How Leading CMOs are Planning Marketing Budgets for 2017

Posted on by Jocelyn Brown

Business lady is looking for new business ideas.Right now, around the globe, marketing budgets are being planned, and marketers are making the case for what they want to spend in 2017. This might be keeping a few of you up at night—after all, budget dollars are like fuel to marketers; the more we have, the farther we can go. But the task of planning and understanding investments is often ambiguous and increasingly competitive as marketers contend with other functions for limited resources, all while fighting the perception of marketing as an internal cost-center.

In a perfect world, you could simply consider the results you’re aiming for (revenue) and build a plan that supports it. The real budget constraints of every company, however, make this a fantasy.

The best CMOs present plans that show a clear path to revenue, but many organizations struggle to reach this level of clarity and transparency.

Here’s what the best CMOs are doing differently.

1. They aren’t relying on the rearview mirror. 

Many teams use results from the previous year to make data-driven assumptions about the expected results for programs they’re planning to run next year. Often their marketing planning involves taking last year’s plan and tweaking it, perhaps eliminating waste and identifying opportunities to double down. But last year, though informative and certainly a starting point, should not be the only influence on your upcoming plan.

“Building a new marketing organization a year ago included a strategic focus on specific pipeline contribution objectives for marketing,” notes Brian Kardon, CMO, Fuze. “And tying actual results with the investments that it took to generate those results is not only critical to planning season (taking place now) but allows us to course-correct our marketing activities throughout the year with much more confidence.”

2. They’re in lockstep with corporate objectives.

The most successful marketing plans are in tight alignment with corporate strategy and objectives. These CMOs are in lockstep with what the business is trying to accomplish.

“Our marketing organization is keenly attuned to its contribution to the business, “ says Susan Vanin, global marketing operations, Juniper Networks. “We make data-driven, strategic decisions that maximize our impact.”

There will always be programs in the strategy that are evergreen, such as customer conferences. These likely won’t be cut as you plan for next year, but marketers who can jockey for budget have a distinct ability to prove their worth by making decisions that are directly aligned to corporate strategy, and making the case for how they’ll produce results in the year ahead.

3. They are prepared with data and scenarios.

Those who have control over their marketing investments can articulate to the business the effect of budget constraints or increases. Whether you’re telling the business you do not have enough resources to deliver, or explaining what a 5-10% increase in budget could do, I recommend having these kinds of conversations early. Can you articulate stewardship over your investment in a way that is aligned to business strategy and grounded in the market? These conversations are really about trust.

“There has been a huge increase in trust on how marketing is investing, and in the value we bring to the business,” notes Jackie Yeaney, CMO, RedHat.

Market volatility can force teams to react quickly to what’s changing. Leading CMOs come to the table prepared with a list of “what ifs.” What if a competitor gets stronger? What if the budget increases by 10%? They use a baseline plan to paint a picture of how different scenarios could impact results. These are facts-based and database-driven conversations about why funds are needed, and what could happen if they don’t get them.

Being the most prepared person often sets you up for success in budgeting and planning conversations. This means demonstrating that you’re tied to the reality of the business and can answer questions in the context of the organization. Be agile and have scenarios available at your fingertips. Above all, remember this mantra: “Fact-based decisions, not decision-based facts.”

4. They plan from the bottom up.

The most advanced CMOs are leveraging a bottom-up, data-driven approach to understand funnel and conversion dynamics. This allows leading CMOs to predict what the result and output of a campaign may mean over time, and to answer questions about the return on each investment along with the estimated revenue impact. They are then able to understand their marketing plan not in terms of “how much money do we spend each quarter?” but rather, “how much revenue do I need to deliver each quarter.” This becomes the dynamic perspective that informs action.

All businesses operate against a pattern and some seasonality–so why manage spend within the fictional construct of a budget spread evenly across the year? Planning based on what results you’ll generate and when allows you to react to the realities of the business.

5. They are fully transparent with finance.

A marketing team’s attention to tracking spending with outcomes can strengthen their relationship with Finance. “We feel as if we are truly a trusted adviser to the CFO and CEO. Everyone has visibility into our spending and the results they are driving,” says Fuze’s Kardon.

When marketing teams are global, it’s often difficult to manage transparency, but the best CMOs work closely with their counterparts in finance. From the CFO to financial planning stakeholders, the more you can ensure you’re in line with their cadence of evaluating business strategy and budgeting, the better. If you’ve got a business planning strategy or financial planning arm of the business, show iterations of your plan early to get their input. The more aligned you are, the less likely you’ll be surprised by budget allocation later.

Marketers don’t always talk about their activity in the language of the rest of the business. The truth is, the common language across every department is money. The most successful marketing leaders run their departments like a business, describing their activity in ways the business understands, and demonstrating control and confidence over every dollar spent.

Jocelyn Brown is the vice president of customer success at Allocadia.

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