What it means
A conventional plan runs through a standard sequence: where the business is now, what it is trying to achieve, who it will target, what it will say, what it will do, what that costs and how success will be judged. The situation analysis usually draws on market research, competitor review and last year's results, which grounds the targets in something other than optimism.
The distinction between a plan and a strategy is worth holding onto. Strategy is the set of choices about which customers to serve and how to be different, while the plan is the execution schedule that follows from those choices.
A plan without a strategy behind it is a list of activities that will keep people busy without necessarily moving the business. Budgeting is where marketing plans usually break down.
The two common approaches are top-down, setting spend as a percentage of expected revenue, and bottom-up, working out what has to happen to hit the revenue target and pricing that activity. Bottom-up is more defensible in front of a finance team because it shows the arithmetic linking spend to sales.
A plan should carry a small number of leading indicators, not just the annual revenue target. Enquiries, qualified opportunities, conversion rates and pipeline value all show whether the plan is working within weeks rather than at the year end, and they make mid-course corrections possible while there is still budget left to move.
The nuance experienced marketers add is contingency. Good plans state what will be cut first if the budget is reduced by 20% and what will be added if an extra allocation appears, so those decisions are made calmly in advance instead of hurriedly in the middle of a bad quarter.
In practice
Real-world examples.
Example
A veterinary practice group builds an annual plan around three objectives: 400 new registrations, a lift in preventive plan membership from 28% to 35% of clients, and a review score above 4.6. Each objective has an owner, a quarterly milestone and a named budget line, so progress is reviewed monthly against numbers rather than impressions.
Example
A business software firm writes a plan in which 60% of the budget supports the two industries where it wins most often, 30% supports existing customer expansion and 10% is held as a test budget for a third industry. Holding the test budget separate stops experimental spend from quietly consuming the core programme.
Example
A furniture manufacturer entering export markets builds a two-year plan whose first year contains no revenue target at all, only distributor sign-ups, trade show attendance and product certification milestones. Setting realistic leading indicators avoids the familiar pattern of declaring failure before a long sales cycle has had time to produce anything.
Formula
Calculation
A bottom-up marketing plan works backwards from the revenue target to the budget required.
Orders needed = revenue target / average order value
Visits needed = orders needed / conversion rate
Budget = visits needed x cost per visit
An online office supplies retailer sets a revenue target of $6,000,000 for the year. Its average order value is $400 and its site converts visitors to orders at 2.5%. Paid and organic activity together deliver visits at an average blended cost of $1.20.
Orders needed = $6,000,000 / $400 = 15,000 orders
Visits needed = 15,000 / 0.025 = 600,000 visits
Budget required = 600,000 x $1.20 = $720,000
Marketing spend as a share of revenue = $720,000 / $6,000,000 = 12%
The plan can then be stress-tested. If conversion improves from 2.5% to 3%, the visits required fall to 15,000 / 0.03 = 500,000 and the budget falls to 500,000 x $1.20 = $600,000, saving $120,000 for the same revenue. That comparison is often the strongest argument in the plan for investing in the website rather than in more advertising.Case study
Seen in the real world.
This illustrative and fictional example follows Alder Grove Nurseries, a garden plant grower selling to independent garden centres. For years its marketing plan was a single page listing trade shows and a catalogue print run, with a budget set at whatever had been spent the previous year plus inflation.
A new commercial manager rebuilt the plan from the revenue target down. The business needed $4,800,000 of trade revenue, average annual spend per garden centre was $12,000, so the plan required 400 active accounts against the 310 it held. Winning 90 net new accounts at a historical conversion rate of one account per five qualified conversations meant 450 conversations, which drove the show schedule, the sales visit plan and a targeted direct campaign.
The budget that fell out of this arithmetic was $186,000, about 25% higher than the previous year, but it arrived with a chain of numbers the board could interrogate. Alder Grove ended the year with 386 active accounts and revenue of $4,632,000, short of target but close enough that the following year's plan started from a working model rather than from a blank page.
Watch out
Common mistakes.
- Writing a plan that is a list of activities with no linking arithmetic between spend and the revenue target it is supposed to deliver.
- Setting the budget as last year plus a percentage, which locks in whatever mix of good and wasted spend already existed.
- Tracking only the annual revenue number, so the plan is judged far too late to change anything about how it was executed.
Questions
People also ask.
How long should a marketing plan cover?
Most businesses work to twelve months with quarterly reviews, though fast-moving categories often plan in detail for one quarter and in outline for the year.
Should the plan include competitor activity?
Yes, at least a short assessment of how competitors are likely to respond, because a plan that assumes rivals stand still tends to overstate expected results.
Who should sign off a marketing plan?
The commercial or executive team as a whole, because the plan commits budget, assumes sales capacity and depends on product timelines that marketing does not control alone.
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