Take five minutes to learn how effective budget management can result in 10% more budget.
First of all, rest assured: You are not the only one. Every now and then all marketers have to deal with some sort of budget shortages. And even if you do not have a budget deficit, you have probably given it some thought. What if I had more resources, what would I do?
Outstanding marketers often have a number of similar personality traits. They have a high willingness to take risks. They are creative in finding solutions off the beaten track. They are flexible and can quickly adapt to changing circumstances. Just think of a good marketer, be it Steve Jobs, Heineken’s Cindy Tervoort or your own local brand-hero. At first glance, risk taking and sound budget control seem to contradict each other. On closer examination though, it turns out that they don’t.
Successful marketing leaders have another quality that distinguishes the aces from the mediocre ones. It is the extent to which they have focus and leadership, and are in control. A good marketer is in control of planning and budgets, can show the return on investment and surprises the CEO with ever better results. His lesser counterpart on the other hand hopes for a creative miracle from the agency, leaves the budget management to the finance department and therefore runs the chance that the results are charted by an unseen hand.
A strong marketer makes plans with objectives, measurable results, clear milestones, timings and a thorough assessment of the costs. In my practice I have seen several companies that didn’t link their plans with the day-to-day budget management. In these companies, the marketing team went to work and invoices came in at the finance department. Once a month, once a quarter of a year or even only once a year (Yes! Finance was also busy.) the controller or an administrator created an overview of the marketing expenses. If you manage the budget like this, I guarantee that you have created all the conditions for a considerable budget overrun.
– You have no insight into what is spent on a project level.
– It is unclear what your efforts will lead to.
– Your team members have no idea about their influence on the budget.
– Any insight to intervene is missing.
Markets change, plans change continuously
In many organizations, (marketing) budget overruns are a valid reason to say goodbye to the responsible CMO, marketing director or communications manager. This applies in particular to companies where the marketing costs have a direct impact on the profit of the company. In organizations where marketing and communication spending is a rather limited fraction of the turnover, it may be that there is a more lighthearted view on budget overruns.
Another form of ineffective budget management is correcting overruns on one project by taking away budget from other projects or cancelling them altogether. The result is that the marketing activities as a whole are less effective than initially planned, because with better budget management, more activities could have taken place.
If a CMO does not have complete control over spending, an even more striking disadvantage is bound to pop up. Everyday reality that markets are changing rapidly and plans need to change constantly too. If your budgeting method is rigid, chances are that you end up executing marketing activities for the sake of meeting the budget. The world is ‘agile’ and the times of rigid annual budgets belong to the past virtually everywhere. What you need is a budgeting system that is flexible under all circumstances.
Plan and budget aligned at all times
If you want to control and manage plans and budget as an exceptional marketing leader, make sure that these are continuously in line with each other. If your plans change under the influence of market conditions, you need to change the budget accordingly. Strategy, Plan, Activities and Budget need to go hand in hand. The marketing leader, who integrates plan and budget management, will notice that underspending often occurs in projects. Your team of good project managers and coordinators is capable of realizing efficiencies and accruing purchasing advantages. Or they simply do more with less. In my practice at a multinational with tens of millions of marketing budget, on average 10% per project was saved through efficiency and also because the expenditures were sometimes not billed by the suppliers. (Yes, you read that right). The case has been described by the founders of Boardview.io in the book The noble art of getting things done in marketing. Efficiently.
By reallocating the savings directly to other projects, marketing activities at this company became more effective.
Now imagine your projects and budget: how about if you could reallocate 5-15% per project to other projects or just report them as savings?
Expensive digital marketing tools
Are expensive digital marketing suites necessary for your plan, project management and budget management to be aligned continuously and realize savings? Nothing is less true!
If you do not yet have a budget management tool as a marketing department, it is even better to first start with some of the tools already at hand in your company. Effective budget management can be done with a relatively inexpensive tool such as Allocadia, but also in Excel or Google spreadsheets. If you have a budget in place, but just want to realize the aligned between plans, projects and results, we can help you with direct result-enhancing improvements in a few short sprints.
Do you want to know if you can also save 10% marketing budget this year? They do not hesitate, there is always a chance to improve marketing performance. Plan a 15-minute telephone introductory appointment for free with me in Calendy.