Dear head of marketing, we feel your pain: the late autumn is nearly here and the heavy negotiations about marketing budget with your C-suite colleagues are getting closer and closer. As a savvy sales and brand value oriented professional you wish to ensure a sufficient share of organization’s budget is allocated there where it profits the most: marketing. However, the pressure from the CEO and the CFO might, once again, make you satisfy with unpleasant compromises. What about if this autumn you had an ace up your sleeve? A data driven marketing budget proposal!
Getting the right mind set for Data Driven Budgeting
There are four persistent myths in many Finnish organizations that limit the data driven budgeting:
- Using past business behavior and gut feeling is the right way to make investment decisions,
- Internal data alone gives sufficiently reliable results,
- They do not have access to the data they would need for data driven decision making, and
- Using and implementing data driven methods would mean overly complex, expensive or long projects.
It is a truth that the tools marketing executives have at their disposal have evolved significantly during the past years. However, it is also a truth that Finnish organizations are lagging behind in implementing these tools as a part of their marketing processes. The management science capabilities before on the disposal of the few are now at the grasp of all whom are willing to use them. And these tools are the ones that’ll help you, the head of marketing, to dispel the four myths above.
There is countless amount of proof on how data driven approaches enhance the decision making capabilities of organizations, increase marketing ROI and company profit in both: short and long term.
You can now forget the arbitrary rules of thumb you’ve used to allocate your marketing budget with; the same approaches used to optimize your marketing mix can be used to make your budgeting data driven and profit oriented.
Data Driven Budgeting Process: What Does It Mean
Moving towards data driven marketing budgeting is not an overnight task, but the rewards exceed the efforts to a great degree. Here is a simple, but still relevant, seven step example roadmap for moving towards more data driven marketing budgeting:
Thanks to the process described above, you’ll be able to justify your marketing budget by answering accurately the questions like:
- What are the key drivers of sales for your brand?
- How are your media investments performing?
- What to do next – how much to invest, where and when?
You do know that under-budgeting is as much of a “sin” as is over-budgeting. But does your CFO know? She most likely will after you have bought the hard, data driven facts to the conversations.
Instead of arguing for your need for a budget increase or debating over the right area for cost savings, you can base your decisions and arguments on 100% facts: you know your marketing ROI, you know what the optimal marketing mix in this competitive situation is and what implications (positive and negative) any changes to it have, and you know the effect an increase or decrease to the budget has to your company’s business.
Annual budget planning meetings can be a real hash. Not only for you as the head marketing but also for your CEO and CFO. You are to work together towards the common goal, however. In order to make the chaotic world of budget and money allocation a bit more structured, facts based on data and conclusions derived from it are vital. Marketing related valuable insights can lead to budget decisions that have a significant positive impact to IT, product development or even logistics and, at the end of the day, to the whole organization. There is no need to compete about the budget with your C-suite colleagues. Rather, you can show them the ace up your sleeve and help broadening the data driven decision making in your company since one thing is sure: data driven decision making is here to stay and marketing budgets shouldn’t be based on crystal ball forecasts any more.