A Guide to Crafting Your 2023 Marketing Budget
In the ever-evolving landscape of marketing, there are always new strategies and investments to consider. Yet, amid the clutter of opportunities, the burning question remains: how can you choose the best things to focus on and wisely allocate your budget? This blog will cover questions a business should consider during planning, building a sufficient marketing budget, and tips to increase your ROI to get the most out of your marketing budget.
When embarking on the journey of planning your insurance marketing strategy, it’s crucial to establish your goals for the year. To guide you in this endeavor, here are some key questions to ponder:
- How much are you currently investing in acquiring insurance leads?
- Which of your campaigns have yielded the best and worst results?
- Which channels have proven to have the highest and lowest return on investment (ROI)?
- What messages resonate most effectively with your customer base?
Bear in mind that acquiring new customers costs significantly more—around 7 to 9 times—than retaining existing ones. This underscores the importance of aligning your insurance marketing strategies with both short-term and long-term objectives while allocating funds accordingly.
Given the discussions surrounding an impending recession, more customers have been tightening their belts and seeking ways to save on essential expenses. Insurance agents must emphasize the value of insurance policies to potential customers.
suggests that the insurance industry as a whole allocated approximately 48% of its marketing budget to direct mail in the past six months, with a projected 12% earmarked for digital channels (such as paid social, display, and pre-roll video). The remaining portion of the projection was allocated to national TV. Insider Intelligence has forecasted that over one-third (33.1%) of the U.S. population will sever ties with traditional TV this year. This concern has prompted large insurers like GEICO to adjust their marketing plans and reduce spending on TV advertising.
As a result, many insurance marketers are prioritizing direct-to-consumer marketing efforts, particularly video and direct mail, which are expected to maintain strong performance.
It’s not just about what works currently but also about anticipating what will continue to work as customers become more selective with their spending.
The more questions you ask to comprehensively understand your digital marketing landscape, the better equipped you’ll be to plan for the upcoming year.
To begin, it’s important to identify the top priorities for your business. Consider the following approaches based on your specific circumstances:
- If you have already tapped into your existing pool of leads and need to expand your customer base, prioritize activities that enhance brand awareness and generate demand.
- If you have successfully built a substantial audience but are falling short of your revenue targets, shift your focus towards optimizing conversions and driving sales.
While there may be some overlap in your goals, it is crucial to define them as precisely as possible to ensure clarity and effective planning.
Now that you have compiled your list of goals, it’s time to thoroughly evaluate your previous year’s return on investment (ROI). This analysis will provide valuable insights into what strategies and tactics proved successful, as well as those that fell short.
For instance, you may discover that allocating a substantial budget to a particular channel resulted in high customer acquisition costs. In response, you might prioritize insurance marketing ideas that emphasize customer retention and upselling, thereby maximizing the value of existing clientele.
Alternatively, you might uncover that your most fruitful campaign involved personalized direct mailers targeting a specific audience segment. Armed with this knowledge, you can consider revisiting similar strategies and channels to achieve comparable outcomes.
By carefully scrutinizing past campaigns, you will be equipped to make informed decisions regarding which marketing strategies and channels to concentrate your efforts on once again.
Creating a perfect marketing budget may be elusive, but armed with the right data, you can confidently develop a well-informed budget.
Yes, that means we need to do the math.
First, start by calculating your Cost Per Lead in a given channel. You can get that by dividing the total amount spent on a campaign by the number of leads generated. Next, find your conversion rate. This is the percentage of leads that ultimately become customers. To get this number divide the number of total leads divided by the number that successfully converted into customers.
To determine the number of leads required to meet your goal, divide your new target by the conversion rate. For example, if your target is 1,000 new customers, and your conversion rate is 40%, you’ll need 2,500 leads.
Finally, it’s time to evaluate the financial investment necessary. Multiply the number of leads required (2,500) by the cost per lead. This represents the amount you would need to invest to reach your goal within that particular marketing channel.
With these figures in hand, you can make informed decisions about the viability of each marketing channel. By understanding your goals and the budget you can allocate for each, you can effectively allocate your resources to maximize your impact and achieve the desired outcomes.
Now that you have determined the crucial channels for your company, it’s time to explore strategies to maximize your return on investment (ROI) within those channels.
One effective approach is to optimize your budget through segmentation and personalization, particularly in email marketing, direct mail, and other tactics. These methods tend to be more cost-effective for insurance companies while yielding significant ROI.
Consider your loyal customers. Do they want to receive the same offer they saw last year? Most likely not.
Instead, focus on understanding their current needs and identifying the offers that best suit them. By segmenting and targeting consumers based on specific life events and their response behavior through direct marketing, you can tailor messages and landing pages that truly resonate with your target market and prompt them to take action.
According to McKinsey, personalized messages can deliver 5-8 times the ROI on marketing spending and boost sales by 10% or more. By crafting more meaningful engagements across your selected channels, you have the potential to generate a steady flow of leads and witness an improved ROI within just a few months.
Achieving success as an insurance marketer doesn’t come from following a one-size-fits-all formula. Instead, it’s about discovering the perfect recipe for your company’s unique needs and goals.
So, how can you make this process easier?
Question Everything About Your Marketing Strategy
Don’t limit your analysis to what didn’t work—examine and question everything. Evaluate your insurance company’s website’s performance, assess your ad’s ROI, and analyze the audience that engages with your social media ads. Continuously ask yourself why certain actions occur to gain deeper insights.
Determine and Prioritize Goals Based on Your Target Audience
Whether your focus is on acquiring new leads or nurturing existing customers, meeting them where they are is essential. For example, direct mail campaigns may be highly effective for generating new leads, while email marketing might resonate better with your existing client base. Understanding the sources of your leads is crucial for optimizing your budget effectively.
Find the Right Marketing Mix
Finding the right marketing mix is critical to engaging new and existing customers. Consider your omnichannel marketing approach and ensure that your customers enjoy a consistent experience across your website, emails, direct mailers, and social media channels.
The ideal mix will heavily depend on your goals. If you prioritize one channel over another, make sure it delivers enough new or recurring business for your insurance company.
Hire an Expert
Rather than employing expensive full-time staff to handle all aspects of marketing, an outsourced marketing agency can be much more efficient. This team can leverage proprietary data, creative expertise, and their experience with effective revenue-generating tactics. For the best results, consider reaching out to FM Engage, a direct marketing agency focused on the insurance industry. We use deep experience and 50 years of proprietary data to help you connect with your most promising prospects.