How Much Should You Spend on Marketing? Start With Your Sales Forecast

“How much should we spend on marketing?” is one of the most common questions in any management team, and one that teams rarely answer well. The usual answers are a percentage of revenue, last year’s budget plus a little, or whatever is left once you have paid for everything else.

None of these start where they should: with the sales you need to win. In this article we show a simple way to work backwards from your sales forecast to a marketing budget you can defend, and why a cash-flow view makes the decision much easier. The same logic applies whether you sell in your home market or are building a pipeline in the Nordics for the first time, where the first customers often take longer to win than expected.

Why a percentage-based marketing budget misses the point

Benchmarks for marketing spend as a share of revenue are easy to find, and they can be useful as a sanity check. The problem is that they say nothing about your business. Two companies with the same revenue can need very different budgets. Deal size, sales cycle, the number of new customers needed and the number of customers lost each year all play a part.

A budget based on a percentage also tends to move in the wrong direction. When sales slow down, revenue falls, management cuts the marketing budget, and the pipeline for next year gets thinner. The budget follows the past instead of supporting the target.

Work backwards from the target

A forecast-based budget turns the question around. Instead of asking what you can afford, you ask what it takes to reach the sales goal, and then decide whether that is worth it.

The calculation is not complicated. For a B2B company that wins customers through meetings, it usually runs in five steps.

1. New revenue needed

Start with the sales target for the year and subtract what you expect from existing customers. What is left is the revenue that has to come from new customers.

2. Number of new customers

Divide that figure by your average first-year revenue per new customer. This gives you the number of new customers you need to win.

3. Number of meetings

Look at how many first meetings it typically takes to win one customer. If you win one in five, you need five times as many meetings as customers.

4. Number of leads or bookings

Not every lead becomes a meeting. If half of your inbound enquiries turn into a real first meeting, you need twice as many leads as meetings.

5. Cost per lead or meeting

Finally, multiply by what a lead or a booked meeting costs you through your marketing channels today. That is your required marketing budget, at least as a first estimate.

A simple example

Imagine a company that wants 400.000 EUR in new revenue next year, with an average first-year customer value of 20.000 EUR. That means 20 new customers. If it wins one customer out of every five first meetings, it needs 100 meetings. If half of its leads become meetings, it needs 200 leads. And if a qualified lead currently costs around 350 EUR through paid campaigns, the budget lands at roughly 70.000 EUR.

These figures are illustrative only. Your own conversion rates and costs will differ, and they should come from your own data rather than from industry averages. The point is the logic: you can check, discuss and improve every number in the chain.

Add the cash-flow view

A budget on its own is still only a cost. What makes it a decision is knowing when the money comes back.

In B2B, there is often a long gap between spending money on a campaign and receiving payment from the customer it produced. The meeting may happen a few weeks after the click. The customer may sign a few months later and pay the first invoice 30 to 60 days after that.

When you map spend and expected payments month by month, you can see:

• How much cash the marketing plan ties up before it starts paying back
• In which month the campaign is expected to break even
• What happens to cash flow if the sales cycle turns out longer than planned

This is the view a CFO or a bank recognises immediately, because it treats marketing the way the business treats other investments.

Use real data, then keep it updated

The quality of the budget depends on the quality of the numbers behind it. It is best to take conversion rates, deal sizes and the time from first contact to payment from your own CRM and accounting system rather than estimate them. If those numbers are not yet available, the first version of the budget will rest on assumptions, and it is worth saying so clearly.

Once campaigns are running, update the forecast with actual results every month or quarter. If meetings cost more than planned, or close faster than expected, you can adjust the budget before the year is over rather than after.

What you gain

A forecast-based marketing budget gives management something rare: a marketing plan that speaks the same language as the rest of the business. It connects spend to sales targets, shows the expected payback period, and makes it obvious which assumptions matter most. That turns the annual budget discussion from a negotiation into a calculation.

How Contentas Marketing can help

Contentas Marketing collects data from your sales and finance systems and proposes the marketing budget needed to reach your sales forecast, together with a cash-flow plan that shows when campaigns are expected to pay back. As part of our campaign cash-flow reporting, we compare results with the plan as they come in, so the budget stays grounded in reality.

We work with B2B companies selling in the Nordics, both those already established in the region and those entering it for the first time. If you are new to the Nordic market, read our guide on how to win your first Nordic B2B customers.

If you would like to see what your sales target means in meetings, leads and budget, book a short introductory meeting.