Control your sales and marketing costs

Control your sales and marketing costs

There are few items of business expense that command as much attention and focus as sales and marketing.

It’s for good reason. As a business, your sales and marketing are historical expenses that can literally create hogs for your revenue, if executed successfully and creatively.

This is true for all industries, but for start-ups and SaaS companies, the pace of business is very fast and the landscape is increasingly saturated – so your marketing is critical. Without strategic and effective marketing, your business, product, and brand can disappear into the noise. It brings customers to your doorstep, which drives up sales and, therefore, revenue.

And without sales, a key revenue stream, your business won’t last long.

Therefore, it is important to understand as well as monitor your sales and marketing expenses (apart from your cost of goods sold, which we also discuss in detail). Your sales and marketing expenses should cover all costs related to advertising, partnerships, and salary/salary for everyone involved. Monitoring and being aware of these costs will help you measure critical metrics for your business.

In this article, we’ll cover how to measure your sales and marketing expenses; What should be included in this category; And, how to organize your expenses to maximize what they can do for the success of your business. Let’s start!

Contents

• What are the sales and marketing expenses
• What constitutes sales and marketing expenses
• The value of sales and marketing spend
• How to Maximize Sales and Marketing Spend

What are the sales and marketing expenses

Selling, selling, and marketing expenses are costs that are acquired directly or indirectly, from the vision to sell, transact, promote, or advertise a product or service, or the business/organization that provides them. provides.

When you think of sales and marketing, what comes to mind? Advertising campaigns on billboards, print ads, social media, streaming platforms? These are all true. But when you think about what it costs, other than the actual cost of a campaign, expenses go a long way.

For a startup or business, sales and marketing expenses include payroll/salaries (of all sales and marketing staff); platforms, tools or software used to monitor or support marketing and sales; and, the cost of the campaigns themselves. This includes print and media advertising, but also – trade shows, road bass, pop-ups, partnerships, etc.

When you see some organizations’ financial reports, you may notice that they will combine Selling and marketing expenses with General and administrative expenses, to large Sales, general and administrative (SG&A) expenses.

This is ultimately at the discretion of each company; However, it is important to understand, track, and monitor sales and marketing expenses so that you can understand how customer engagement metrics are performing. These metrics include customer acquisition cost (CAC); CAC Payback; Lifetime Value (LTV) – all of which are very important metrics for any business, but especially for SaaS businesses.

You can combine these expenses with G&A, but separating them will help you manage your financial projections and strategy much more easily.

One such example of using sales and marketing spend separately is in a metric that is often used to gauge the effectiveness of sales and marketing on your line. Verification, it is called the ratio of sales and marketing expenses:

Ratio of sales and marketing expenses: (sales and marketing expenses) / revenue

This shows how high your sales and marketing expenses are as a percentage of your revenue.

What constitutes sales and marketing expenses

From an accounting perspective, what kind of costs will be charged under this umbrella? When calculating sales and marketing expenses, your most important line item will be labor and talent, as this will cost a proportional amount for services rendered.

Here are some of the typical line items that will be under the umbrella of sales and marketing expenses:

• Payroll/salaries of sales and marketing staff (regular and contract);
• Professional fees for agencies (like PR agencies, booking agents, etc.)
• Commissions on sales
• Sponsorships / partnerships
• Sales and Marketing Software
• Design fees (for website, print/video/social media advertising, etc.)
• Telemarketing
• Transport costs for exhibitions and physical events (trade shows, roadshows, pop-ups, conventions, etc.)

The value of sales and marketing spend

The crux of this focus on sales and marketing is due to the clear and proven link marketing has to your sales numbers, and therefore your revenue. This will fall to your end profits (net income).

While it is important to focus on your product and invest strategically in worthwhile research and development costs, this alone will not yield enough revenue to sustain the business. Even if your product is revolutionary, this is how the product is sold to the public and marketed to both your target customer and your uncaptured customers, which will help turn the competition trend towards your product shore. / service.

Indeed, any market, but in this case, SaaS, is very saturated. Technology-based businesses have so many entities and competitors that standing out is no longer a strategic position, it’s a necessity.

Marketing is how you can stand out, capture new customers, and grab that market share that will help cement your success. This is no longer limited to large billboards and advertisements in widesheets; Now that also means a strong, cutting-edge digital presence. You need to tell your brand story; the solution and innovation of its product or service; and core values, to get noticed and stay relevant.

All of this goes without saying for any founder, who knows the importance of standing out.

Therefore, sales and marketing can denounce success. So, then keep in mind that tracking and tracking sales and marketing spend is just as essential. These include your customer acquisition cost (CAC); Churn rate; and CAC recovery. You will also want to be well versed in different customer acquisition strategies, to stay on top of the marketing game.

How to Maximize Sales and Marketing Spend

The best way to maximize your sales and marketing spend is to know what’s working for your startup and what isn’t, clearly and quantitatively measured.

The return on investment and performance of your marketing campaigns will be the foundation for your assessment of whether your marketing efforts are indeed successful or have not yielded the desired results.

If, for example, you’re spending hundreds of thousands of dollars on TV commercials, but you see that your sales aren’t budging, and a few extra digging shows that the ads are playing on off-pit hours, this is worth reconsidering. . Re-implementing that budget to a proven successful marketing strategy – such as, perhaps, boosted social media posts that have a more effective cost-per-lead (CPL). Or, lower-cost content marketing, like search engine optimization (SEO).

It’s a delicate balance to strike, which is why it’s very important to take the time and invest in a sales team, especially prospects, with proven sales records and abilities that understand your business, your revenue model and thus how to drive up sales. A right-sized team is also important, as too few staff can create a backlog, while too much is also a wasted expense.

Finally, keep in mind that while there is a strong, inherent link between sales/marketing and revenue, there are no guarantees. Therefore, monitoring and measuring the effects of your marketing on sales is what should and must ultimately guide your decisions about what deserves your sales and marketing budget.

Good luck!

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