How to avoid the biggest marketing budget mistakes
Assigning budget to marketing activity has often been seen as laborious, un-scientific and seemingly arbituary. Whilst spend for other business areas such as HR and IT can see return on investment almost immediately, marketing spend is a dark art. Whilst no two businesses are the same, our combined experience in B2B organisations of over 50 years has shown some trends in how marketing budgets are managed.
Typical marketing budget journeys...
The "aspirational spend:revenue" ratio
At the start of the journey, we have the hope of marketing spend having a direct correlation to revenue, with the thought that as the pipeline grows, revenue will outpace spend. In the B2B world however, this is rarely the case due to complex sales cycles which often take up to a year to complete. As a result, a data-driven marketing strategy is required to enable organisational objectives to be met.
The strategic marketing plan
With the right mix of research, analysis and planning, a comprehensive marketing strategy can be implemented. Activity will be implemented based on what is happening in the market, what has worked historically and feedback from the sales force. This requires the organisation to have the confidence and trust to deliver results in the coming months, rather than days or weeks.
If there is a lack of confidence whilst pipeline and revenue builds, an injection of activity may result in some immediate results, however it detracts from the overall strategy and risks the long term objectives. Equally, when pipeline and revenue are looking healthy, reducing spend or pausing activity will lead to a similar situation.
The roller coaster
Ultimately, this leads to a reactionary series of marketing activities based on gut feel and current market conditions. If these activities do not have the same objectives as the original marketing strategy, it can cause confusion to your market and lead to mixed messages being delivered.
5 Top Tips for ensuring your marketing budget delivers your strategy...
1. Be clear and confident
Take time to understand where the market is heading. Constant changes to the marketing budget sends a poor message to the rest of the organisation, business partners and to your competitors. It is better to be consistent with your approach and build trust that the overall plan is a good one which may need some adjustments along the way.
2. Avoid knee jerk reactions
Relying on emotions rather than market intelligence can be dangerous and may result in having to double efforts after a time away from market. Cutting budgets without a logical reason or not communicating the reasons why can create uncertainty. Instead ask for justifications based on data and facts as to why the budget needs to divert from the original plan.
3. Work backwards
Understand your marketplace. Assess the potential of your audience, existing opportunities, and where your wins came from in previous years. This will help to focus your budget where spend should be and where the returns will come.
4. Consider the variables
Seasonal, competitive, internal and external forces (PESTLE) will have a significant impact on your strategy throughout the year. Ask your marketing team to not only justify spend, but to demonstrate from market research intelligence why the level of spend or the type of activity is a required and whether result will yield long term, or if results will show immediately.
5. Tracking and recording
Use historical budgets and spend reports to understand what has worked well in the past but be cautious, the market may have moved on so consider whether repeating past activity is likely to yield the same success. Follow and track your competitors to understand how they are evolving and be sure not to be predictable to your market.
Budgeting is always an emotive topic within an organisation. Whilst it is tempting to spend what is available, why not incentivise budget holders to find new ways of spending wisely? Empower them to spend savings on new innovative ideas to generate new leads and revenue, encouraging more creativity and passion in your organisation without requiring extra budget!
To find out more about how we can help you get the most out of your budget, leave your details and we'll contact you for an obligation free chat.
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