During the annual planning season, business leaders often want to know how much to allocate to their marketing budget. But there’s no easy answer.
At the same time, marketers are challenged to guarantee ROI for each dollar spent resulting in unrealistic expectations about the time and budget needed to develop a consistent ROI-yielding marketing engine.
These scenarios result in a recurring cycle of trial and error: invest → get frustrated by the unclear ROI → pull the plug (and abandon any progress) → pick a new tactic → start again.
This webinar features a panel of experienced sales and marketing leaders, who share insights to help growing companies set a plan and budget that shifts from short-term activities and costly cycles of experimentation to long-term value creation.
Key Takeaways
- Consider the opportunity cost of having the wrong people in the wrong seats in your organization and how that affects your marketing budget.
- Taking advantage of marketing during uncertain economic conditions may prove to be valuable for your organization.
- Don’t let a lack of information stop you from marketing. If you want that clarity, you can build it through marketing activities.
- You cannot predict results without strong data.
- Engage freelance and agency partners early and often in the budgeting process to ensure a cohesive and flexible strategy.
Links & Resources Mentioned
- What is the Authentic Growth™ Marketing Maturity Matrix?
- Traction: Get a Grip On Your Business
- The Components of Authentic Growth™ Methodology
- OrangeBall Creative
Webinar Transcription
Introduction and Webinar Overview
Jennifer Zick: All right, and we’re back for another edition of the Authentic Growth™ webinar. Welcome to the early arrivals. We’ve just opened up the Zoom curtains, so we’re going to give everybody a chance to get here and land. We’re so grateful that you’re spending some of your day with us today, and we’ll be kicking off the content really soon. Just given a few minutes to let the crowds flood through. So if you’re just arriving, make sure you’ve got a notebook. Make sure you’re ready to share your questions with us. As we go through today’s panel, I want to point out that there are two features in today’s webinar where you can interact, but I want to especially point your attention to the Q and a feature.
If you’ve got a question for our panel at large or a specific panelist today, please drop that question into the Q and A because we will reserve some time at the end of the conversation to pull some questions from the audience. So we would love for you to be participating in this if you want to chat along the way, just to give commentary, a hand clap, a critique, hey, welcome it. Be part of the conversation, but for sure use that Q and a feature. So. All right, I think we’ve got critical mass. We’re gonna officially get started. Welcome again. You are here today at the Authentic growth webinar for the topic of marketing budgeting. We’ve got a really robust conversation ready to go today, if we’ve not met before, I’m Jennifer Zick. I’m the founder and CEO of Authentic®.
Authentic is a team of fractional chief marketing officers working all across the United States and sometimes beyond to help great businesses overcome random acts of marketing and budgeting and confidently take the next right step toward healthy growth. We’re just delighted to have you with us today. A little bit about Authentic, if you’re not familiar. Just so you understand the perspective that we come to the table with. We work primarily with entrepreneurial businesses who are growing beyond 5 million in revenue, upward to 100 million. That’s usually our sweet spot. And the work that we do as fractional cmos, we work with businesses of all business models, B2B, B2C, distributor, channel, and across a wide variety of industries.
So we’ve put together a panel today of very diverse perspectives, knowing that you in the audience are coming from a lot of diverse situations in the audience today, we know we have entrepreneurs and CEOs and executives. We have revenue leaders in sales and marketing roles. We have independent consultants and agency partners. So whatever you bring into the conversation today, we hope that we’re going to give you something of value that you can take back and make actionable as you’re looking ahead to 2024. So we don’t want to delay getting started with that. We’re going to jump right in. And again, if you’re just joining us, I want to encourage you to take advantage of the Q and a feature that you’ll see on the screen so that you can drop a question to any of us as we go along.
And we’ll spend some time at the end addressing some audience questions. So without any further ado, it is my pleasure to introduce to you my esteemed friends and panelists. Today we have two of our consulting fractional cmos with us, as well as one of our most valued and trusted ally Network agency partners. And John, I’m going to start with you, our ally network partner, and ask you to introduce yourself. Tell us a little bit about the work that you do.
John Gamades: Hey guys, my name is John Gamades. I’m one of the partners at Orange Ball Creative. We’re a brand and marketing agency here in the Twin Cities. We do work across industries and so today I’m going to be able to bring perspective from an agency to this conversation. I’m really excited about that. Orange Ball is a firm that does a lot of work in website development, content development, brand and identity. And really our focus is on messaging. We do a lot of work and a lot of focus in the messaging area to get that right for our clients. That’s kind of our sweet spot. And then we bring it to all those other tactical areas that we provide for.
Jennifer Zick: Thank you, John. My one little fun comment about messaging is a quote I use often from a past colleague who said, if you don’t have your messaging foundation right and you just start doing the marketing stuff, you’re really at risk of just making your brand suck faster to more people. So thank you for helping make sure that our clients are not making their brand suck faster to more people. We appreciate you. Mary Beth. Hi, thanks for being here.
Mary Beth Mohn: Hi everybody. My name is Mary Beth Mohn and I am fairly new to Authentic, but I’ve got 20 plus years of marketing management experience, which means budgeting experience, and I primarily worked in b two b with the last 15 years or so being SAS and services. But some of the industries I’ve worked include insurance, management consulting, training and certification, and healthcare technology. I’ve also got a little bit of b two b, e commerce or rather b two c e commerce experience and have done a lot with channel and partnerships and have also done some marketing consulting from time to time during my career.
Jennifer Zick: Awesome. Well we’re grateful to have all that experience at the table. Mary Beth and Veronica.
Veronica Williams: Hello Jennifer. Thanks for having me here today. And I don’t really like to think about how long I’ve been a marketing professional at this point. But I’ve been doing it for quite some time and I think what’s unique about my experience is I have worked client side, agency side and I’ve also owned a business. So I’ve been involved in the marketing budgeting process from all sides of that decision making process. So it’s interesting to have that perspective on the process. I have worked across so many industries from ski resorts to law firms. I’ve done B2C, D2C, manufacturing. So I’ve covered quite a bit of ground there.
And the only other thing I have to say is I’m in a website development project with John and he’s helped with the brand messaging that inspired that and I just. I have to give him a little plug. It’s been great working with him.
Jennifer Zick: Thanks Veronica. And of course I’m going to host and moderate today’s conversation. But as a former marketing leader and now a founder and CEO, I am dangerously equipped to contribute to some of the discussion. So thank you for humoring me when I chime in. Excited to dive right in. And today’s conversation on budgeting I think is unique in the context of the environment and the economy that we find ourselves in. And the reason I wanted to take this topic on is not only because it’s timely, I mean most every business is in a cycle of planning for the coming year depending on when their fiscal starts and ends. So it’s very timely, but it’s also uniquely challenging. I have spent this year as a CEO talking to a lot of other CEOs across our clients who represent almost every single industry.
And in my Vistage community that represents a really wide swath and universally what we’ve seen this year is that it’s been a weird year. This year’s been a weird year where a lot of companies have seen slowdowns or stall outs or slower sales cycles or even revenue losses and everybody’s looking at next year asking what’s going to happen. We’re sitting in a space where we’re coming out of a relatively wonky year. There are wars happening globally, a presidential election coming up in the US. Nobody really feels like they’ve got a good grasp on the crystal ball of projections for next year. So if you’re listening today and you feel yourself trying to balance, like, how do we plan forward?
And with optimism and growth on our minds, but also the reality that things could change and are changing dynamically, we want to just give you some insights today and some ways to stay flexible in the changes that are happening around us. So let’s kick this off. And Mary Beth, I’m going to start with you with our first question of the day. I’ve just discussed that it is a challenging time economically right now, but marketing is never easy, right. In any cycle, in any economic environment, marketing is hard. And we also know, unfortunately, that marketing can often be the first budget that gets hit if executives and the finance team start to get feeling cautious as the year rolls through. But we also know that companies have to stay invested in marketing to grow.
Importance of Marketing Budgets
Jennifer Zick: How, you know, from your perspective, how should teams be approaching budgeting for the coming year and in this current cycle?
Mary Beth Mohn: You know, one of the benefits of having done budgeting for so many years is I’ve gone through a number of economic cycles, and over the years, through a lot of trial and error, have developed ways to budget in a way that is detailed, yet flexible. Because you’re right, in a lot of companies, the budget is the budget, and there’s not a lot of discretionary money. So everyone looks at the marketing budget as the discretionary budget, and that’s where things can get cut. So the way that I counteract that is just through a process where it’s very clear, looking at the budget, what the numbers are tied to in terms of activities and expectations. So one of the first questions that people ask is, how much should I allocate to marketing? And, of course, that’s gonna vary from business to business.
And marketing budgets are typically expressed as a percentage of revenue, but it varies based on industry. And so we’ve done some work at Authentic, as you know, looking into this. And for professional services, it can be between five and 15%. For SaaS and technology companies, it can be between 15 and 30%. So there’s quite a wide range there. But that’s just one guideline to look at. Another thing to consider is the growth stage of your company. Right? So if you’re putting energy into marketing and driving sales, is the rest of the business even going to be able to support those sales? And that’s an important consideration that you have to think about. You have to look at speed to impact, because marketing activities take time, but you can oftentimes accelerate that timeframe by throwing more money at it.
And, you know, I’ve looked at, I’ve managed budgets that have been measured in thousands and tens of thousands of dollars and budgets that have been measured in millions. And it’s very different when you’re playing with different pools of money. But a lot of the principles really are the same. And marketing is one of the few things that you can actually do with zero budget to some degree, because you can do social media, organic types of activities. However, that’s not necessarily something that’s recommended because you also have to look at opportunity costs, you have to look at what your competitors are doing, how much they’re spending, et cetera. So there’s a lot of things that go into it, and there’s no one right formula that every company can use.
But just being aware of these things and thinking about them as you’re planning is helpful.
Jennifer Zick: Well, and I think, and I’m going to come to some of the other panelists, but to insert myself real quickly here, I think what’s interesting is that some business founders and early stage company leaders believe that they can run with zero marketing budget. But what they haven’t analyzed and assessed is that you have a brand, whether you know it or not, and you’re creating that brand, whether you know it or not. And whatever you are doing is taking from the resources of people in your business who aren’t marketers, and their time is valuable. So what are you losing out on by having the wrong people in the wrong seat? Producing what an expert could accelerate. So there’s always an opportunity cost, right? So marketing is happening whether you’re investing in it or not. So the question is, you know, what are you trying to build?
And John, I think you had some perspectives on this from your seat. How would you advise people to learn this year?
John Gamades: I really, this might sound a little bit weird, but I like these times of uncertainty. And from the perspective of the noise starts to drop a little bit. From a marketing and tactics standpoint, we’re often competing with so much noise in the marketplace, everyone’s trying to push their message through. And in these times of uncertainty, when people start to dial back their budgets, there’s new opportunities that pop up. And I think there’s opportunities to rise above some of the noise that we encounter when everything is good. And so that’s the one thing I think we should all be thinking about is there an opportunity here? That we can take advantage of that we didn’t have when things were more certain. So, yeah, I love that.
Jennifer Zick: And Veronica, you’ve seen some cycles in your life, too. When you’re looking at an economy that is unpredictable, what are the things that you’re thinking about when it comes to budgeting?
Veronica Williams: Well, I’m going to agree with John. Right. And so the most notable markets that I’ve been through are, you know, I was working in the ski resort business when September 11 happened. Right. And that if you were in the hospitality business, that was a devastating event. I mean, it was a devastating event, but. Right. It really impacted what your outlook was and what you have to remember in all of this. And then 2008, that recession. Right. 25% of advertising agencies closed nationwide, and our agency was very profitable that year. So John is exactly right. You have to look at what the opportunity is that’s provided.
And it’s fascinating to me because when you look at those cycles and you look at the organizations that were bold and not necessarily extravagant, but we’re bold in their approach to marketing during those time frames, when the economy comes back, they’re in so much better position to maximize everybody else’s fear during that time because they gain a larger share of voice during that time. So I’m with John on this. I think you have to be smart and strategic about how you’re going to spend, but it’s a real opportunity when you’re willing to.
Metrics and Data Points
Jennifer Zick: Absolutely. So, John, back to you with this next question, and then I would love to hear from all of you. What metrics and data points do you think are really important to inform the marketing budget? Like it’s nice to say, oh, things are slowing down, here’s our opportunity. But what rationale goes into shaping a budget?
John Gamades: Or should I think I’m going to point back to some of the things that Mary Beth shared. We really, we want to, there’s a handful of things we want to understand from the agency side. What are your revenue goals? Where are we trying to get from point a to point b? Let’s understand what those numbers look like. Let’s have some conversations about customer lifetime value. If we can get a lead in the door and we can turn that into a sale, what does that look like long term, what’s the value that brings? Understanding market channel marketing channels specifically, where are your customers hanging out and what channels are going to drive the best return and which ones are channels you could be in but you shouldn’t be in. And I think that’s a question that comes up all the time.
Like there’s so many marketing channels and marketing opportunities out there right now, cutting through all the options and focusing on the best options is a big part of this conversation. You’ve got seasonal factors that come into play, and that’s one of the conversations we have quite a bit, is seasonal, are there things we should be aware of? We’ve got one client right now who’s in the AG business. And within the AG business, seasonally, things change all the time. There are high seasons, low seasons. What they’re selling from season to season and what messages we’re delivering changes quite a bit. So those are things we want to be very aware of. And then you’re looking at the growth stage. Where are you at in the growth stage? And one of the things that comes out of this conversation is transparency.
So when a marketing agency asks you, what’s your budget? People get weird about that. Sometimes they don’t necessarily want to share. A good marketing agency is asking you that so they understand the sandbox that they’re able to play in based on your budget, based on what you have available. What can we do with that? How can we help you prioritize that? And that’s a big part of the conversation. And sometimes we’ll push back on it and say, okay, if you spent a little bit more, you could get a little bit more. Like we could make some greater gains by moving the needle here or there. But that transparency that you have with your agency I think is really important.
Jennifer Zick: So yeah, thank you. And I love the comments that you have about really understanding customer lifetime value. What do the gains look like if we make these investments and they bring us the new business or the retained business that we need as a healthy business? And I like to use Authentic as a case study in almost every one of these webinars, you know, we invested about a 14% of revenue clip for combined sales and marketing in our business. And when I plan out the marketing budget with our marketing leader, we’re asking ourselves, not, you know, where are we at today? What can we afford today? That is not how we plan our budget.
We’re asking ourselves what is our revenue target for next year and how do we plant the seeds starting now, that create the business opportunities that are going to take a year to develop with the seeds planted. So I like to encourage folks to think about the investment you make in marketing. Today is going to be the seeds planted for the crop you’ll harvest 12, 18, 24 months from now. So a lot of what you budget for this next cycle needs to be dependent on where you want to be two years from now, not just during next year. So, Veronica, what are your thoughts on important metrics to think about budgeting?
Veronica Williams: You know, one of the things that’s always really hard about any marketing conversation is there’s no single answer, right? So you have to be thinking about all the things that John just said, right? Like, where are you? Where are you in your life cycle? Where is your brand? How mature is it? How much investment do you need to make in that? Are you at a maintenance point, or are you trying to grow brand awareness? All of those things come into play. What are your competitors doing? And we had a conversation in one of our mind shares recently about conversion rate optimization. And one of the things that I think about marketing that way all the time, and I always try to talk about the conversion rate being specific to whatever it is that you’re trying to do, right.
So it’s not always return on investment, but I have a tendency to always bring it back to return on investment because I’ve been a business owner that ultimately it is about dollars in and dollars out. So even if you’re looking at your conversion rate optimization and it’s not a direct revenue driver, there usually is a way you can connect it back to return on investment. And I really have always thought of it that way, especially because I do think of marketing as a revenue center. So it always comes back to that for me.
Jennifer Zick: And what about you, Mary Beth? What have been some of the data points that help you understand what the budget will need in the next cycle?
Mary Beth Mohn: Well, the thing that I think is difficult for a lot of companies is if they’re just getting started with marketing, they often don’t know those things, like lifetime value. And so to be able to come up with the return on investment is hard. Cause I’ve had conversations with a lot of people who have said, well, if you can guarantee me that if I give you this amount that I’m gonna get whatever return, then you can have as much as you want. And it’s like, I can’t guarantee you that until we start doing some marketing. Cause you really have to start doing the activities and learning from it. Cause you can look at industry averages, but every business is unique. It’s just gonna be unique in terms of where it’s playing in the larger industry.
And so the thing is, don’t let that lack of information stop you from doing things and sit around and wait to get that clarity, you build that clarity by doing activities. And certainly you want to make intelligent decisions about different kinds of campaigns and things based on, you know, your broad background. But you have to start somewhere. So you have to start by coming up with what you think is a realistic return and then just, you know, learning from it and iterating. And I also look at setting up the budget in such a way where it corresponds to the way that the numbers are reported throughout the organization. So it’s easier, you know, if the overall organization reports numbers based on business unit versus product line, you know, whatever that is, that I’m doing the marketing budget accordingly.
So it’s really easy to kind of map how those numbers play through.
Jennifer Zick: You brought up such a couple really important concepts there that we don’t have time. They could be their own webinars. But I want to point the audience back to the Authentic website, which is Authenticbrand.com. We have just recently completed a whole series of content that’s part of our marketing maturity matrix. And one of the components of the matrix, there are ten different attributes, but one of them is data and metrics. And the really important thing for growing businesses and their leaders to understand is that you cannot predict results without strong data. Insights that give you metrics that will help you predict, formulate what those results look like. And so every business must move through the evolution from putting processes and systems in place to capture baseline data. And then that data becomes knowledge once there’s enough of it.
And that knowledge and information can become insights. And from insights, you can get to predictive analytics. But you can’t get any data until you’ve done things that give you information back. Right? So if it’s a cart and horse, the horse that needs to go first is activity. You have to start doing the things with the best strategy that you possibly can without knowing exactly what you’re going to get as a result. Yeah, that’s so good. Okay, well, like I said, that’s maybe a whole nother webinar for another day, but moving along. Veronica, I want to come back to you, because it’s one thing to have some of the data and the insights that help to set what the budget parameters could be and what level of investment we should make. But you do have to get people on board.
Getting Buy-In for Marketing Budgets
Jennifer Zick: You have to get your CEO and your CFO and your head of sales to align around what you’re doing with the budget and get people on board. So how do you build that case for marketing investment?
Veronica Williams: So my short answer is the way you think is going to work. Right. And that, I don’t mean to sound flippant, but the simple fact of the matter is it’s a, it is a lot like marketing in that there’s a strategic approach, and it starts with understanding who your target audience is. So again, I have been in the role where I’ve been the decision maker on the budget, and what the person who’s trying to convince me to spend has to go through is very different from what it would be to convince somebody else. And I have presented to a lot of different personality types, and you have to understand, are they a risk taker? Are they very conservative? What’s important to them?
And I don’t mean what are the goals for the business, but I mean, what’s important to that decision maker and understanding that, because I’ve been in a situation where I used to do a lot of direct response, and we looked at lifetime value and customer acquisition, and we had a great ratio. I mean, it was a great ratio, but he didn’t care about that ratio. The only thing he really cared about was the acquisition cost. So all that other information didn’t help make the case. So again, the short answer is you have to understand who your target audience is and develop the strategy around that. But that said, there are some things that are pretty constant, right? So the number one is data.
And, I was lucky enough early on in my career to work with someone who explained that to me, because, again, I was in ski resort marketing for a long time, and I was running a reservations department. And whenever the weather turns bad, the first thing every ski resort wants to do is cut costs. And so that would start with the reservation department. You know, you have to lay off people, and when you lay people off, it’s hard to get them back when the weather is good. So, you know, I would always say no. And they’re like, well, if you want to keep them, prove what you’re going to do with them and how it’s going to feed the bottom line. And so I found some industry standards about what training and upselling could do to the reservation bottom line.
And I made an argument based on data, and there was no data, Mary Beth. This was, you know, nobody had tracked what our outcomes really were. And so to just even put that together and have the baseline made a really big impact on the decision makers that all of a sudden they had baseline information to work from. So, you know, I always suggest starting with the data and the way you know what data to look for, again, is understand who your target audience is, understand what your goals are. Nowadays, even if you don’t have historic data, which is the best, there’s plenty of places to get it. Using AI is a really easy way to look for. If you’re not great with Google Search, that’s a great way to get it.
Using associations is another great place to find industry data about where to start, and then you have to document your activity. We talked about this a little bit with the conversion rate optimization. It’s really important to track what you’re doing. And I know that sounds silly, but as marketers we often are so fast paced that we are just moving from one thing to the next thing, because we’re expected to accomplish so much that you’re not actually writing down what’s gone on. So when you go back and look at your results, you don’t know what drove them because you weren’t paying attention to the activity. So documenting your outcomes and then continually evaluating and evolving. Right. I think that’s the best way to make a strong case, is you are actually reporting back on the metrics.
And when you take credit for failure and success, I think that helps you earn respect from the decision makers so that the next time you’re in that position, you have a better opportunity for making your case.
Jennifer Zick: I love that. I love that idea of proactively bringing forward what’s working, not working, and being accountable for. Then how do we adapt from there? Mary Beth, how have you achieved buy-in and support around the budget and the plan?
Mary Beth Mohn: Well, I think what Veronica said is spot on in terms of, you have to know what’s important to the stakeholder. And I had a role where I had a budget that just had multiple sub budgets for different parts of the organization. And each of them had a stakeholder who was very invested in what was going into their portion of the budget. And one of the things I used to do is if they would bring something to me that they wanted to be done, I would use that as an opportunity to see what they were committed to doing to help that activity become a success.
Because, you know what I think of is when you have a kid and you bring them to the store and they’re begging for the new toy, and they want you to buy it for them, and you say, well, I’m not going to buy it, but if you put in half of your birthday money and then suddenly they don’t want it because it requires some investment from them, and I would use that tactic actually to work with stakeholders as well, because you could find out who was really attached to a particular idea versus somebody who is just like, oh, let’s have marketing do this for us. And so to get some buy in and some accountability from them in terms of, okay, if we do this campaign and it drives leads in this way, how are you going to follow up on those?
To make sure that it’s carrying all the way through the sales process, etcetera. So that’s just one way that I would do it.
Jennifer Zick: That’s such good pointers. Before we move on in the conversation, I just want to remind the audience that we have a Q and a for you to use. And I don’t see any queues posted yet. Please share your questions as we go along. And Veronica, go ahead with what you were going to add.
Veronica Williams: Well, I’m sorry to interrupt, but I really like the point that Mary Beth made. And that is another thing I think is really important, is to be creative. And one of the things that I did when I owned my agency is if there was a tactic that I was arguing for that I felt was going to really move the needle and budget was an issue, I would offer to do a performance compensation model. So right at that point, I was demonstrating my faith, Mary Beth, in what I was proposing, because I had skin in the game at that point. So I would perform that task at my cost, and then I would ask for compensation at different performance models. So, you know, I think you can be creative, and I think that works from both the agency side and from the client side. Right.
Like how you pitch it. If you’ve got skin in the game, it demonstrates that you’re far more vested in the concept, and I think that also helps the decision.
Jennifer Zick: John, is there anything you want to add before we move to the next question?
John Gamades: I would just say, like, conversations about buy in and having skin in the game, a lot of that comes down to breaking down silos. And we see in organizations all over the place, like, there’s a lot of silos in business right now, especially virtual coming out of COVID People aren’t communicating the same. And I think one of the roles we play is to facilitate that cross department communication to where you get buy-in from everybody. And there’s that alignment. I think that’s a role we play, and we can do really well for businesses.
Departmental Collaboration
Jennifer Zick: That’s awesome. I call that connective tissue. And I think marketing is well positioned to be the creator of that. And Mary Beth, this leads us perfectly into the next question that I’m going to start with you. We talked about getting buy-in and you started speaking about how one of your strategies is by department and getting investment. But what are some of the teams or departments that you do want to make sure you’re working with in the budgeting process?
Mary Beth Mohn: Well, there’s a lot of them, and I’m speaking from a B2B background here, but it really is important to think through all the other stakeholders when you’re doing it upfront because if you don’t, what happens is in the middle of the year, someone will come to you and need money for something that you didn’t envision. And oftentimes if it’s an important enough priority, then it has to take money from something else that you wanted to spend it on. So obviously the leadership team CEO, knowing what the company goals are, it’s helpful to know if there’s any acquisitions being planned as that can certainly skew your branding costs for the year. I actually always try to really befriend the CFO because they have a horrible job of rolling up all the budgets and trying to get to a certain number, right.
So they really appreciate it if you’re buttoned up with your numbers, that they know that everything’s tied to a real activity and that you’re not just, you know, playing funny numbers with them. So, you know, getting the CFO to be a partner is important. And then sales, obviously, HR, particularly if there are. If employee recruitment is a big challenge for the organization or if there’s any large company wide events that might be expected to be paid for out of the marketing budget. Product management to know if there’s new product launches that are going to be happening during that year. Customer success in terms of any customer retention activity that you want to do, partner and channel marketing, if you have that aspect to your business, is important, whether you want to plan any cooperative campaigns or events along with key partners.
If a company is broken into business units, you want to talk to the head of the business units that are involved and then understand how events are to be budgeted in your organization. Because in some organizations, anything that’s an event ends up in marketing, even if it’s not really a marketing related activity. So those are just some of the ones off the top of my head. But if you have those conversations upfront, it’s so much more helpful than to have a surprise happen to you later on, for sure.
Jennifer Zick: And I would say in a small business there might not be all of those departments, but there are all of those roles? The roles still exist, and asking for those kinds of inputs are still important, even if it’s a three person leadership team and a small group of people I love. We finally have some questions coming in. Thank you, audience. We’ll incorporate you later. John, anything you would want to add there?
John Gamades: I’m just going to add one other role that I think gets forgotten sometimes, and it’s HR. I think right now we’re hearing from a lot of clients I had that night.
Jennifer Zick: Forgot. It matters.
Mary Beth Mohn: It absolutely matters.
John Gamades: Just from a recruiting and retention perspective, it’s a challenge a lot of businesses are facing right now and including HR and the conversation. How are you going to market to not only your customers, but to new employees and to the employees that you have in place right now? What kind of money are you going to spend on that? Because there is often spending that has to happen to make some of those things work. Whether it’s updating a website to make it more attractive to new talent or events like you were talking about. There’s a lot of different plays that happen in that space, so.
Creating Flexible Budgets
Jennifer Zick: Absolutely. And I would love to go deeper on this, but to stay on time, I’m going to keep moving to the next question, which is coming right back to you, John. How can you engage your agency partners or freelancers that are working with your team to support you in the planning process?
John Gamades: I think my answer to this is super simple. Engage us early. Like, sometimes it’s easy to build a strategy, and then when the strategy is done, reach out to your agency partner and say, okay, now make this happen. And there are a lot of areas where an agency can add value in that planning process, from things we’ve seen work with other clients to understanding how much time, how much energy, how much resource it’s going to take to make something happen. I think that’s a myth. That happens quite often, is the plan gets built and then you pull in the team to build it. And it’s like building a home or a giant office space. If the architects are working with the contractors to envision it together.
I feel like the building goes up a lot faster, there’s a lot more efficiency built in, a lot less waste, and things go just a lot smoother. So that’s my short, simple answer to that question.
Jennifer Zick: And Veronica, you’ve run and owned an agency, so how would you address this? How would you want to incorporate your partners?
Veronica Williams: Well, I’m going to marry what John said, and I think for me there are two things that really come to mind on this. And it’s trust and synergy. And again, this comes from having been on both sides. From my perspective, you have to trust your agency enough to have honest, frank conversations about where you’re at and what you need from them, and how they can play with your staff efficiently. And if you don’t have that relationship with your agency, it’s not the right agency. Right. Like. And I feel that having been on the agency side, if you don’t trust me enough to have that conversation with me, I’m not the right agency for you. And the other thing is, one of the things that I have seen happen when markets get.
When the economy gets a little unpredictable, I’ve seen clients try to implement a strategy of hiring multiple partners, thinking that it gives them more influence over price, right? So if I’m not all in with one agency, I might have more influence over what I can get charged for. And, you know, that’s. It’s not necessarily a bad strategy to use multiple partners if you’re doing that based on need and you’re doing that based on skill set, right? Like, that’s one thing. But if you’re doing it from a cost perspective, what you have to remember is you’re losing a lot of synergy. Because when you have one agency partner, especially if you don’t have a strong internal marketing leader, they actually start to own the cohesiveness of all of your tactics.
And they do things like make sure that your landing pages work well with your website and they are looking at conversion optimization correctly. So I just think those are two things that are really important, is to make sure that you’re looking for synergy and you have a lot of trust in your partner.
Jennifer Zick: Absolutely. Mary Beth, on the client side of things, how have you engaged agencies to help make your budget smarter, stronger, more strategic?
Mary Beth Mohn: Yeah, well, I definitely subscribe to what Veronica said about having to trust who I’m working with, and I will pick a good working relationship over. There’s certain companies where you have to get three bids and then you go with the lowest one. And I thankfully did not have to do that, because when you have a good relationship with an agency, even if the bid is higher, you’re going to save money in the long run, it’s just going to happen. And so the thing that I like to use agency partners for is, especially when you’re framing up a budget for something that’s a new initiative to you that you haven’t done before to get the input on what it’s going to cost, because things I’ve done a lot, I can estimate that pretty closely on my own.
But if you’re doing something new to really get those numbers, then also I get very granular in terms of documenting the scope of the work so that I know exactly what’s covered in it. And then you can have a conversation with your partner if you’re looking to try and contain costs on things that you can strip out or things where you might be able to do something internally, a piece of the puzzle, and work with them on it. And if you have a good relationship with your agency partner, and they know that you’re not in it to waste their time, you can really accomplish a lot doing that, I think.
Jennifer Zick: Absolutely. And I’ll speak for Authentic as a small, youngish business. Right. We’re coming up on our 7th year, and we do have dedicated in house marketing talent, but we also work with several partners who are augmented members of our team. And that deep trust and understanding and clarity of swimlanes is what makes the whole engine work successfully together. So agency partners that I just don’t think any modern business can afford not to have partners along the way who are deep in their expertise. Supporting your team and getting them involved in the strategy and planning is really important. So, Veronica, it’s one thing to set up a budget and get buy-in and get across the finish line with your budget approvals to start the year, but nothing ever goes as planned, ever within the year.
So how do you create a flexible budget that can respond to market shifts?
Veronica Williams: So, this goes to how you set your budget up. But I think there’s a really nice kind of way to set up your budget, and that is a 70 20 10 rule. And I like that method, because, Mary Beth, I think you would agree to this. Like, you have 70% that you know are things that have worked for you in the past, and that might include things that you’ve already committed to. But then you put 20% towards testing new things, testing new tactics with your current target audience, right? So you allocate 20% to trying new things, and again, remember to document and monitor and evolve, and then you have 10%. That’s for something that’s more high risk. Right. Things that you want to try, that you haven’t tried before, maybe looking at new target audiences.
And what’s nice about that is if you set your budget up that way and you have to make a modification, then it’s easy to let go of the high risk opportunities. Right. You know that you’re still gonna do the things that have worked in the past. You might even still have some chance for testing, but it’s the high risk things that you’re gonna let go of. Also in the past, I typically include three to 5% contingency. And that three to 5% contingency can work in two different ways. Right. That can be if you need to make a cut mid year. That’s the easiest place to cut if you haven’t already spent it.
But the other reason it’s really nice to have that contingency is if you’ve tested something that’s working really well and you want to do more of that, it gives you some flexibility to put that money back in. And Jen, you touched on this a little bit with the swim lanes. The other thing that I think really helps is the EOS model of doing 90 day check-ins. Right? What have we done? What’s worked? What’s not working? What do we need to refocus on? What do we need to cut? And I think the more unstable the economy, the more frequently I have a tendency to look at my spending. I’ll dive into my analytics a lot more deeply, on a more frequent basis.
When the economy is unstable and I have to watch every penny, I’m going to want to be a lot more cautious about looking at my Google Ad spend and monitoring it much more closely. The other thing that I think is important, and we talked about this a little bit, is leveraging different staffing models. So, right, are you going to hire it and own it, or are you going to rent it and work with an agency to provide that? And because, you know, I hate to say it, but that does move the risk to somebody else. So, you know, I think looking at internal versus external and another, you know, great opportunity is to go fractional. If you are at the point where you need to bring on senior level marketers controller, start looking at fractional alternatives. There’s even fractional HR people.
So it’s a great opportunity to bring in some high end talent at literally a fraction of the cost. Those are some of the things that come to mind for me, if you’re going to try and really be nimble and be ready to make pivots.
Jennifer Zick: For those listening who heard Veronica refer to EOS, if you’re not familiar, it’s the entrepreneurial operating system based on a book called Traction. It’s very common operating system used by small and growing entrepreneurial businesses. We run on EOS at Authentic and in fact, we’ve developed our own proprietary Authentic growth methodology to be very complimentary for businesses who run on a similar operating system and cadence, because these businesses, as growing smaller businesses, have to be nimble. No matter what the economy, we have to be nimble. The game is changing around us, and we are evolving businesses. So to have a cadence where you’re looking at your overall business strategy every 90 days. You set it during annual planning, but you revisit it every 90 days to see what might need to change. And so we do the same as fractional cmos using our methodology.
We are working alongside clients with their operating rhythm, but we’re also looking actively at quarterly business reviews for the marketing and workshopping out. What have we learned? What do we incorporate into this next 90 days? So, you know, budgets are usually set once in the year, but they’re managed fluidly throughout the year. So, Mary Beth, what strategies have you used to be nimble?
Mary Beth Mohn: Well, it’s kind of funny, because when you talk about, you know, the 90 day review, working for a public company, obviously everything kind of goes on that quarterly timeframe. So, yeah, I would set up the budget at the beginning of the year with the first quarter being pretty solid and the rest of the year a little bit more fluid. But to Veronica’s point about if you have to pivot mid year, I’ve had to make cuts that were deep cuts partway through the year. And so it wasn’t a matter of just skimming off a 10% high risk thing. I had to go into the core of some of the activities. And so that’s where I think it really pays off to be detailed in creating your budget.
So, again, having the scope of work identified, so that if you need to modify the scope of work, you know how to do that, scaling it back. And also, I make a note in the budget of any deadlines in terms of cancellations of events, you know, when you get your money back, when you won’t get your money back, and to put those things in my calendar so that if re forecasting has to happen and you have to make the tough decision to drop something, that you’re doing it in a way where you’re preserving as much of your budget as possible. So that’s one of the ways.
Jennifer Zick: So wise. And John, how do you, as an agency partner, work with companies to provide flexibility and help advise them on those give and take?
John Gamades: I think one of the conversations we have all the time is, what internal resources do you have that we can collaborate with? So the agency partner, if it’s a good one, is going to look for ways to help leverage the talent you already have internally where it makes sense, and then fill gaps. So that means we’re not going to do everything. We’re going to do the things that we should be doing and let your internal team, where they’re capable and where they have those skill sets, really run with those things. We’re going to empower them and turn them loose so they can do their side equally as well.
Jennifer Zick: So that’s wise and that’s what marketing leaders want from our agency partners, is that you’re helping us understand when we can absorb and what pieces we ought to be absorbing to create that great synergistic efficiency in the relationship. So we now have some really nice comments and questions from the audience. I’m going to turn my attention there and I’m going to start with some awesome comments shared by our friend Bo from Orange ball, John’s business colleague. These are just a couple quotes that I think are worth calling out so that it’s on the record. Here’s one. Marketing is like a fire. You need to get it started to create heat. You can’t say fire, give me heat and then I’ll add wood. That’s smart. Here’s another one from Bo. A quote from Henry Ford.
Audience Q+A
Jennifer Zick: A person who stops advertising to save money is like a person who stops a clock to save time. Ooh, good. That’s good stuff. Okay, now I’m going to roll into the questions. Bo, thank you for those nice little nuggets. I’m going to start at the top here with mercedes, who’s asking us, how do you recommend allocating marketing investments that have short term rois versus longer term rois, especially when you’re in growth mode and you don’t have as much data to back up the new initiatives that are unproven. So in their business, they have a lot of data to back up what they’ve already done and they’re looking at the risks they need to take to grow in markets they haven’t accessed. So who wants to take this one first? It’s a meaty one.
How do you balance short and long term ROI and what you know and risks you’re going to take?
Veronica Williams: I’ll give that a try. So it’s really interesting because especially when the economy is going to be unstable, that is a good time to think long haul. It’s a little bit like the stock market, right? When the economy is unstable, I try not to look too frequently because I’m in it for the long haul. And I think you have to be checking on what your return on investment goals are. But when this is a good time to invest in things that are going to provide value to your brand, like search engine optimization, content marketing, you know, things that really help people know who you are. So I have a tendency when the economy is bad to focus a little bit more on brand investment. And also, you know, again, what’s your level of comfort with risk?
Because that investment is more stable than a short term return on investment. You, you might make more immediately, but it might also have a greater risk associated with it when, you know, if you’re investing in your brand, that’s going to have a pretty continuous return.
Jennifer Zick: Any thoughts to add?
John Gamades: I think we have to resist the urge to want a microwave. We always want things to go fast. We want the short term ROI. And in marketing, that’s really hard to find.
Jennifer Zick: So we’re more like a smoker.
John Gamades: Yes.
Jennifer Zick: My husband loves to smoke meat, so it’s an all day event. All right, so here’s a question. I’m just going to read it out. We’ve actually already kind of spoken to it. But the question is, are there best practices for timing on when to make the budget? Is it an ongoing conversation throughout the year or do you save it for the end? So I’ll start off by saying a lot of small, less mature businesses do this once a year without much forethought or afterthought. We just create a budget and then we survive through the year. Right. But more mature businesses are looking at it quarterly more regularly. What advice would you give to help businesses kind of build their maturity around thinking through budget and forecast through the year? What are some best practices there?
Mary Beth Mohn: One thing that I like to do is I told you, I’m all about documenting everything. And so when I have a budget spreadsheet, every time I do a revision, I copy the sheet and make the revision so that I have kind of a history of what I did. And the reason I do that is if I had something that was planned, that was a good idea, but weren’t able to do it because we had to make budget cuts. I want to be able to easily pull that up and revisit it if we end up having more money to spend. And similarly, if there are ideas that come up throughout the year of activities where it’s like that would be a good thing to try, I want to make a note of it.
So I’ll have on my current budget, I’ll have placeholders for upcoming activity that might not be on this year, but it’ll be on the following year. And that actually helps with buy in as well. Because if you’re trying something new, but you’ve been talking about it for a full year, then by the time you get around to actually putting budget toward it doesn’t sound that new and experimental anymore because it’s something you’ve been kind of trying to build buy in for along the way.
Jennifer Zick: So. Smart. Well, here’s a question I think we all can have a perspective on, because every one of us on this call has either been an owner of a professional services business, is participating in one now, or has served one. So here’s a question from a pro services business. I’m guessing from someone on the marketing side of the house. How can analytics be set up for a pro services business? For example, SEO, blog posts, newsletters, social efforts? How do you track marketing ROI from marketing when it all ends up in the hands of the sales team? I have philosophy on this, but I’m going to wait and ask my esteemed panelists first.
Mary Beth Mohn: I think a lot of it depends on the relationship that marketing has with sales and making sure that sales understands the importance of following through and communicating with marketing so that you can put answer to that.
John Gamades: That goes back to the silo conversation. One of the biggest silo instances I see is between sales and marketing, because there’s a competitiveness. I want credit, and I understand that. But it’s also from a higher level business perspective, wanting credit is not the biggest win for the business. It’s a short term, like little blip. You know, from the analytics side, there’s a lot of things now you can find a lot of analytics. And I think one of the keys to analytics today is figuring out which ones you should pay attention to. There’s so many data points, not all of them are important. So really getting dialed in on which ones you’re going to look at and which ones you’re going to pay attention to, I think is a big part of this conversation.
Jennifer Zick: Absolutely, Veronica.
Veronica Williams: So for me, it’s a good CRM, right? And I mean, you know, one of the things that I love about HubSpot is the ability to set up lead scoring. And so you can rank the quality of your contact based on their interactions with your media and which media has driven them. It’s also nice because it can be historical, right? It can go back and look at, not from when you first got them as a contact, but once they make contact, it goes back and feeds how they got involved with your brand. And then it’s also a great way to actually distinguish between marketing and sales. Right.
Veronica Williams: Because you can then identify your marketing qualified leads and based on their activity, when they become sales qualified leads, when it’s time to turn them over to sales and have sales contact them and track your deals and your outcomes. I mean, it is nice to have that single source of truth. And I also agree with John. You know, if you’re going to be using a variety of analytic tools, you really have to be careful about what analytics are going to be meaningful to you because there’s so much information that you can just get stuck in the data and not really even find. It’s really about actionable insights. Right. And so that’s, I think when you’re talking about what analytics you want to use, it’s what information is going to drive a decision for me.
Jennifer Zick: Absolutely. And again, using Authentic as a case study, here we are. A b, two b professional services firm. We sell to CEOs and executives. Many professional services firms are selling a strategic high trust relationship to executives. And when that’s the case, it’s not transactional. This is not a widget that you can buy on an e-commerce site and track an ad through to the conversion point of purchase. High trust relationship. And so going all the way back to where John started, I would really encourage that instead of thinking from a credit mindset which creates divisiveness between sales and marketing. As you already said, think about marketing in terms of influence on attracting someone to your brand, converting them through those early pipeline stages. The influence marketing has after the deal to help create within the culture a positive brand experience.
Bring clients back to more content that deepens their trust. You know, we’ve got some clients on this webinar right now. This is marketing’s influence on that relationship right now. Right. The influence of marketing doesn’t begin or end at lead generation and the handoff to sales, the influence of marketing needs to be measured over the entire relationship life cycle. So, but to give you some idea of how we stitch together, what Veronica was talking about with what John was talking about is we’ve been using a robust CRM and practices since day one to know who is important to us and engaged with us and how our marketing initiatives and channels and tactics and campaigns influence those relationships.
Then we’re able to look at all that historic data and have years of accumulated data so that we know on the marketing side, with the sales side, with client services side, what is our average deal size, what is the time to close? From the time we have a hand raiser, that is a deal, until we’ve won it. How long do our clients stay with us? On average, what kind of deals are the most profitable for us? Right. So once you start to get that kind of data and analysis, marketing is working so closely with sales on those big levers. What are the big levers that marketing can help to influence longer client retention? What are the levers that marketing can help to influence? The average deal size in the product or services? Mixed. And so it’s an evolution.
It takes all of the pieces from the process to capture the data and the places and the systems to how you’re going to use those insights to bring sales and marketing close together. But gosh, this hour is going really fast. We’ve got one more question from the audience that I’m going to try to pack in real quickly, which is slightly related, but this person wants to know, how do you prove ROI when marketing attribution is broken due to a tightening of privacy settings? Oh, we missed cookies.
Veronica Williams: Go for it, John.
John Gamades: Nope, you go ahead. You go ahead.
Veronica Williams: Well, it’s interesting because the first payoff report that I ever created for a client was before there were cookies. And so we actually write a. So you have to be creative and you have to look for things that you can document. And so return on investment can also be in terms of the things that you were just talking about, Jen. Right. Like how long does it take to close a deal? Marketing influences that. What is the brand advocacy afterwards? Marketing influences that. How much can you charge for your product? Right. Your brand reputation is probably one of the greatest influencers on your ability to maintain or increase price. So all of those things. And again, you just have to start getting creative about how you’re going to answer that question. But there are definitely ways to do it.
And first party data is a great way. Survey your customers. Right. That’s a great way to get first party data.
Jennifer Zick: Well, we could turn any of these questions into its own webinar, but of course, we know we have some time constraints, so we’re going to go ahead and land the plane gracefully and give everybody back just a couple of minutes. I want to say a really deep thank you to all of our panelists. The time that you’ve shared with us today, your wisdom, your experiences, and just the fun of being in this virtual room with all of you. It just fills my cup. So thank you so much for being part of Authentic and part of our community. Thank you. Attendees for joining us today and sharing your hour with us.
I hope you’ve all gotten something of value to take back to your teams, and we want to send you off with hopefully a lot of optimism for the coming year and hopefully a couple of new ways of looking at how you’re going to budget, be nimble, and be able to demonstrate the value that marketing is bringing to your organization. So we are cheering you on, and if there’s any way that we can be of service, we’re here. Please follow up, link in, connect, reach out. We’d love to hear from you, but go forth in your day. Be a blessing, be blessed, and we’ll see you next time. Take care, everybody.
Want more information about creating your marketing budget? Check out this article: How mature is your marketing? Answer this question before setting your budget.
