Developing a Marketing Budget Plan for Professional Services

There’s no getting around it: any professional services firm that wants to grow has to find new clients and new opportunities. And the most successful firms take a methodical approach to this task, documenting each year’s strategy in a marketing budget plan. There’s no reason your firm can’t follow their example. In this post, we will show you how to develop a thoughtful and effective plan for your professional services firm.

Four Approaches to Marketing Planning

While most firms are faced with the task of planning for growth, they do not approach it in the same way. We have observed four general methods:

1. Ad hoc. Many firms do little if any forward planning. The marketing tactics they choose are tied to their immediate needs (e.g., “We need more business NOW!”) or random opportunities, such as being approached for a sponsorship. With this approach, results are often elusive.
2. Legacy budget planning. At other firms, change is hard: “This is the way we have always done it, so let’s make a few minor adjustments and do the same thing next year.” Or, “We always exhibit at this conference, so we’ll do it again.” Typically, they do little analysis of past results or changes in the competitive environment.
3. Consensus budget planning. In many partnerships, the owner group will “brainstorm” marketing ideas and build a budget and plan based on the accumulated suggestions. While everyone gets some of what they want, consensus-based marketing planning tends to be overly ambitious and unfocused — and doomed to ineffectiveness.
4. Strategic marketing planning. In this approach, a firm develops a systematic plan based on its strategic business goals and an informed understanding of its relevant target client groups. The firm allocates its budget in a way that maximizes the probability of success and harnesses efficiencies. Over the course of the year, the firm tracks results and uses them to adjust the plan going forward. This is the approach we recommend and describe in this post.

How Much Should You Spend on Your Marketing Budget?

There are two basic ways to determine your overall marketing budget: bottom-up and top-down.

In the bottom-up approach, you identify which strategies and tactics will allow you to achieve your marketing goals. You then determine the likely expenses associated with implementing that strategy. The sum of these expenses becomes your marketing budget.

The top-down approach involves benchmarking your spending levels and allocations against other firms that are similar to yours. For instance, you might model your marketing strategy and tactics on those used by market leaders.

In reality, most firms tend to use some of each. The top-down approach is often used to set overall spending levels, while the bottom-up approach tends to drive the specific allocation of funds to specific initiatives.

We’ll outline a recommended process for developing your marketing budget plan below. But first, there are some things to keep in mind as you benchmark your budget against comparable firms.

Benchmarking Your Marketing Budget

Your first challenge is to decide which peer group firms to benchmark yourself against. To make the right choice, you need to consider several factors:

Industry Group. Industries within the professional services universe can spend quite differently from each other on marketing (see Figure 1). Some of these differences are driven by the way their services are used. Ongoing compliance-based services, such as accounting, tend to have lower expense levels.  Segments whose buyers have fewer recurring needs, such as some consulting or technology services, require greater investment to capture the steady stream of new clients to drive growth.

Figure 1. Professional services marketing budgets by industry (average)

Hybrid Firms. A relatively recent trend is the emergence of firms offering a wide range of services, often including services from different professions. For example, many large CPA firms also offer a wide range of consulting, technology or human resources management services. When we produce budget benchmarks for these complex firms, we typically develop a composite benchmark using a service mix that reflects their unique offerings.

Firm Size. Smaller firms typically spend a higher proportion of their revenue on marketing. The reason is that marketing a firm, no matter its size, requires a similar set of tools (a website, for instance), which can eat up a larger slice of small firm’s marketing budget. Also, larger firms tend to have more visibility in the marketplace and a larger referral base — so it’s easier to sustain their momentum. A strong brand is easier to maintain than it is to build.

What’s Included. Different firms include different expenses in their marketing budgets. For example, some include staff salaries, while others don’t. And infrequent, large expenses — such as a firm rebrand or a new website — can drive significant variation from year to year. So make sure you understand what is included in your benchmark.

Timing. The level and pattern of marketing spending also changes over time, so it is important to have current data. At Hinge, we have seen marked variations in year-to-year spending trends across the professional services industries. This is why we collect fresh spending data each year to advise our clients.

Comparison Group. Most benchmarking data compares your firm to averages. This allows you to measure yourself against average firms in your industry. While such a comparison is helpful, we believe that you should also compare your marketing budget to the fastest-growing, most-successful firms. So we recommend benchmarking against both average-growth and high-growth firms. This practice is very helpful when deciding how to allocate funds for various strategies.

Once you have a set of budget benchmarks to inform your decision making, you are ready to develop a marketing budget and plan for your professional services firm.

How to Prepare Your Marketing Budget and Plan

1. Start with business goals

Strategic marketing starts with your firm’s strategic goals. What are you trying to achieve. Do you want to grow the firm? By how much? Over what time period?

But business goals go beyond the overall numbers. You’ll want to understand which segments of the practice are the best targets for growth. Most firms have a range of different client types that buy a variety of specific services.

Where can you deliver the best value? Which segments will be the easiest to grow? Where are you already experiencing growth? Once you have narrowed your choices, it is time to get a deeper understanding of your target audience.

2. Research your target audiences

The next step in preparing a strategic marketing plan and budget is to identify and research your target audiences. Let’s start by getting clear about the concept of a target audience.

Who are your target audiences?

Your target audiences are the groups of people you need to reach to execute your marketing strategy. Potential clients are an obvious example. But of course, this audience could be further segmented by industry, by role, or both, if those distinctions are important. And of course, it is not just the final decision maker that is important here. Individual influencers, and sometimes a formal selection committee, often advise the final decision maker.

Then there are potential referral sources that open doors for you. In some circumstances, referral sources can be so influential that they become de facto decision makers. There are also outside influencers that shape widely held opinions of your firm. Examples include journalists, industry analysts and influential thought leaders.

In many industries, raging talent wars can severely impact a firm’s ability to deliver on its promises. This makes potential employees or subcontractors important target audiences as well. Think of these efforts as building your employer brand.

After considering all the possible people you need to reach, you may find that you have more target audiences than you can reasonably address. So how do you prioritize and select audiences? Many firms conduct research on multiple potential audiences or market segments to help them choose the most responsive markets (see Opportunity Research below).

How do you research target audiences?

There are two broad types of research. The first is secondary research. This refers to searching for research studies that have already been conducted by another organization. Trade associations or publishers often release studies about specific industries. Similarly, there are many organizations that sell relevant research on market size or trends. For example, Hinge publishes research on marketing budgets for professional services firms that can be used to benchmark your marketing spending and guide your selection of the most effective techniques.

The second type of research is primary research. In this type of research, you commission an original study of your target audiences. While more expensive, primary research has the advantage of directly addressing the critical questions that are most relevant to your specific circumstances. When you combine this with high-quality secondary research, you should have a full, well-informed view of your audiences. This market intelligence dramatically reduces risk and makes marketing more of a science than an expensive guessing game.

What type of information are you seeking?

As you begin to dig in, you will probably uncover a lot of potential questions. When conducting research on behalf of our clients, we find that three types of studies are most helpful in their planning. While they overlap somewhat, each has a particular focus.

1. Opportunity Research. This type of research evaluates the viability of alternative markets or audiences within markets. For example, you may offer a service that can be useful to several types of financial institutions, from community banks to savings and loans or even quasi-government entities. Which market is likely to be more responsive? Who are your prime competitors in each market? Where is your firm’s brand strongest? Where is the value you provide most appreciated? Making the right call can have a huge impact on your bottom line.
2. Brand Research. How is your brand perceived in the markets you have chosen? Who are the relevant competitors? What key issues are on your prospects’ minds? What are your differentiators? Answering questions like these can help you position your firm and provide the foundation of a successful marketing strategy. These answers can also inform the messages you craft for each audience and point to the most effective ways to reach them.
3. Client Journey Research. This type of primary research focuses on understanding the full lifecycle of a client’s engagement with your firm, from initial awareness to long-term loyalty. Of particular interest is how potential clients educate themselves about their business challenges (what are they reading, what conferences do they attend, etc.?) and how they choose a professional services firm. These insights are marketing gold. You also want to learn where your firm is providing real value and identify any faulty assumptions that your team may have about your audiences.

Your research should take you to a new level of understanding. Now you are prepared to make major progress on your marketing plan, starting with strategy.

3. Develop your marketing strategy

A lot of marketers struggle to distinguish between marketing strategy and marketing tactics. So let’s get our terminology straight. By marketing strategy, we mean the high-level planning and ideas that set the direction for your overall marketing, such as how your firm is positioned in the marketplace and the key messages you deliver to your audiences. Tactics, on the other hand, are the specific techniques you use to deliver those messages and engage your audiences. They are much more fluid and can change quickly. The strategy should change little, if at all, in the course of a year.

If you are simply updating an existing strategic marketing plan you may find that there is little need to change your overall marketing strategy at each review. A minor adjustment may be in order from time to time. However, if you are developing a new plan, getting the strategy right is very important.

We believe that an effective strategy should have four key elements.

As we introduced in the section on research, identifying and understanding your target audiences are key to the success of your plan. The firm that feels “everyone” is the right target for its service is at a distinct disadvantage. Its efforts will be spread so thin as to have no impact on anyone. This is the section of the plan where you specify what target audiences you will focus on. Resist the temptation to try to be everything to everyone.

What sets your firm or practice apart from your competitors? Often, the research you performed earlier will help you discover differentiators that you may not have been aware of before. For example, you might learn that the unique way you deliver your findings is unusually helpful to clients. Or you might choose a differentiator. For example, you might decide to specialize in a specific industry or type of service. In either case, each differentiator must pass three critical tests: it must be true, provable and relevant to your clientele.

Next, include the market positioning of your firm. How is your firm positioned relative to key competitors? Is your firm the low-cost alternative? Are you the specialists that command top dollar? Your brand positioning is built upon your differentiators. They are the bricks that build the house that is your market positioning. Your positioning gives your audiences the cohesive and compelling story they need to prefer your firm over competitors.

What key messages do each of your audiences need to hear? These will likely vary from audience to audience. For instance, potential employees are probably going to be interested in different things than your referral sources. Having said that, the key messages must not contradict each other — and they should be consistent with your firm’s overall market positioning. We find that it’s also very helpful in this section of your plan to capture common objections that you encounter in the marketplace, as well as how to overcome them.

Once you have your overall strategy documented, it’s time to select the marketing techniques and tactics that will deliver the key messages to your target audiences.

4. Select your marketing techniques

In our experience, this is where a lot of firms start their marketing planning and budgeting. Which new technique should we try this year? Bad idea. Unless you understand your business situation, audiences and strategy first, you will almost certainly make some counterproductive choices.

Your research into your target audience will also tell you which communications channels they are already using. Why choose Twitter if no one in your target audience is on it? And do you really want to miss the conference that 70% of your target audience attends?

You still have some important choices to make. You will need to balance your offline and online presence. As Figure 2 illustrates, most traditional offline marketing techniques also have digital analogues. Traditional speaking engagements have a corresponding webinar alternative. There is print and digital advertising. Each format has advantages and disadvantages.

Figure 2.  Many traditional marketing techniques (blue) have online counterparts (green).

Our research has shown the fastest growing and most profitable firms tend to use a mix of both. But be cautious. Don’t spread yourself so thin that nothing you do has an impact. Dabbling doesn’t work well. Going deeper with fewer techniques typically delivers better results.

Also, different techniques tend to have different levels of efficiency and impact. Our research on high-growth firms shows that some techniques simply work better than others. Now, when presented with two competing alternative techniques, you can choose the option that has been empirically shown to deliver more impact.

Once you have selected your marketing techniques, you can determine if you will need any new marketing infrastructure, training or outside support to make the plan a reality. And you are also ready to set specific goals.

5. Set specific goals and determine how you will track them

You might think that it makes logical sense to select goals before techniques. But here is the catch. Each technique lends itself to certain tracking mechanisms. While some high-level goals, such as acquiring ten new clients per month, applies to all of your marketing, other goals, such as getting 20 new LinkedIn shares each week, are technique specific — you have to know you will be using LinkedIn before you can set that goal. Modern technology makes some metrics easy to track, so when it makes sense, take advantage of what is readily available to you.

At a high level there are three areas of tracking that makes sense for most professional services firms. Let’s take a look at each of them.

1. Business Outcomes. Business outcomes are based on the high-level business goals that we explored in the first step of the budgeting and planning exercise. Revenue growth, number and type of new clients, profitability and new leads are all examples of business outcomes. In many ways, these measures track the success of your marketing plan. These metrics can typically be tracked in firms’ financial or CRM systems.
2. Visibility. Most professional services firms want to increase the visibility of their expertise. In our experience, the single most representative measure of visibility is external website traffic. The more people who know of your firm, the more website traffic you will receive. This measure can be further refined by looking at traffic to certain sections of the website. For example, you might monitor traffic to the careers section of your site to track the visibility of your recruiting campaign. Other measures of visibility might include traffic to your social media pages or the growth of your email database. You might even develop an index that incorporates all of these yardsticks.
3. Expertise. Tracking changes in your perceived expertise can be tricky, but it is possible. To do so, you need specific, tangible indicators. For example, you could track how many people download your white papers, view your blog posts (assuming that your blog posts demonstrate expertise) or attend your speaking events. After all, people who consume your educational content are demonstrating an interest in your expertise, and by quantifying that interest you can get a measure of how much people trust your ideas and perspectives over time. You could add another dimension to this view by tracking how many people consume multiple pieces of your content. Those who consume it on a regular, ongoing basis are likely to consider your firm highly authoritative.

Visibility and expertise should not be the only business outcomes you seek. However, they can give you insight into how the marketing process is working. For example, if new business is not growing as quickly as you would like, you will need to understand why. Is it because visibility is not increasing? These measures will help you diagnose the problem.

Tracking Implementation. Another variable to track is your implementation of the marketing techniques in your plan. Are the events happening as scheduled? Are your designated articles actually being published? Often, the reason a technique is not working is that it is not being implemented as planned. This kind of information is also very helpful in problem solving and adjusting your implementation.

Setting Goals. Knowing where to set goals is something of an art form. On one hand, you must take into account the current level of baseline performance. What is reasonable to achieve given your situation? On the other hand, you must consider what it will take to achieve the business outcome you desire. The level of impact you need from a marketing technique will also influence your decisions on how much effort it will require. Which we explore in the next step.

6. Choose frequency, effort levels and resources

What will it take to be successful? How often should you publish blogs or offer webinars? What effort will be required from internal sources? What sort of external resources will you need? What about training? How about software or a new website?

Answering these questions often involves interplay between your goals and the resources required to achieve them — reality has a way of imposing limits. Put another way, Steps 5-7 are often iterative until you reach a balance between what you want to achieve and what is possible in your situation.

In today’s professional services firm, marketing is a team sport. No individual or even department can do it all. That means that you need a range of resources to help you execute your plan. The marketing team, billable professionals and outside resources must work together to produce the desired result. Many configurations are possible as long as you have the necessary time and skills at your disposal.

Coordinating all of these activities can be quite a challenge, too. One tool that we have found helpful is a content marketing calendar. This document lays out what you will be doing and when it will happen. While you don’t have to be overly rigid with your schedule — it’s usually a good idea to accommodate some amount of flexibility — having a tool for advanced planning eliminates excuses and allows you to coordinate many resources.

7. Develop budgets

At this point in the process, you should understand your firm’s business goals, have researched your audience and have developed an overall strategy for your brand. You should also have selected the best techniques to reach your audience so you can deliver appropriate messages at the appropriate frequency using the appropriate resources. In addition, you should have determined how to measure results against your goals.

The final step is to develop your marketing plan budget based on these detailed assumptions.

On one level, this is a relatively straightforward exercise. You can ask specialized vendors to provide estimates for infrastructure projects such as a website or a new marketing automation platform. But don’t make low cost your primary deciding factor. Many firms have wasted precious resources on “cheap” marketing tools that were woefully ineffective.

Estimating costs for recurring activities, such as blogging or article placement, can be a bit more challenging since many more people may be involved over a longer period of time. For instance, one of the biggest challenges can be tracking down busy subject matter experts and managing their critical role in the marketing process. Estimating costs like these can be tricky.

Once you have collected these cost estimates, you should have an overall spending benchmark (see Benchmarking Your Budget, above), as well as a detailed “bottom-up” budget that addresses your specific needs. How do they square with each other?

If you find that they are relatively well-aligned, you may be done with your budget. If, however, you find that your bottom-up budget is significantly lower than the relevant benchmark, look first for missed items. Did you forget something important? Are your costs unrealistically low? Are you planning frequent enough marketing activities to meet your goals? Are the quality of your planned resources adequate to return the desired results?

If the bottom-up approach has come in much higher, make sure you aren’t double counting some expenses. Next, see if the discrepancy is driven by one-time expenses (such as a research project or a new website). Are you are planning activities more frequently than you need?

If you find that you need to reduce your budget, try eliminating one whole technique or initiative rather than trimming across the board. In our experience, it is more effective to do fewer things but do them better.

Making Strategic Marketing Agile

It’s more important than ever to have a flexible, high-quality marketing plan. According to our recent research on professional services buyers, the entire marketplace is undergoing rapid change. New competitors are entering the market and new technologies are revolutionizing how the work of professionals gets done. And the way buyers research business issues and find and select providers has changed. The digital revolution is reshaping this industry, just as it has with so many others.

Planning and budgeting are much easier when markets are stable and predictable. That is no longer true for large chunks of the professional services marketplace. So how do you adapt your strategic marketing budget plan to a rapidly changing competitive marketplace? We have found that adhering to just four principles can make a big difference: 

1. Keep tabs on your target market. Frequent changes in the marketplace require frequent updates to your marketing assumptions. This means you’ll need to continuously monitor your target client groups for changes in their key challenges, the assumptions that drive your marketing and the competitive environment. In fact, our research has consistently shown that firms that do frequent research on their target audiences grow faster and are more profitable.
2. Test new ideas. Do not be satisfied with current results. In a rapidly changing environment, techniques that work today can lose their edge tomorrow. Specialty services can go mainstream and become commodities. That’s why it’s important to test new ideas and approaches all the time. It prepares you for rapid change.
3. Track results and adjust. Reviewing results and making appropriate adjustments is built into our recommended approach for marketing budget planning. The key is that you have to do it. If you are not tracking results and adjusting course along the way, you are not adapting to the changing business environment. You are becoming obsolescent.
4. Review on a quick cycle. Many firms schedule annual budget planning meetings. At today’s pace of change, that may not be quick enough to keep up with the marketplace. The solution is to review and adjust your budget on a faster cycle. We recommend quarterly reviews, instead.

A Final Thought

For many years, the professional services were a sleepy backwater in the marketing world. No longer. Budgets are growing, and achieving results requires more active planning and management. The stakes are higher, too, and the pace of change is more rapid. If you don’t want to learn your lessons the hard way, it’s time to get serious and do your planning and budgeting the right way.

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