How Much to Budget for Database Marketing vs. Lead Generation

Most b-to-b marketers appear to spend 90%-95% of their budget on image, awareness, and sales lead generation programs, and only 5%-10% on database marketing. I think this budgeting approach is dead wrong.

Instead, if you are new to database marketing consider spending approximately 70%-75% of your marketing budget for image, awareness, and lead generation programs. Then spend another 15%-20% of your budget to fund database marketing programs designed to nurture prospects until they qualify or buy. Allocate the remainder to target existing customers for retention and sales of other products or services, upgrades, and add-ons.

Companies with mature database marketing programs—especially those that have been able to track and measure the increased sales that resulted from marketing programs aimed at their databases—often wind up budgeting less than half of their funding toward image, awareness, and lead generation programs. Why? Because they find that they don’t need to spend as much on those objectives when they are also using database marketing programs to talk directly to subsets of their market.

These mature database marketers use the other half or more of their budget for funding marketing communications programs aimed directly at their databases of suspects, prospects, and customers: targeted, orchestrated, repetitive campaigns designed to identify and nurture prospects and talk to customers, maximizing the sales opportunities they represent.

Image, awareness, and lead generation programs are important, of course. But sales lead generation programs work best alongside strong database marketing programs. Both aspects are important to having top-performing direct marketing solutions.

<i>M. H. “Mac” McIntosh is president of North Kingstown, RI-based b-to-b marketing consultancy Mac McIntosh.</i>

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