Nov 6, 2014

Marketing as a Percentage of Revenue

Marketing is not static. It should grow with your company.

Salesforce.com invests 53% of its revenue into sales and marketing. Let that sink in for a moment. Fifty three percent!!! And its revenue for fiscal 2014 was $4.07 billion.

Is your company investing enough in sales and marketing to achieve its goals?

Companies are not spending enough on marketing

According to a study conducted by the CMO Council, 58% of businesses’ marketing budgets are under 4%. And less than 2% of companies are investing over 20% into sales and marketing.

Four percent of revenue as a marketing budget is a pittance. That means a $10 million a year business is only investing $400,000 into its salespeople, website, digital marketing, and promotions.

The difference between the companies who invest in marketing and the ones who don’t is stark. Guess who is growing and who is stuck?

Salesforce.com is king of the mountain for a reason

I started my career in the CRM industry. I sold a Lotus Notes-based CRM system to mid- to large-sized companies throughout North America.

In the early 2000’s there were thousands of software firms with CRM solutions. It was a cluttered mess. Today, you can count on both hands the CRM options.

According to Gartner, Salesforce.com has 16% market share of the CRM industry, which is well ahead of Microsoft, SAP, and Oracle. Salesforce is the king of the mountain in their space with good reason — the company invests more in its marketing as a percentage of revenue than its competitors.

Are you spending enough on marketing?

There’s no magic formula of how much a company should spend on sales and marketing. It’s unique to each business, its goals and strategy.

But challenge your assumptions:

  1. Are you investing enough in sales and marketing to sustain your growth goals?
  2. Are you investing enough in marketing to defend your brand and its market position from your competitors?

Marketing is an investment. Peter Drucker wrote, “Business has only two functions — marketing and innovation.”

Are you giving marketing the weight it deserves?

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