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Marketing budgets are an integral part of the entire marketing process. It has always been one of the most productive sales drivers. You can hardly expect to win over new customers and build a base of loyal clients without any kind or marketing concept.
Although it seems like a reasonable and widely accepted statement, it turns out that so many Chief Financial Officers (CFOs) disagree.
Expert marketers like our students who’ve graduated from our digital marketing course find it easier to generate state-of-the-art and commendable marketing budgets that are not only approved by their CFOs, but also achieve the goals that they have set.
So quick question. What makes top-level finance executives so suspicious about the resources dedicated to marketing purposes?
Okay, we all know that CFOs are prone to saving and cutting costs, but there are much more concrete reasons that make them raise eyebrows looking at your budget proposal. Here are a few stats to explain this kind of attitude:
- Around 60% of small business owners are not able to track ROI from their social media activities. Click To Tweet
- There is a massive difference between low and high performers in email marketing. While high performers achieve $70+ per dollar invested, low performers are recognizing gains of less than $5 per dollar invested.
- Brands spend up to 43% of their marketing budget on content, yet only 23% of Chief Marketing Officers feel they are producing the right information for the right audience, and delivering it at the right time and correct format.
- Only 30% of retail email list subscribers in the USA have actually made a purchase from the retailer whose email list they subscribed to.
These and many other statistical findings reveal a very important thing – it’s not always easy to justify marketing costs.
We could even say that marketers and finance executives don’t speak the same language, so you have to “translate” a budget proposal so as to sound more natural to the CFO.
How exactly can you do that? Below you will find 7 best marketing budget strategies to help you build a marketing budget and plan that your CFO will definitely approve.
Let’s check them out…
- 1 1. Learn Organizational Goals: They Matter To Marketing Budgets
- 2 2. Sell Your Marketing Budget To The Sales Agents Before Seeing CFO
- 3 3. Don’t Recycle Activities In Your Proposed Marketing Budget
- 4 4. Organize Activities by Business Objectives
- 5 5. Your Marketing Budget Should Make Income Projections
- 6 6. Make Future Expenditures Contingent on Early Success
- 7 7. Let Bonuses Depend on Sales Results
- 8 To Cut the Long Story Short
- 9 Final Words
- 10 About The Author
- 10.1 Share this on all your social media platform for a chance to win some AWESOME prizes
- 10.2 Related
1. Learn Organizational Goals: They Matter To Marketing Budgets
Marketing plans might be crucial for the success of a company, but it doesn’t mean you can treat this aspect of the business separately and out of the wider organizational context. You have to understand the overall objectives of your… Click To Tweet
Rudolf Zeigler, a CMO at Best Essays, explained it briefly: “Before you create a set of activities followed by the corresponding budget, you need to learn more about the business strategy and its key performance indicators”.
In other words, you have to know things such as sales and revenue projections. After all, you can’t expect CFOs to approve marketing budgets that equal 50% of the annual sellout, can you?
You need to be aware of business indicators like profitability, net margin, consumer retention, and all other factors that make the business either successful or inefficient.
2. Sell Your Marketing Budget To The Sales Agents Before Seeing CFO
The easiest way to test the business logic of your budget proposal is to consult sales managers who are already familiar with next year’s objectives.
Try to explain to them what makes your plan valid and sustainable. Don’t be afraid of asking for a feedback – if sales managers don’t understand certain parts of the budget, chances are the same thing will happen with the CFO.
Once you’ve done that, you can slightly adapt marketing budget to make it more precise and acceptable to the finance department. Then go back to sales personnel again to hear what they think about the new version.
In case both sides agree that marketing budget is now rock solid, you can definitely meet the CFO and convince him that your project is reasonable.
3. Don’t Recycle Activities In Your Proposed Marketing Budget
First of all, it proves that you take care of the quality of marketing activities and don’t just keep adding more things by default. Secondly, it proves you are willing to cut down costs and terminate actions that don’t seem profitable.
Of course, you have to explain this while presenting your marketing budget. Highlight the items you want to eliminate and clarify your intentions concisely.
Tell the CFO why you did it – ROI was too small, you didn’t earn enough social media awareness, you found a new way to do the same thing more efficiently, etc.
Doing so, you will convince finance executives that your logic is sound and clear. They won’t consider you to be biased toward marketing niche, so they will likely support you and give the budget proposal a green light.
4. Organize Activities by Business Objectives
We already mentioned that marketers and finance managers often don’t understand each other. This happens because marketing budget is not using the same concept and language to express financial benefits of the plan.
Although it’s much easier for you as a marketer to follow the budget by marketing objectives, you need to put more emphasis on business targets while presenting your plan.
Keep in mind that you are not playing this game in home court, so you have to adapt and indulge the host.
Set business objectives for all marketing activities. You should try to explain the expected benefits of each item individually. Don’t speak too much about awareness, likes or shares – talk about concrete stuff such as leads and conversion rates.
For instance, one of our students, Naomi, learnt this same strategy from our digital marketing course. While preparing her budget, she wrote out a four-quarter evaluation plan that was tied to certain specific targets for every quarter.
Her budget was not only approved by the CFO of the company, but also had an 85% quarterly execution performance. Do you see that it works? You can be like her too.
It doesn’t guarantee anything, but at least CFO will understand what you are saying and hopefully appreciate the way you want to improve business through marketing.
5. Your Marketing Budget Should Make Income Projections
You need to focus on expenditures while preparing a marketing plan. However, you also need to take into account the results of your actions and anticipate the profit you could gain from those activities.
This way, you will shift focus (at least partly) from costs to income, which is a great negotiation tactic for the meeting with CFO.
You could even go one step ahead and include the ROI calculator in your plans. It could be a big bonus because you would use precise metrics to evaluate the forecasted profitability of different investments.
Details like this often play a decisive role, so why wouldn’t you take advantage of such a simple tactic?
6. Make Future Expenditures Contingent on Early Success
It would be perfect if you could count on the full amount of marketing investment straight away. But it’s getting increasingly difficult to ensure 100% of the planned budget, so you can make future expenditures contingent on early success.
What does it mean? It means you can make a balance between business performance in general and the level of marketing investments. In case the company is doing well, you can ask for more funds quarter after quarter.
But if the business is not doing so well, you have to play with what you got in the beginning.
While this is a tricky thing to do in terms of all-year planning, it is usually the most acceptable model for CFOs. But if you strongly believe in company’s success, don’t hesitate to suggest this kind of marketing plan.
7. Let Bonuses Depend on Sales Results
Annual bonuses are a natural part of budget planning. However, CFOs don’t really enjoy the fact that marketing staff can receive bonuses even if sales results go way below predictions. What you can do in that respect is to propose tying your team’s bonuses to the overall sales achievements.
After all, fulfilling marketing targets doesn’t mean much if the company, in general, is not on the right track. A proposal like this would probably make your CFO thrilled, so you could count on the approval of your marketing budget.
To Cut the Long Story Short
Now that you’ve learned the basic rules of building a marketing budget, you can easily determine the logic behind this process. To put it simply, you must concentrate on business metrics common to finance departments.
Forget about trust building, brand awareness, click through rates, and similar marketing buzzwords. You need to focus on tangible results instead.
Looking at it from the perspective of an average CFO, it means explaining how marketing activities influence sales results and increase customer lifetime value.
If you are able to do this, you can count on CFO’s support. But if you stick strictly to marketing jargon, don’t think your budget proposal will make the finance guys super excited.
A well-designed marketing strategy can make all the difference in terms of business success, but the budget it takes is often disproved by CFOs. If you want to ensure a stable and sound annual budget, you have to understand how finance executives think and adapt your proposal so as to match their professional preferences.
In this post, we showed you a list of 7 tactics to build a marketing budget that your CFO will definitely approve. Did you ever face a problem presenting marketing budget?
Do you have other valuable suggestions to share with our readers? Feel free to let us know in comments and we’ll be glad to discuss this topic with you!