How To Protect Your B2B Marketing Budget

In a recent discussion on the Chief Marketing Officer (CMO) LinkedIn network, Art Hyde asked this question: How do you keep your marketing budget from being cut by the CFO while every other line-item is untouched?

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There is a lot of interest about this issue in the B2B marketing community, for good reason.  No one likes to see their budget cut, especially if they (fairly or not) perceive this as a sign of waning influence.  Budgets are cut for all sorts of reasons, some rational and some not. But it helps to have a strategy to reduce the impact that cut-marketing-first thinking will have on you. Here are some ideas:

  1. Tie your budget directly to revenue. You want your marketing department and the marketing budget to be viewed by the CFO as an investment, not an expense. These are two vastly different perspectives—the “marketing as investment” mentality will ensure that you get your share of the budget dollars, while the “marketing as expense” mindset will lead to your budget being cut at every opportunity.
  2. Use data to support your financial requests. It’s not enough to talk about how you contribute to revenue; you must also have the data to back up your statements. My two-part series on B2B marketing metrics will show you the specifics of the data you need to track to prove your value to both the sales department and the executive suite.
  3. Align your efforts with the sales department. Many times, the marketing budget gets cut not because marketing isn’t doing its job, but rather because of a lack of support from the sales department. Fairly or not, there is often a gap between what the marketing department thinks it is delivering and what the customer (sales) believes it is receiving. If the sales team blames marketing for their own failure to perform, the CFO and/or CEO can take a negative view of the marketing department and sharpen their budget-cutting axe. The solution to this problem is a carefully crafted service level agreement (SLA) that outlines the process, roles and deliverables of each department.
  4. Make your requests early. Budgets are often like a “land grab,” with the best results going to those who get there fastest. Stake your claim early, back it up with data, and you will have a better chance of a favorable outcome.
  5. Don’t take it personally. Your budget may be cut for reasons that are unrelated to your performance. In fact, it may be cut precisely because you are so competent. For example, if you can generate more leads at less cost, why wouldn’t the company take advantage of your efficiency? As the saying goes, “No good deed goes unpunished”.

Before joining the services side of the B2B marketing profession, I served as a director or VP of marketing at several large software companies. Along the way, I met some highly effective marketers who spent their company’s money wisely and got great results relative to the dollars spent. I also worked with a few who couldn’t market their way out of a brown paper bag, yet were very adept at playing the corporate game and commanding large budgets. These people spent more time fighting internal battles than communicating with prospects.

If you have such a budget waster on your team, it’s best to part company with them quickly. While such individuals are eventually replaced, they can do major damage in the meantime.

 

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4 comments

  • Tia Thompson February 13, 2014   Reply →

    Excellent point about marketing as an investment, it is! When we portray ourselves as an expense and fail to show our added revenue, we get cut. Great advice on how to prove your marketing worth. Thanks.

  • Phil Smith February 14, 2014   Reply →

    Nice Post. In my opinion most marketing departments suffer because they do not address points 3 and 4. When there is a success it is often the first to claim it (usually sales) that wins. Truth is sales are often very good at developing a prospect and taking them through to close (their job) but, in my experience, poor at generating leads in the first place and awful at targeting the best prospects (those that deliver long term value not just the quick one off sale). Marketing needs to prove their value in lead generation and strategy using appropriate data.
    Building on this point it is essential for a cast iron agreement between sales and marketing on who is responsible for what. This, in my experience, is more difficult as it sounds as there is always an element of empire building by both sales and marketing and it can often need the CEO to intervene.

    • Christopher Ryan February 18, 2014   Reply →

      Phil, thanks for the comment. I agree with your points completely. Sales often wins because in most environments, they are the ones who bring in the all important revenue. As you suggest, this is why the service level agreement (SLA) is crucial to measure marketing’s impact on revenue. The SLA is also a critical document to share in those (hopefully rare) instances where the intervention of the CEO is required.

      Chris

  • Mike Foster February 19, 2014   Reply →

    This is a good list for business units in general, not just marketing. But I especially like to see budget and activity to business revenue. It’s not about building a bigger organization, but rather generating results for the business.

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