Every year, usually sometime in the summer, marketing organizations around the world hunker down to develop their business plans for the coming year. Some organizations have a formalized process resulting in plans that are built from rigorous learning plans, voice-of-customer & voice-of-sales incorporated to ensure alignment with the marketplace, supported but a refreshed corporate strategic plan and extensive cross-functional collaboration. Others are a carbon copy of last year’s plan with the dates changed. I would argue that most plans lie somewhere in between.
Regardless of the rigor behind the plans, where the rubber meets the road is when it comes time to argue for spend to execute the marketing budget. As SiriusDecisions notes in their blog post, Get Out the Green Eyeshades: Budget Season Looms (SiriusDecisions Blog http://shar.es/t4Gsq) the typical first response of marketers to this critical step is defensiveness. My project is critically important and my business will not survie without it. My project is better that yours (I mean really what business does your tactic drive anyway). And so on, and so forth. So how should a the business plan and the resulting spend be evaluated to make it less subjective? Sirius posits you take the heat out of the room using this framework:
- Strategy first, then budget. Identify the goals that will impact marketing’s actions for the next year.
- Determine your marketing priorities. Use the goals to drive your plan.
- Communicate your choices. Gain agreement from sales and the business units that will be impacted by the choices that marketing makes.
- Choose a budget model. If you are using a campaign model, then you can build your budget around the principles of campaign design, prioritization and allocation.
- Put on those green eyeshades. Build a top-down budget allocation model based on proportional distribution of your budget to the different areas of priority.
- Take a pass at a bottom-up approach. Even though you won’t be able to define all the activities, you can identify a big proportion of your required spend.
- Question tradition. Look at your activities from the current year and ask yourself if you would fund them at the same rate.
- Focus budget measurement on outcomes, not activities. While it’s easier to assign budget measurement to activities, this doesn’t help you focus on your all-important business priorities.
The goal of course, is to approve the plan and tactics that drive pipeline and revenue in the areas agreed to in the corporate strategic plan. Sounds logical, but we aren’t always logical — how likely is this approach to be successful within your organization?