likely need to change your approach to reach these individuals.

The IBM Institute for Business Value (IBV) has released a report summarizing this new change, titled “To buy or not to buy: How Millennials are reshaping B2B Marketing”. This study looks at a subset of 700+ survey respondents from the Millennial, Gen X and Baby Boomer generations and how their decision-making processes differ. To successfully reach Millennials, it is important for marketers to alter their approach.

  • Analytics drive decisions
    According to the study, more than half of Millennials depend on analytics to help them make better business decisions. Today, people are used to the accessibility of data with just a click of their phone or tablet. Readily available data will speed up the buying process, and give your product or service the authenticity needed to be credible.
  • Introduce Yourself to Millennials
    During the research process, what really matters for Millennials is determining if a vendor is a good fit for their organization. Since most basic research can be easily found online, the addition of authentic and personalized in-person interactions allow Millennials to better envision what it would be like to work with another organization.
  • Hook, Line, and Sinker?
    The Sales Cycle has begun, so now what, more in-person meetings? Nope. IBM states that even though Millennials prefer personal introductions with vendors at first, once the sales cycle starts, it’s a completely different story. Millennials desire interactions that are quick, easy, and virtual as they decide on an answer. For example, emailing and interacting through social media would be the best way to keep in contact rather than calling to set up in-person meetings. The less work they have to do, the better!
  • Family and Friends Are Key!
    Once it’s time to make a decision, Millennials are seen to rely heavily on the influence of family, friends, and peers. They believe that if others within their circle see the product or service as beneficial, they will feel the same way–even for B2B businesses. Neither Gen X or Baby Boomers use this strategy for decision-making; their own experiences and impressions are the most important.

As a B2B Marketer, understanding the attitudes and decision-making process for this new generation of leaders is key for success. Many marketers have been using the same strategies for years, and yet they’re wondering why they are falling short when working with Millennials. Understanding and implementing these tactics in your business may be challenging at first, but once mastered, they will provide marketers with a competitive advantage that will last for years to come.

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