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What Budget Should I Allocate for Demand Generation?

Start from revenue, not channels. Size spend from pipeline targets and allocate across create (demand) and capture (conversion) to hit goals efficiently.

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Use a revenue-back model: 1) define new revenue target, 2) translate to required pipeline (target ÷ win rate), 3) set the marketing-sourced share, 4) model conversion rates to estimate required opportunities and hand-raisers, then 5) fund the plan with a budget that achieves that volume at a sustainable CAC payback. As a guardrail, many teams land between 8–12% of ARR (early-stage: higher; enterprise/renewal-heavy: lower), split roughly 60% demand creation / 40% capture & conversion, then refine by ROI.

Budget Building Blocks

Pipeline math — Required Pipeline = New Revenue Target ÷ Win Rate (apply 3–5× if using coverage)
Marketing-sourced % — Portion of pipeline owned by marketing (e.g., 40–60%)
Conversion ladder — Visit→Lead CVR, MQL→SQL, SQL→Oppty, Win Rate, ASP; use your historicals
CAC/payback guardrails — Budget to achieve a target CAC or payback period (e.g., <12–18 months for SaaS)
Allocation mix — Create (narrative, content, social/video, events) vs. Capture (offers, CRO, retargeting, chat)
People/Tools/Media — Typical OPEX split: Media 35–55%, Content & Creative 20–35%, Tools & Data 10–20%, Testing 5–10%

From Revenue Target to Budget: A Simple Model

1) Revenue goal: $5M new ARR. 2) Win rate: 25% ⇒ required pipeline = $5M ÷ 0.25 = $20M. 3) Marketing-sourced: 50% ⇒ $10M pipeline. 4) ASP: $50k ⇒ need 200 opportunities. 5) SQL→Oppty 40% ⇒ need 500 SQLs. 6) MQL→SQL 25% ⇒ need 2,000 MQLs. Fund channels and content to reliably produce those MQLs at your target CAC/payback.

Start with a working split: 60% Create (content engine, social/video, events, category POV) and 40% Capture (offers, CRO, retargeting, paid search, conversion tools). Shift dollars quarterly toward the best pipeline per dollar by source and intent.

Instrument the plan: attach every program to a hypothesis, owner, target, and review date. Track leading indicators (reach, engaged sessions, branded search, content-assisted SQLs) and lagging metrics (cost/opportunity, pipeline, revenue).

Quarterly Demand Gen Budget Sprint

  • Week 1: Lock revenue→pipeline math, marketing-sourced %, and conversion ladder. Set CAC/payback guardrails.
  • Weeks 2–3: Allocate: 60/40 create/capture; define program-level budgets (media, content, tools, testing). Prebuild 3 offers per segment.
  • Week 4: Launch with dashboards by intent & source. Set commit/upsides and a 10–15% testing reserve. Schedule a QBR to reallocate.

Frequently Asked Questions

What % of revenue should demand gen get?
As a starting point, 8–12% of ARR for many B2B SaaS/recurring models. Early-stage or low awareness may require 15–25%. Enterprise with strong expansion can run 5–8%—but let CAC/payback be your true guardrail.
How do I split budget across channels?
Begin with 60% demand creation (content, social/video, events, thought leadership) and 40% capture (paid search, retargeting, CRO, chat). Rebalance quarterly to the highest pipeline yield at acceptable CAC.
What if my CPL is low but pipeline isn’t growing?
You’re overfunding capture. Shift dollars into awareness, narrative content, and mid-funnel education to raise qualified intent and ASP.
Should I include people and tools in the budget?
Yes. Plan media, content/creative, tools/data, and testing. Underfunding content or analytics reduces media ROI and slows iteration.
How often should I reallocate spend?
Review monthly; formally rebalance quarterly. Protect a 10–15% test reserve to explore new formats, audiences, or offers without derailing core programs.

Turn Budget Into Predictable Pipeline

We’ll translate your revenue goals into a demand-gen plan, allocate spend across create vs. capture, and build dashboards that prove impact.

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