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How To Scale Marketing And Double Your Revenue Every Year

Planning to skyrocket revenue, year on year? Scaling a business involves scaling your marketing budget and operations. Discover how Expedia, Microsoft and Proctor and Gamble invested in marketing to boost their bottomline. You'll dive into proven and profitable ways to scale marketing.

It’s a new financial year and you’re figuring out your company’s next steps. You performed well last year but now you want to really scale up.

So you want to double your growth, year on year?

Scaling your marketing efforts allows you to win more customers for your business.

That means more revenue, which provides the capital that fuels growth. AKA Spending money to make money is the core of scaling a business. 

The trick is to know how to spend your budget to achieve maximum growth.

That’s where this article comes in.

Here we’ll look at some tips for scaling your marketing operations along with case studies of companies that increased their marketing budgets to maximise revenue.

 

How to scale marketing for maximum revenue

Scaling a business? See how these 3 companies take big picture steps to skyrocket revenue year on year.

 

Expedia Spends Almost Half its Revenue on Marketing

Expedia is one of the largest online travel companies in the world. Based in the United States, it aggregates travel information and prices to help its users find the best deals.

It also spends a huge amount on marketing. In fact, it’s not uncommon for Expedia to spend 40% or more of its yearly revenue on marketing its services.

For example, in 2014 the company spent 48.7% of its revenue on sales and marketing. That equates to just over $2.8 billion.

However, in doing so it generated revenue of over $5.7 billion and a net income just shy of $400 million. That’s some solid ROI!

Expedia spent 48.7 of revenue on sales and marketing ($2.8 billion). As a result, they generated revenue of over $5.7 billion. 

It repeated this tactic in 2017. The company broke its own marketing spending record in this year.

Expedia invested over 52% of its revenue into marketing, which equates to over $5.3 billion spent. Again, a jump in revenue resulted. The company earned over $10 billion for the year, with a net income of over $375 million.

Each year, Expedia invests a huge portion of its revenue into marketing. However, it continues to increase overall revenue and scale effectively.

In fact, in just three years it has managed to almost double its yearly revenue figures using this tactic.

 

Microsoft’s Consistently High Spend

As you know, Microsoft is one of the biggest companies on the face of the earth. It also has one of the biggest marketing budgets in the world, too.

Just take a look at this chart:

microsoft-expenditure-sales-marketing

Figure 1 - https://www.statista.com/statistics/506534/microsoft-sales-marketing-expenditure/

Since 2013, Microsoft has consistently spent about $15 billion per year on sales and marketing. This figure has actually seen a big jump up to almost $17.5 billion in 2018.

However, this is consistently around 20-30% of its revenue from each year:

Despite a couple of blips in 2016 and 2017, Microsoft has consistently scaled upwards in line with its spending on marketing. The increase in spending in 2018 is actually reflected by an increase in revenue for the same year.

Furthermore, the company typically generates a net income in the tens of billions each year:

microsoft-annual-revenue-worldwide

Figure 2 - https://www.microsoft.com/investor/reports/ar17/index.html

Each year, Microsoft scales up due to high investment into its sales and marketing efforts.

 

Proctor and Gamble Goes Digital

Proctor and Gamble is one of the world’s largest consumer goods companies. The brand primarily covers beauty, health, and home products. Brands like Pampers and Gillette all fall under the Proctor and Gamble banner.

It’s also one of the biggest advertising spends out there.

In 2014, the company spent $4.6 billion on marketing. Importantly, this year also marked a shift in its advertising direction.

Proctor and Gamble recognised digital advertising as the best revenue driver after seeing that 50% of people’s viewing time takes place on digital channels.

During this year, it shifted a huge amount of its advertising budget to online ads.

This resulted in a host of successful online campaigns, such as its Always #LikeAGirl YouTube videos. Those racked up over 58 million views during the course of the year.

The company’s 2014 earnings reports highlighted just how well they did due to this large marketing spend. Its net sales shot up to just over $83 billion.

That’s a $500 million increase on the previous year.

Screen Shot 2018-10-15 at 4.14.42 PM

Figure 2 - http://www.pginvestor.com/interactive/lookandfeel/4004124/PG_Annual_Report_2014.pdf

Proctor and Gamble’s net earnings also rose to over $11.6 billion during this period. Going digital played a large part in these increases.

Despite its massive marketing spend, the company actually reduced spending by 4.2% compared to the previous year.

The use of online platforms generated higher returns for less money.

 

Scaling a business calls for marketing that goes the mile

Each of these examples demonstrates that scaling your marketing can have very impressive results.

Whatever the budget, the principle remains the same. Scaling your marketing operations with a bigger budget can mean a much bigger ROI and seriously revenue-shifting results.

That leaves one key question:

How do you do it?

Here are three tips for scaling your marketing to accelerate business growth now and in the future.

 

Tip #1 – Set Targets and Create a Plan

The average business spends 11.1% of its revenue on marketing:

image9

Figure 3 - https://www.smartinsights.com/digital-marketing-strategy/11-1-of-budget-is-spent-on-marketing-how-does-your-business-compare/

Key stakeholders often only see marketing as a cost.Your aim is to establish marketing as a revenue driver for the company. To ensure that happens, you have to start at the end goal.

What revenue does the company aim to achieve for the year?

That gives you a baseline that allows you to work out how much budget to dedicate to marketing. From there, you can work out how to spend it.

For example, let’s say that you have a revenue target of $1.25 million. You decide that you’ll spend 12% of that target on marketing, thus putting yourself slightly above the national average.

This leaves you with a marketing budget of $150,000 for the year.

With that concrete figure in place, you can build a marketing campaign to reach or exceed the revenue target.

The biggest advantage of this percentage system is that it scales over time. As your revenue grows, so too does the amount that you spend on marketing. The percentage stays the same, but the dollar amount keeps going up.

With those figures in place, you need to come up with a plan.

Reverse engineering your sales and marketing goals is the key here.

Look to your past campaigns and follow these tips:

  • Identify your lagging and leading indicators. Your lagging indicators are the actions you took in the past that generated sales. Your leading indicators are the actions that you must take in the future. For example, let’s say that your lagging indicator is the revenue you generated from AdWords. Your leading indicators would be the actions you’d take to improve that revenue, such as optimising your landing pages.
  • Define what a sales opportunity looks like to your business.
  • Create sales and marketing criteria based on past interactions with customers. Define what a lead needs to have to qualify it as a potential source of revenue.

 

Once you know all of this information, you can build on it to create a new marketing plan for the year.

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Tip #2 – Create Your One Source of Truth

The sheer amount of data that you collect can present a problem. Worse yet, that data is often spread across several different platforms. You have to spend more time managing it than actively using it. As a result, you have less timely information to guide your decision-making.

The problem with this multi-platform approach is that it’s difficult to scale. As the business grows, you have to invest more in each platform and more in people to manage it.

You need to create a single source of truth. This is one dashboard that highlights all of the important information you need to grow your marketing efforts. The key metrics on this platform can include, but aren’t limited to:

  • Where your visitors/leads/customers come from.
  • How much you’re spending in total.
  • How much you’re spending on each marketing channel.
  • Projected total revenue from your customers.
  • Average spend per customer.
  • How many people you have in each stage of your marketing funnel. A great platform will even recommend the next actions to take.

 

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Figure 4 - https://www.hubspot.com/product-updates/page/8

Ideally, this single platform will also help you to automate your marketing too.

Good marketing automation tools allow you to send targeted messages to your leads. They identify where a lead is in your sales funnel and ensure they receive the correct message. This can drastically reduce the time you spend on your marketing cycle.

Automated lead nurturing allows you to communicate with leads on several platforms. These include email and social media.

You make repetitive tasks more efficient - freeing up your sales team to focus their time on the more qualified opportunities.

 

Tip #3 – Invest in the Platforms That You Own

Do you invest in the platforms that you own or those that you rent?

That’s the big question for marketers. A platform that you rent is essentially any platform that you spend money on that you don’t own.

Facebook is a good example.

Some businesses invest far more time into improving their Facebook profile than they do their website. However, even something as simple as an algorithm change can derail their efforts.

They have no control over changes made to the platform. As a result, they’re trying to build the brand based on somebody else’s set of rules.

A platform that you own could include something like your website. These are platforms that you have full control over. Every action that you take can influence your marketing efforts. This control allows you to build a more stable digital presence.

Ultimately, this presence lasts longer than your presences on rented platforms.

Invest in the platforms that you own. You have full control over them and they’re linked to your brand identity.

Customers arrive on those platforms expecting to see your message and products. Make sure you’re communicating the right messages.

Finally, create a marketing strategy that focuses both on quick wins and long-term marketing goals. You don’t have to choose one or the other.

For example, you could use online advertising to generate quick revenue. But your long-term goal would be to improve your website’s search engine rankings so you get another source of revenue.

Furthermore, you can use these strategies to help you decide on your marketing priorities. Figuring out where to dedicate your energy is often one of the biggest challenges that marketers face.

These strategies help you to keep track of what’s working, which means you can realign your priorities as needed.

 

The Final Word

Scaling a business involves having the right processes in place to allow for growth.

This means understanding your revenue figures and how they relate to marketing spend. You also need a single source of truth that delivers the important data no matter how big the business gets. Investing in the platforms that you own also ensures that they’re ready to scale when needed.

Implement automation to speed up processes and allow you to communicate with more people on a wider scale and in a more personalised way.

Most importantly, revisit your marketing goals each year. You can’t scale successfully if you rely on the same campaign year on year. Look at your previous year’s results and reverse engineer new marketing plans based on them.

In the digital realm, the first step of scaling is to push traffic towards your website. That’s where Online Marketing Gurus can help.

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