How To Plan Your B2B Marketing Budget Like A CMO Pro
How do you plan when your marketing (and beyond) world spins at an unprecedented pace? Pandemic aside, this is not the first time B2B marketers will face drastic changes to their best intended budget plans. Here are some practical tips to keep you on the right marketing budgeting (and planning) track.
Planning a B2B marketing budget is one of the big challenges for CMOs, but the size of marketing budgets as a percentage of company revenue has remained more or less stable at 11% since 2012.
In fact, when you compare total marketing spend with the amount allocated to other key business needs, marketing fares better than any other department. Yet B2B marketers have been complaining about “not having enough budget” since the dawn of time.
What lies behind this apparent discontent?
It seems that often the real challenge isn’t the size of the budget, but constant changes after allocation.
It’s beyond frustrating to reach Q3 and find out that a significant slice of your remaining budget has been whipped away, leaving you struggling to adapt the strategy you’ve been planning for months.
In 2020, however, the only thing that’s certain is uncertainty. A Gartner report found that more than 44% of CMOs faced midyear budget cuts because of COVID-19, and almost 11% experienced cuts of over 15%.
I’ve been thinking about this a lot, and have distilled the art of B2B marketing budgeting down to these “golden rules” which can save you frustration and angst.
1) Expect the unexpected
It’s far more likely that you’ll face a surprise budget cut than that it remaining untouched through the end of the year, and in the pandemic economy of 2020-2021, it’s practically guaranteed. So start planning for it.
When you lay out your strategy for 2021, assume that up to 30% of your budget will be cut. That way you’ll be prepared if it occurs, and enjoy a pleasant surprise if it doesn’t.
2) Distinguish Marketing “must do” from “nice to do”
Setting aside the utopian dreams of the wonders we’d achieve if we had an unlimited budget, we also need to get very real about what we can achieve with the budget that has been approved.
So bearing rule #1 in mind, and with a careful eye to your overall marketing goals, split your KPIs and your budget into two: the “must do” list and the “nice to do” list. If you can’t hit all your “must do” KPIs on 70% of your prospective budget, you need to think again.
Must do: successful product launch in key countries and verticals in Q1;
Nice to do: expanding product launch to Tier-2 or Tier-3 countries and verticals.
3) Prioritize testing and plan for miscellaneous
It’s really easy to overlook testing and miscellaneous costs.
Testing includes A/B testing for your marketing content, new audiences, new verticals, new user interfaces, even email subject lines. You name it, it can be tested AND testing should be part of your B2B marketing DNA.
The old saying: If you carry on doing what you’ve always been doing, you’ll always get what you’ve been getting”, is simply misleading. The tech ecosystem and the B2B marketing that supports it evolves at a pace that does not bode well on companies that are not trying out the new, continuously.
To harness this approach, decide on at least 3 major activities that you want to thoroughly test in 2021 and add them to your “Must do”. Set aside at least 20% of your “Must do” budget for these activities. You can get an idea of how it’s done in this template marketing calendar.
Last but not least for this section, plan for miscellaneous costs, such as customer gifts and the occasional print, redesign and additional web pages you did not plan for.
4) Get down and dirty with the detail
The more specific you are about budget allocation, the greater your chances of meeting your marketing goals and staying within budget. That’s why I recommend adding more categories and sub-categories that go beyond “content marketing” or “PPC” or “social spend.”
Break your social media spending down to a channel by channel level. If you’re expecting a product launch in the next year, allocate a specific budget to that event. Yes, we’re talking about that level of detail.
5) Limit the number of KPIs
Although you should take a very detailed approach to your B2B marketing categories, your KPIs should be on a much higher level. It’s tempting to assign KPIs for each and every marketing activity, but it’s a mistake.
If your KPIs become too detailed, you’re liable to get side-tracked into trying to meet every KPI and lose sight of the bigger marketing picture. You’re also likely to end up with a lot of short-term KPIs that don’t further your broader business goals.
For example, if you are driven to reach a 20% increase in opportunities in Q1, there is little point in paying attention to the number of leads you are generating. You may well be generating fewer leads than the previous quarter but reaching the goal of 20% increase in opportunities. Agree with your management which goals are those that matter, and which are vanity metrics.
6) Include planned and actual costs
As you can see on my template marketing budget calendar, I’ve created a column for “planned cost” and another for “actual cost.”
When you track actual costs as well as planned costs, you’ll make life easier for yourself in the long run. You’ll be able to look back and check which activities stayed within budget, and which overran. It also makes it a lot easier to swiftly move budget from one activity that you have underspent on and over to another.
Because you’ve also broken your marketing activities down to such a fine level of detail, you’ll be better able to see exactly where you misjudged the costs, and plan your budgets with higher accuracy next time.
Keep it flexible
When your marketing budget is detailed, but allows for the possibility of change, you’ll stop getting taken by surprise by budget cuts. If and when they occur, you’ll know exactly what to remove without harming your core marketing goals.
If you need any help planning our B2B marketing budget, please reach out.
Get in contact with us | Book a consultation
PS: If you found this helpful, I'd really appreciate if you can click here to share it on Twitter - besides helping my ego, it's just fun to get notifications 😉