Essential Marketing Budget Terms to Understand
Budgeting can be complex, especially when it comes to the key terms that guide your marketing plans. Understanding these terms is a simple way to navigate the intricacies of budgeting. Read on and get familiar with the most important concepts to make your budgeting process smoother.
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Why should you use a budget board?
Whether you’re a newly launched business or an established one, a budget board helps you manage your marketing spend effectively. For new businesses, it helps you set up systems and practices from scratch—covering marketing, sales, operations, finance, and more. For established businesses, it provides a unified view of ongoing campaigns, helps optimize existing budgets, prevents overspending, and ensures that every rupee spent contributes to growth.
Key Marketing Budget Terms
ROI (Return on Investment)
ROI is a crucial metric for evaluating the revenue generated compared to the amount spent on marketing campaigns. The formula to calculate ROI is: (Revenue - Cost) / Cost x 100
CAC (Customer Acquisition Cost)
CAC measures the cost of acquiring a new customer through marketing efforts. It's calculated by dividing total marketing expenses by the number of new customers acquired within a specific period: CAC = Total Marketing Expenses / Number of New Customers
CLV (Customer Lifetime Value)
CLV represents the total revenue a customer is expected to generate over their lifetime relationship with your business. By comparing CLV to CAC, marketers can gauge the long-term profitability of acquiring customers through different channels. The key to sustainable growth is maximizing CLV while minimizing CAC.
CPL (Cost Per Lead)
CPL measures the cost incurred to acquire a single lead. It's calculated by dividing total marketing expenses by the number of leads generated: CPL = Total Marketing Expenses / Number of Leads Generated Optimizing both CPL and conversion rates helps marketers improve lead generation efficiency and maximize the ROI of their campaigns.
Conversion Rate
The conversion rate refers to the percentage of leads that convert into customers. By optimizing this rate, businesses can better assess the success of their marketing efforts in driving customer actions.
Conversion Ratio
The conversion ratio measures the ratio of conversions to the total number of visitors or leads within a specific time period. It’s used to evaluate the effectiveness of a marketing campaign, website, or sales funnel in converting visitors or leads into actions such as making a purchase, signing up for a newsletter, or filling out a form.
ROAS (Return on Ad Spend)
ROAS provides insight into the effectiveness of your ads in generating revenue. The formula to calculate ROAS is: ROAS = (Revenue from Ads / Ad Spend) x 100
Budget simplified in Marketing Plus
In Zoho Marketing Plus, you can easily enter your budget based on your plan, add expenses, categorize them, and analyze your spending more effectively with the help of graphs and charts.
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