There’s so much choice available that customers can pick and choose who they buy from and where, when, and how it happens. They want to discover, research, evaluate, and purchase on their preferred channel. Give them that option, and they’re more likely to choose you. That’s the whole point behind the multi-channel approach.
While many CMOs are focused on tracking data to gain deeper customer insights, marketing leaders, experts and analysts say it’s vital they don’t forget the importance of staying on track with marketing spend.
We speak to marketing leaders, experts and analysts to find out the secrets to a successful budget metrics strategy.
1. Embrace the 70:30 budget rule
Experts agree marketers need to embrace a proportionate budget rule in order to leave some room for flexibility and innovation.
“Marketing spend should be 70 per cent allocated for real plans, with at least 30 per cent to manage flexibly,” founder of marketing consulting firm Morgan, David Morgan, tells CMO. “Things will change, but keep this money in allocated buckets, so it can’t easily be identified and returned to finance if the numbers are falling short.”
CEO of marketing performance solutions company Full Circle Insights, Bonnie Crater, says the 30 per cent should leave some room for innovation, experimentation, things that come up and unanticipated opportunities.
“You need to make sure you have the flexibility to innovate and ensure you do, because if you don’t, then things will get worse,” she says.
At flash storage solutions company Nimble Storage, marketing manager for Asia-Pacific and Japan, Amy Webb, leaves about 20 per cent room in her marketing budget for tweaks and changes, while measuring effectiveness throughout the year.
“I work to a quarterly planning cycle, but work with my team on ‘skeleton plans’ at the beginning of the year,” she says. “This may require negotiation with the finance team, so it’s important to understand their requirements first. Add buffers, and ask for more dollars - as long as you can back up the request with metrics. You may find your business can help you.”
2. Avoid regressive analysis
In his 30 years’ experience as a global marketing lead for the likes of Procter & Gamble, Citibank, Samsung, and Nestle, Morgan says he’s seen finance divisions having greater responsibilities and control. As a result, he believes there are far fewer annual budget overspends and much less dramatic overspends now than in previous times. However, he stresses it’s still critical not to depend on regressive analysis or econometric modelling.
“The marketing world this year is very different to last year’s marketing world so, ‘analysing the past to manage the future’ is inhibiting and distracting,” he explains. “Use strategic platform management tools like Morgan’s TRES solution, to identify spend by principle and objective, as well as how to optimise - particularly media spend.”
3. Track impact on revenue not just leads
According to Crater, a lot of marketers measure success by how many leads they generate, but claims if you prioritised your budget in terms of the leads you generate and their actual impact on revenue, you’ll get a completely different prioritisation.
“A lot of times we have a lot of campaigns that prove very popular and we get a lot of responses, but few of those responses actually turn out to be business,” she says. “It’s the dirty little secret about marketing that if you have a program that generates lots of leads, it doesn’t mean it generates a lot of business. So measuring leads is not enough – in fact it will give you the wrong information as to how your marketing is actually working.”
A big challenge is balancing every dollar spent on brand awareness, with dollars spent on short and long term lead generating tasks that can be tracked, Webb adds.
“Today, most CMOs have the tools to effectively measure the results of marketing initiatives and set goals based on these metrics,” she says. “This proves difficult in managing the spend on brand-related initiatives that may be harder to track but crucial for lead conversion.”
Crater recommends marketers use specific metrics to measure which leads actually lead to a deal and then also measure conversion rates, analysing the percentage that converts from stage to stage.
“It’s important to keep track of your marketing mix and see how that’s actually working throughout the year,” she says. “One of the key things we would emphasis is just because it’s a popular message, doesn’t mean it’s going to drive a lot of business. You need to constantly measure how things are working as you go along, not just after every program, but you need to understand how your leads actually progress through the funnel.”
Morgan says it’s essential to find the right metrics to evidence spend versus success, especially given the fact that next-generation marketing requires more than simply sales and brand numbers.
“At our firm we recommend looking at consumer sentiment measurement and PwC has a great tool, together with consumer value measurement, both short and long-term as primary, and relegate the sales and brand metrics to secondary," he says.
4. Invest in a reliable mechanism to track ROI
Leveraging the right technology is another essential when keeping track of your marketing spend efficiently, and global marketing director of digital software company Squiz, Robin Marchant, stresses marketers need to have a reliable mechanism to see ROI.
“Track what activities you’re doing and what activities that generates for the business,” he advises. “But also be patient because it’s very hard to track an ROI with a longer sales cycle.”
Sitecore CMO, Scott Anderson, agrees, adding marketers need to build a rigorous planning and tracking approach and then adhere to it, regardless of whether they’re working in a small, medium or large business.
“In big enterprises, there are robust systems, procurement departments and accounting teams to monitor spending patterns,” he says. “But in smaller companies, where such systems are not present, the marketing department may have to track its own spend via tools like Excel spreadsheets. Regardless, as a marketer you need to own the process of spend tracking. You need to defines the tracking tools, templates, frequency of check-ins, and so on. But each manager is responsible for coming in on budget.”
A/NZ marketing manager of software company Hyland, Dianne Gruneklee, suggests marketers need to have a good system in place that will track every lead that comes into the organisation - no matter where it is generated from.
“A good system will be able to track Web generated leads, trade show leads, email campaigns, social media, partners and alliances and more,” she says. “Marketers need to know what is working and what is not working in their marketing mix so they can fine-tune and adjust their spend – not just annually, but on a monthly or quarterly basis if needed/appropriate.”
5. Frequently review and adapt
In the age of the agile marketer, experts agree it’s critical to continually review, track, measure and tweak the marketing spend throughout the year.
Printing company OKI Data Australia’s A/NZ marketing manager, Antonio Leone, says more marketers need to be vigilant about frequent reviewing and tracking their budget regularly so they aren’t in the red come year end.
“You need to measure ROI as much and where possible,” he says. “A lack of ROI, and the means to measure it, is the biggest flaw possible. After all, regardless of how you allocate your budget in terms of ATL or BTL, digital, online, print, broadcast, PR, social media, events - in the end if the ROI is there and the marketing objectives are being achieved, then it's money well spent.”
Anderson adds it’s important to collaborate internally, and he encourages regular team meetings to analyse the marketing spend and adjust it where necessary.
“Knowing that fluctuations occur throughout the year, my team holds monthly meetings with an open discussion to determine who may need less money in the current quarter and who may need more,” he says. “In those meetings, we prioritise and reprioritise activities and spend levels to get the most out of our budget given the dynamics of the market.”
Top tips for tracking
Key tracking takeaways from Landesk's director of international marketing, Susan McGuire:
- Understand which activities really drive pipeline for the business and track and analyse every activity budget is spent on.
- Look at conversion rates of leads to opportunities to pipeline to closed business and calculate the ROI.
- Budget tracking spreadsheets are boring and admin intensive, but are a basic necessity. Plot all key activities into the spreadsheet at the beginning of the year to understand remaining monies available.
- Keep a buffer for surprise costs that might arise.
- Cancel out any activities that are a nice to have and are not proven business drivers.
Read more of our marketing budget series: