A normal budget year is often filled with challenges, objections, and requests to defend your planned spending. Why do we need to allocate $x to trade shows or what do we get from our PR spend? These and other questions are common and will certainly gain greater momentum this year. As I’ve talked about in recent videos, one key for marketers is to think and talk more like the C-Suite in communicating your budget requests and goals. What are some ways to accomplish this?
Frame Marketing Budget by Segments
Darren and I both believe in categorizing your marketing spend to align with your business goals NOT the tactics that you use. We’ve seen so many examples of marketers listing their budget as 20% on websites, 10% of communications, etc. and wonder why they get challenged on the effectiveness of these tactics. Who does your website focus on new or existing customers? Where are your communication programs targeted? These are just a few examples.
Think of categorizing your marketing spending as shown in this diagram:
Aligning Marketing Spend with the Business
In this format, I can look at how our marketing budget is designed to drive business. If asked how our plan achieves growth in new customers, I can respond that we have 23% of the budget allocated towards initiatives focused on growing new customers. If the question is how much are you focused on driving specific products and services, I can answer that we have 45% of the budget targeted to specific product and service campaigns. Why is that important? It should align with your revenue growth as depicted in this chart:
Of course, you need to be able to answer questions on how much spending is devoted to the website or PR or email but is that as critical to the C-Suite as the segments that you are driving? Think about how the manufacturing team segments their budgets each year. An example is 45% for people and training, 10% for safety, 20% for preventative maintenance, 25% productivity improvements. It sets the stage for good discussions about whether your efforts are aligned with the needs of the business.
At Rand Inc., we can help you have these conversations and give you the platform to not only build your budgets but track performance and develop scenario plans for future periods. We believe successful marketing starts with aligned business strategies, strong planning, and meaningful measurements. For more information reach out to us at www.randinc.cc.