According to Gartner analyst Laura McLellan, the top three challenges marketers face are growing profitable revenue, connecting more effectively with customers, and standing out amidst serious competition. What amount should CEOs be doling out to overcome these hurdles?
The CMO Council advises spending 1 to 10% of sales revenue on marketing per year. The budget can then be broken down by the 70/20/10 rule. This dictates that you allocate 70% of the budget to tried and true channels, 20% to safe bets, and 10% to experimental opportunities that may provide a big payoff.
While these numbers have proven to be effective, they don’t take into account the fact that marketing has evolved. Now more than ever, marketers are being held accountable to report detailed metrics at every stage of the funnel and how much revenue can be attributed directly to their efforts. Forrester predicts that in 2015, CMOs will be responsible for turning the enterprise toward the customer, evolving their role into the engine that fuels customer-centric company growth. CMOs will also take on a more significant role in the C-suite and partner with CIOs to solve data challenges. This will require them to pick and choose from a plethora of technologies becoming readily available to marketers. How do executives make sound investments that increase ROI?
Data eases the burden by providing marketers the opportunity to analyze the effectiveness of every single campaign. Rather than scouring through this data at the end of the fiscal year, CMOs should instead leverage these insights on a daily basis to inform spending decisions in the future.
“Marketer’s who incorporate return-on-investment data into their daily decision making can better allocate their marketing dollars.” – Mckinsey & Company
Make campaign data and analytics a part of the conversation on a weekly basis. Have employees measure accurate data and present their findings. This not only encourages your marketing team to invest in technologies that show their worth in dollars, but also builds a data-driven marketing culture, in which employees set numerical goals.
Spend some time conducting an internal audit of the current marketing technologies you already have in house. How are they contributing to ROI and are they quantifiable? Understand what’s missing and what can be eliminated. Real-time updates provide CMOs with a wealth of knowledge and allow them to redirect funds to successful channels.
Here’s how our VP of Marketing, Peter Tait approaches this topic:
“The point of having a marketing budget is to help the company reach its business goals, and it can be very useful to work backwards from next year’s revenue targets to develop marketing goals for pipeline metrics. If sales is going to make its number in Q4, what lead volume do you need in Q1 and Q2? This exercise is especially valuable in high-growth companies, where marketing investment needs to occur ahead of a steep revenue curve.”
A robust marketing budget is one that requires maintenance, with frequent adjustments. By adding data to the decision making process, CMOs can avoid becoming risk managers and focus more of their time leading capable marketing teams.
