How much do I need in a revolving fund for sales and marketing promotions?
I want to do some promotions for my product, however, I don't know how much is needed every month for revolving funds that will be used for marketing purposes.
A good way to determine how much to invest in sales and marketing is to allocate a certain percentage of sales for that purpose. This should include the sales and marketing salaries and commissions, promotion, advertising, distribution channels and digital marketing. For a small business, and as a rule of thumb, the ratio of this expense should be approximately 2-3% of sales. By budgeting a fixed percentage you guard against impulsive decisions. The sales and marketing budget must be tied to specific goals and objectives - like 10 % growth in sales for the new fiscal period. You should then break this down into more details as to where exactly this growth will come from - like a new sales rep, new digital marketing program, etc.
Your prime responsibility is to ensure a profit for the company, and the amount that is dedicated to S&M cannot detract from achieving the profit goal. All sales and marketing expenses should be subjected to a regular analysis, which measures their effectiveness. You must justify the people that you hire to perform sales and marketing functions and all other expenditures by their results - revenue, profit and customer growth.
For more information on profit-driven marketing, you can check out a case study on this topic on www.gsmbizsystem.com