Tag Archives: budget

CMOs Will Outspend CIOs on Technology by 2017

How do today’s marketers truly view their ability to harness and leverage big data to produce measurable results?

That’s the question posed by the team at Teradata. And the answer may be found by diving into the extensive new Teradata Data-Driven Marketing Survey 2013.

The global results offer an in-depth look at some key issues, including marketers’ perceptions of how their companies use data to guide marketing decisions, perceived barriers to using data to drive marketing, and where marketers’ expect their organizations to place data-driven priorities over the next couple of years.

A New Approach to the Marketing Budgeting Process

Ahhh Fall…For many of us it signals welcome relief from the summer heat.  Also, for many of us it signals budgeting season and that too many marketers will be submitting their budgets before even creating their marketing plan.  Yes, that does seem a bit backwards!  How can you know what to budget if you don’t yet know what you plan to do?  So what do we do? One common approach is to build the budget based on how the current budget is allocated across headcount, travel and various marketing activities, such as PR, Digital, Events, Training, and so on, make a few adjustments and hit the submit button.

While this may seem like a feasible method, it’s a dangerous one. The budget may be allocated against activities we intend to produce, but it’s unclear what impact or value these activities, and the associated funds, are going to have on the business in terms of new customers, retained customers, additional vertical or customer expansion, or contribution to the business from new products.  It’s no wonder our budget is suspect and immediately comes under fire, especially from the folks in Finance.  And this approach sets the stage for questions like these:

  • Why ads in these pubs?
  • Why so many webinars or trade shows?
  • Why so much money for the email automation platform?
  • Why so much money for new content?

Right away we’re playing defense – with others e.g. finance, suggesting ways we can reduce our spending.  And before we’ve even gotten out of the gate our budget is eroding.  If this isn’t your world, congratulations! If it is, here’s the shocker.  It’s your fault.

If those of us who end up in these conversations had taken a different approach, the conversation would have gone differently.  As marketers we need to think beyond the subaccounts in the cost accounting system.  We need to understand how the dollars we’re requesting are actually going to move business needles.  Businesses are based on revenue and profits generated by customers buying our products/ services, hopefully profitably.  This is the very essence of Marketing.  As a result, we need to think about our budgets in terms of the customers and what they buy.  So rather than submitting a budget for activities, what if you submitted a budget that allocated funds into buckets such as these:

  1. Marketing generated business from net new customers buying existing products
  2. Marketing generated business from existing customers buying existing products
  3. Marketing generated business from net new customers buying new products
  4. Marketing generated business from existing customers buying new products

Of course this would mean we would need to know how many existing customers the company currently serves, where, what products they buy, and how many potential customers there are for these products and where are these potential customers.  And we’d need to know what new products are going to market, the competitive situation, and what customers are most likely to buy these products.  And we’d have to have some targets for each of these categories.  Imagine though that we knew this information about our customers, products, and market.

If we were to budget in this fashion, it doesn’t mean our friends in finance wouldn’t be making a visit, but the conversation will certainly be different.  They will still want to know why we need so much money but instead of defending an activity that we don’t even know we will want to deploy since we haven’t created the plan, we’ll be having a discussion about the business – how many customers, which ones, how easy or hard it will be acquire, retain or grow these customers, our competitive situation, and our product innovation situation.  I’d rather have these conversations with the CFO or other members of the leadership team any day than a conversation about which tradeshows to attend.  And once we have clarity around marketing’s contribution via customer acquisition, retention and growth,  we will also have achieved better alignment with the business and gained insight into how to measure and account for our value.  Plus we will have created maneuvering room and the ability to select the activities best suited to achieve the result.

 

 

How to do more Marketing with the same Budget

All marketing practitioners are seeking ways to save money and get a bigger bang for their budget buck. How to do that isn’t at all obvious. But, sometimes, the answer can be staring you in the face!

No. 1: Seek opportunity in adversity

Inertia, complacency, and overconfidence are your inner demons. Get rid of them. They’ll cost you money. Reading the writing on the wall, on the other hand, is a great place to start to save money.

Too many marketers pay insufficient attention to the early warning signs of big shifts in demographics, technology, and regulation. As a result, they miss out on a great opportunity to proactively innovate to take advantage of those shifts.

Turn adversity on its head and get it to work in your favor. The key is to translate challenges into opportunities (glass half full…) and use constraints to spur innovation (necessity as mother of invention…).

No. 2: Do more with less

Being resourceful in a resource-scare world should be second nature. But it isn’t.

You don’t necessarily need a multimillion-dollar budget. In fact, some of the most successful in our industry are those able to get more from less by applying frugality to every activity they perform. They tend to work for organizations that are efficient, and by that I mean they are frugal in how they design products, how they produce them, how they deliver them, and how they perform after-sales or after-care.

Their frugality shows up not only in their parsimonious use of capital and natural resources but also in how they maximize their limited time and energy. Rather than driving everything themselves, which can be very costly, they rely extensively on partners and collaborators to perform various operations, saving resources, time ,and money.

Try to reuse and combine rather than create something new from scratch.

No. 3: Think and act flexibly

Try walking across a road in Mumbai, India. You’ll make it to the other side only if you’re prepared to think and act flexibly! And there’s no point thinking the Highway Code (Rules of the Road) is going to be your savior when you’re behind the wheel. It won’t. Linear thinking won’t always help. The same is true in our industry.

Western brand owners and their leaders often operate in a black-and-white world that confers a sense of predictability to the order of things. For example, competitors are bad and partners are good; regulations are typically bad for business whereas protectionist policies are good; and although some brand owners may like doing good as part of their corporate social responsibility initiatives, they worry primarily about doing well financially.

Yet such binary thinking that’s anchored in deep-seated assumptions prevents brand owners from reconciling priorities, a process that could yield creative, innovative, and highly cost-effective marketing solutions. The sheer diversity, volatility, and unpredictability of global markets demand that we be flexible. Inflexibility will result in failure and a waste of resources.

We must think laterally, out of the box. We must experiment and improvise.

No. 4: Keep it simple

In the developing world, consumers are put off by complexity. Complicated and elaborate communication is costly and can be a distraction. In the Western hemisphere, we seem obsessed with everything being bigger and brighter. We often get seduced by the power of technology. The world beyond 2013 won’t be like that.

Consumers are down-shifting and opting for simpler, more meaningful lives. Brand owners that respond to these attitudes, values, beliefs, perceptions, and behaviors will benefit in the long run.

No. 5: Use the Web

Being part of the community, being yourself, being transparent, being a great listener and a genuine problem solver build trust, and the fastest way to do so with the biggest community of like-minded people is via the Web.

No. 6: Avoid dependency relationships with external agencies

The only practical way to do this is to be focused on outcomes, not just outputs. Share the learning of triumphs and mistakes. By making a commitment to triple-loop learning, you’ll save a fortune in the long run as the agencies won’t suggest strategies that don’t work and you won’t blow a big fat hole in your budget finding out. Learn as you go.

No. 7: Spend less than others say you should

Anyone who’s ever been into a car showroom to buy a new or used car will know that having an idea of what you want to spend can evaporate in the presence of a convincing salesperson who knows how to pull emotional levers and customize the product “just for you.”

It’s not just alloy wheels or a nicer in-car entertainment system, but it’s the extended warranty, freedom of not worrying about the gap in resale value when you go to sell the car at the end of the payments period, and other extras’ that all come at a price. You invariably end up with a figure that’s more than the one you started with.

The same is true in our industry, particularly when designing and building a website. Beware of buying extra bells and whistles. Chances are, you don’t need them.

No. 8: Don’t just spend time with people you know; network instead

In our industry, many of us prefer to keep the company of those whom we know. But growth of a commercial enterprise demands networking. For one thing, building a new relationship with a customer or client could unlock marketing and sales opportunities well beyond the spending constraints of those you already know.

Effective communication increasingly depends on word-of-mouth. And the best way to stimulate effective word-of-mouth is to network. And the best bit is that it doesn’t have to cost you anything if you join a relevant social networking group where you are free to exchange thoughts and ideas.

No. 9: Collaborate with your customers and clients for profit

Why use expensive market research to come up with insights and answers to some of the most challenging sales and marketing issues when you can collaborate with your customers and clients and get them to help you design your products and services in the first place? After all, if they like them, they’ll want to buy them.

No. 10: Know your ends from your means

Winston Churchill, one of the greatest statesmen who ever lived, once said: “However beautiful the strategy, you should occasionally look at the results.”

The best communication plans and investment in a range of activities will all turn to dust if they don’t deliver the outcomes you’re looking for. Being outcome-focused rather than output-driven means that you know your ends from your means.

And that’s by far the most profitable place to be.

This article is written by Ardi Kolah and is published before on marketingprofs.com

 

Building the Business Case for Marketing Technology

With the global economy still facing significant headwinds, most business leaders are remaining cautious and frugal. They are demanding that any investments they make produce a positive, measurable impact on the bottom line – and the faster the better. Marketing is not exempt from this caution and frugality. Marketing budgets are being scrutinized more closely, and marketers are facing growing pressures to improve the effectiveness and efficiency of the marketing function.

Many marketing leaders believe that the right technology tools will significantly boost marketing effectiveness and efficiency, and there is significant evidence to support this belief. However, investing in new marketing technologies is still a major decision for most enterprises. Marketing technology solutions do not usually require a huge financial investment for large enterprises, but the cost is high enough that most companies will not treat the investment as routine or trivial. Perhaps more important, the implementation of new marketing technologies may well involve business process changes that affect many stakeholders. For these reasons, marketers who plan to recommend such investments must be prepared to justify their recommendation. Read More…