How to Build Your Marketing Budget for 2020: Five Ways to Ease the Pain
“Budgeting” strikes dread into the hearts of marketers. It’s the time of year when we have to do accounting work under a management microscope. Honestly, we became marketers because we don’t like this kind of work. But, alas, every Fall, here it comes, and it’s a pain. Let me commiserate with you and then provide some tips to help.
Why’s it such a pain!?
· The company’s revenue budget isn’t available until January. Huh?! How can you develop your marketing plan when you don’t know what the revenue goals are? And how come your plan is due in November when the plan you need to develop your plan from isn’t ready until January!
· Your CEO has provided goals which seem to be pure fantasy. Were these goals developed to rally the troops to achieve the impossible? Should you even take them seriously?
· You don’t know what process to use or what format to create it in. Does management want a number? Do they want to see your media plan? What should your final deliverable be?
· What’s my number? Can I spend more than last year? How do I justify it?
· It sucks having your work put under the microscope. And it’s no fun negotiating for the dollars you need to support your team and make a difference.
Five tips for developing your marketing budget
Despite the dysfunctional environment you may be operating in, or maybe because of it, I suggest you charge forward anyway and follow these principles to help you.
1. See if marketing impacted sales this year. This is what it’s all about, right? Did you marketing efforts move the needle? Did they increase sales. I suggest you create a monthly spreadsheet that correlates gross sales with marketing spend. Add in your main marketing metrics like leads or customers acquired and see if there’s a correlation or not. Then ask why. This line of inquiry, including a close analysis of your past efforts, will take you into the details of your current plan to learn what’s working and should be repeated, or what’s not and should be changed. This insight will shape your new plan and guide your new budget.
2. Get help from your marketing partners. If you’re working with a marketing agency or media seller, these partners should be part of the process. Ask them to provide details on media performance for each of their areas. This should include budgets, media delivery (like impressions) and results (like leads or customer acquisitions). Then ask them to outline what they believe worked and what could be improved. Lastly, ask them to make a case for the ideal marketing budget. Obviously, you don’t have to use their numbers but their analysis will be valuable since they know the details the best and they may be working with other clients whose insights you will benefit from.
3. Choose your own marketing budget. What?! Doesn’t management give me the budget? They may, but you also may have the opportunity to negotiate a better number. I suggest you start by creating a version of a “zero-based budget.” This means setting aside past assumptions and starting fresh. To do this, assume you have 8% of gross sales to spend on advertising and marketing because this is the number suggested by The Small Business Administration for businesses smaller than $5 million in yearly sales. Most small businesses that I work with spend much less than that because they lack confidence they’ll get a return on the investment. But start there and build a marketing plan that includes projected results in terms of leads, customer acquisitions and revenue increases. What’s your confidence level that this new plan could drive real growth? If it's high, make the case to your management!
4. Objectives, strategies and tactics. If you’re struggling to find the right format for your plan, go back to basics and build your plan using the tried and true methodology of objectives, strategies and tactics.
· Objective: A measurable outcome you want to achieve, like, “generate 25 leads per month.”
· Strategy: A plan to achieve your objective, like, “use advertising to increase awareness of our product.”
· Tactic: A detailed plan to execute your strategy, like, “run print ads in trade publications during peak selling season.”
This structure forces a disciplined approach to building your plan and the associated budget figures. Your goals are sure to be measurable, and your tactics will always ladder up to your goals. Maybe your plan turns into an infographic or gets presented as a marketing calendar, but you can’t miss by starting with this rock-solid planning approach.
5. Make it a discussion, not an inquisition: If you’ve done the work described above, you know your business better than anyone else does. You know what worked this year, you know the details of your current media plan, and you have done budget projections for next year. So, you’re totally prepared for any discussions you need to have with management. And that’s what the meetings should be, discussions. With all the information you’re going to bring, you will provide real value to management by aligning your work with their goal- how to grow the business.
So, you’ve got nothing to worry about. Get to it.
This post was written by John Walker, Founder and Principal at J. Walker Marketing. Contact John directly to discuss your marketing challenges at www.jwalkermktg.com.