It’s Budget Season! Part 2:
How To Build a Better Marketing Budget With 6 Big Questions
Let’s assume you are in the right conceptual frame of mind to start planning your marketing budget (see Part 1 in this series). The next step to building a better marketing budget (one that is grounded in reality and a tool to help keep your business in alignment) is answering six tough and loaded questions.
WARNING! This may not be easy!
- Is your marketing plan and current marketing effort aligned with your business’ strategic objectives? Are all your marketing activities supporting the most important goals of the company? Think of it this way, the tactical parts of your marketing plan are like your to-do list. If you completed all of the items on your to-do list, would those results move your company closer to its primary objectives? If so, you are on the right track. If not, you’ll need to re-think your marketing strategy.
- How does last year’s performance measure up? Conduct a performance analysis. What marketing programs and campaigns were most effective? That is, which programs actually moved you closer to your defined objectives? Which were least effective and why? For the programs that performed well, how can you make them better? Can you make them faster? How can we improve? Should you allocate more of your budget to these more effective programs?
- How will you define or refine your brand’s competitive advantage(s)? And, how can you better communicate your brand’s competitive advantages to your target audiences? In order to answer these question, not only do you need to know precisely what your brand’s competitive advantages are, you also need to know if those competitive advantages are valuable to your target audience. If you don’t have those answers, you may need to invest some of your budget in customer and prospect research to learn your customers’ pain points and what truly motivates them to buy. You may also need to research your competitor’s positioning to see where there is an opening.
- How will we invest our marketing budget to most effectively and efficiently drive qualified new business leads through the sales funnel to reach our strategic business and sales objectives? So, this is the fun part – channeling your innovation and ideas into a tactical plan and then researching the costs for those tactical elements. Those costs become the line item entries of your budget, defining external and internal requirements. The rest is just some basic number crunching.
- How will your marketing budget create value for both your company and your customers? From an accounting standpoint, the marketing budget defines the spending plan for a necessary company expense. However, it is also an opportunity to invest your budget to create assets for the business. Surely, the budget will be used in programs that will drive leads that can be converted to new clients and revenue. Real, tangible assets. In addition, your investment can also create brand equity by creating meaningful and useful content assets for customers.
- How will you measure your progress and success? One of my clients goes beyond rough estimates of how many leads they generate each year. They can tell you to the penny how much they invest to generate a qualified lead through each of their integrated marketing programs as well as the how and why those cost/lead numbers have changed over the past 3 years. That information is then used to make better data-driven decisions and point the way toward possible efficiency and cost-effective marketing solutions.
Once you have fully answered these six questions, the number crunching will come a lot easier. The key takeaway is that your budget is not a stand-alone financial exercise, removed from your strategic marketing plan. The better marketing budget is a financial blueprint that reflects your business priorities and values giving you greater confidence that your marketing investment will yield higher returns for your business and your brand.