After six years of marketing consulting, I am still surprised by the number of sophisticated, established companies that operate without a marketing plan or formal budget.

Whether your organization requires it or not, the budget process is a smart investment.

Good budgets achieve the three Cs

Developing a budget is about more than just numbers; it’s an exercise in consensus, credibility and confidence.

  • Consensus comes as the organization agrees to marketing goals and priorities.
  • Credibility builds as marketing outlines measurable activities and past results.
  • Confidence occurs as stakeholders see a clear link between their priorities and how marketing will support them.

A sound budget:

  • Aligns marketing efforts with organizational goals.
  • Empowers marketing staff with clear priorities and spending parameters.
  • Streamlines the execution of marketing campaigns.
  • Enables strategic relationships and volume discounts with key suppliers.

Beware of fast-track methods

There are several approaches to budgeting, and the strongest starts from scratch. Beware of fast-track methods that simply increase or decrease last year’s total by a percentage, or base marketing expenses on a percentage of revenue. Macro changes like these rarely account for fluctuations in sales, one-time expenses such as product launches or acquisitions, or efficiencies gained by automation and testing. These approaches also undermine connectivity—the critical process of showing how the proposed budget number correlates to a desired outcome.

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