How to Get Marketing Budget Buy In

Written By Matthew Martin

November 8, 2017

How to Get Marketing Budget Buy In From Management

If you work for a company with a marketing department, you’re probably in the same position as so many others and wondering how to get marketing budget buy-in from management.

Here’s the story I hear so many times:

It starts back somewhere in the 90’s when someone had the original conversation with their  boss, “We need web design.” Then that turned into, “We need to be using email marketing” and then later it was “We need to be on Facebook” and so on, and so on, every time a new digital marketing platform pops up.

Here’s what I want everyone to understand.

Marketing is often in a secondary position to product. At least at most companies.

Most businesses look at marketing in the following way: they say, “We’re going to build something and then we’re going to go through all these processes, and at the end of the day, we’re going to come to you, the marketer, and have you tell the world about it.”

That’s the process that businesses have used forever because it was the way it worked with print, then radio, and even with TV.

In that scenario, the business feels they need a marketing budget totaling 2% of gross revenue to make that model work. Now, remember, that model has been in existence since about 1950.

We’ve gone through a lot of changes since 1950 but that 2% number hasn’t changed a lot. That’s one of the key points of this problem because after we got that website, we then had to go back to our boss and ask for more and more.

“I need more budget to drive traffic to the website,” which meant money for search engine optimization / SEO, and that problem continues. 2003 came, and if SEO was done correctly, the site had some traffic, but most likely you wanted to improve our website conversions. So you asked for more marketing budget to put towards conversion optimization.

— Check out Our SEO Jargon Glossary —

Then as the digital space continued to grow, we needed more money for email tools, forms, etc. We go back again and again.

I’m sure you’re getting the point.

Every time we get something, there’s something new a year or two later. The digital space evolves rapidly and takes time to reap the benefits.

This is the main problem marketing directors have regarding Digital Marketing.

Digital Marketing takes time, and new marketing asks often happen before the prior investments have been realized.

So, we’re asking for new tools before we’ve experienced the full benefit of the prior tools because that’s the speed that we’re in right now. That is how fast digital marketing changes. Your business needed SEO optimization to get more traffic, even though the business might not be seeing more than maybe 1% to 2% of their actual revenue coming from that website.

So what can be done?

One of the many things we do at Spade Design is tracking data so that we can discover patterns and one thing we have identified is that there’s a clear difference between high-performing marketing organizations and everyone else.

What we see with high-performing marketing organizations, is that their marketing budgets are rapidly growing.

You probably already understand that if you’re increasing your budget at a 33% rate, it’s only going to take about two and a half, maybe three years, before you have to double your budget to maintain the same results.

But if all you do is double that amount, all you’re going to achieve is the same results.

So if we call that doubled amount, the “normal amount” what we’ve found is that high performing companies take that “normal rate” and actually double it.

To be clear: Average companies double their marketing budget every 2.5-3 years, but high-performing businesses quadruple it.

Now you’re probably thinking that your company would never go for this, but I can tell you that every single day, companies realize that this is a requirement for their success that cannot be ignored.

To achieve this, there must be understanding and acceptance of this new, modern concept of marketing.

Data shows that the main difference between high-performing businesses and everyone else is that the high-performing companies had buy-in from the executive level. These executives understand, support and embrace these new ideas of marketing.

Ready for some numbers?

82% of high performers have full executive buy-in. So if you’re having to debate with your boss that you need SEO, or you need email, social media, or a review management system, then they don’t get it. You won’t be able to convince them that these tools are necessary because they are stuck in the 1950’s marketing mindset.

They don’t have a clue marketing has changed, and it’s no longer what it used to be. They don’t understand that just putting out advertisements and disruptive messages, do not work anymore.

Now, if we revisit that old concept of 2% for a marketing budget, your management is probably saying something like: “Well, we’ve always done it this way, and it’s always worked in the past, can’t we keep doing the same thing?”

The answer is no because we’re living in a different time.

My entire goal with this article is to give you ammunition to go back to your organization and win the fight to get the budget you need to be successful. I want to provide everything you need so that you can go back to your boss and say, “Here’s the points that I have to help you understand what this new idea of marketing is and how much money it’s actually going to require for us to be a high-performing marketing department and hit the goals you’ve set.”

So, on average, 2% of gross revenue was what marketing budgets used to be and a lot of organizations still mistakenly use this.

However, if you look at modern budgets, you’ll see that 2% to 6% is now the bottom tier of any company’s marketing budget. 2% is the lowest of the lows and the only brands that do this, are ones that simply want to maintain their brand and are not seeking growth. (Sounds crazy, but believe it or not, there are companies that do not want to grow.)

If your company wants average growth, defined as growing at a steady and sustainable rate, you’re going to need a marketing budget which is 7% to 12% of the gross revenue of the business.

Now let’s talk about fast growth.

Just about every person I meet with tells me that they have been challenged to double, or triple growth by over 100% per year. If you were told, “Well, last year we did 10,000 leads, so, this year we need to do 20,000 leads” then guess what, you are being asked to create fast growth.

99% of companies that aren’t already planning to die want and expect fast growth.

Many times “bosses,” think that the marketing department is full of wizards and that you have these magical skills that will surpass average results.

In reality, marketers don’t possess any magic skills.

What executives need to understand is for this “magic” to happen, you’re department needs to have a very specific budget, and that budget is 13% to 30% of projected revenue, not existing gross revenue.

If they expect you to double the numbers, then you need to calculate what that double projected revenue would be, and then, you need to have 13% to 30% of that number to make it happen in some sustainable and scalable way.

Let’s talk solutions about how to make this happen.

Here are two options:

1) Top-Down Approach
2) Bottom-up Approach

First, let’s talk about the top-down approach which is, “You need to get your executives to change their mindset.”

We’ve stated that the number one difference between a high-performing marketing organization and everyone else, is they have full executive buy-in to a new idea of what marketing is.

So to get these ideas in their head, they need to hear it from outside sources. Have them read The Experience Economy byJoseph Pine. It talks about the highest economic output you can produce by creating experiences, not products. This should get them to shift their business model to the new age, where marketing becomes more than a secondary factor of production that exists to tell the world about your products.

If you want to drive the point home, give them these two also: Driving Demand written by Carlos Hidalgo, and another book called Cluetrain Manifesto. It’s an older book but don’t discount it because of its age; it’s extremely relevant.

Now for the bottom-up approach.

If the top-down approach is to change their mindset by having external people influence your executives, then the bottom-up approach is the internal strategy that you can put in place to get small wins.

The key is no budget content and achieving success one step at a time.

This is a very long and laborious process where you get very small wins and ratchet up after each win.

I’m going to teach you how to do this in a very simple, easy way. Let’s say you need more budget for content. You’ll need to prove the need and value for a larger content budget. Well, the easiest way to do that is to prove that content works in the first place.

Here’s an example of no budget content: MIT’s Sloan School of Business, which is their MBA program, wanted to increase their enrollment at the college. After some basic research about what people care about when they’re looking to get an MBA, they found that these people placed a high value on connections. They wanted to have a one-on-one relationship with their teachers.

So to accomplish this, they set up a way for prospective students to connect with professors on LinkedIn and the best part about this, it was all free.

This strategy improved their top of funnel leads drastically. This then led to an increase in overall enrollments.

As we all know, if you can prove that your strategy will have a high return, then you will get marketing budget buy in without question.

The problem is the metrics that we use don’t show the real value in a way that makes sense to executives and other powers that be.

Most people try to look at ROI as a value metric. Do not do this.

If you were looking at attribution or ROI as a way to value your marketing methods, you won’t get the budgets you need because when executives are reporting, they don’t mention ROI or attribution. So if you want to receive the marketing budget you need, you have to be able to put your marketing results in terms that are going to show on a balance sheet and are translatable in the language of those people giving out the money.

The best way to do this is to show the impact of weighted pipelines. If you’re not familiar with that term, then please Google the word weighted pipeline. These are the metrics you need to use as the valuation model for all marketing moving forward for these simple reasons:

One, sales already uses it. Who has the sales department? Who works for the sales team? Does anybody know of the weighted pipeline of how you look at your sales pipeline? Sales have stages: stage one, stage two, stage three. Sales have a way to look at all of this. They say, “All right, here’s our pipeline. We have 100 people on stage one, we have 50 people in stage two, and 20 people in stage three. We know that 70% of those in stage three become customers, so we expect 14 customers.” That’s a weighted pipeline.

A person in stage one is only one “x” fraction of someone in stage three. This is already used by the majority of the most progressive businesses on the sales’ side. The reason it isn’t adopted on the marketing side is that the technology wasn’t there to allow us to identify where somebody is in a marketing stage or life cycle.

Now, pretty much every business has a marketing automation platform. This allows you to identify an individual and what stage they are in the marketing lifecycle that you can then predict with very specific degrees of accuracy of when that person will be turned into a lead.

You can then measure that pipeline. You can see all the small things that are done to impact it holistically. Finally, it is prescriptive, because weight pipeline gives you two things. It gives you velocity, and it gives you volume. So if you know the velocity of leads moving through your pipeline, takes X amount of days and you know that there’s X amount of people in this stage, basic math allows you to determine how many leads will be coming out of your pipeline and exactly what period of time. This gives your CEO the ability to forecast and project all of the things that they need.

ROI does not give you anything. It’s retroactive. It does not give you ideas for fixing things, and it does not show real value. Prospects, leads, and sales show value. Show that your marketing efforts directly increase the pipeline, and you’ll have a much higher success rate when asking for an increased marketing budget.

The best advice I can give you is that this conversation needs to happen before you need to ask for an increase in marketing budget. A stretch conversation happens like this, you go to your boss and say, “Hey, boss. If I run a marketing program or run a marketing campaign that gets double the expected rate, I want to have a set-aside budget that I can instantly access to double down on that metric, and keep at it without question.” This way you have a pre-arranged agreement on a stretch metric. If you hit that metric, you get access to that money.

Now, let me show you how to do this quickly and get that money fast.

The trick will consist of social media and your email list.

First off, sometimes people want to debate “paid social.” If you don’t know, organic reach on social media is about 0% to 2%. It sucks and the sooner we all accept this, the sooner we can move on to methods that work. Here’s an example: I saw a brand with 25,000 followers, a very “progressive” brand, and they put out two organic posts on Facebook. Do you know how many people saw them?

84 people. Let that sink in.

Out of 25,000 followers, only 84 people saw the posts.

We’ve seen this time and time again, and the only people still debating this are people who do not track the data or know how to read it.

Organic social media is dead because that is the new monetization method of social media. They make their money with ads, so they force you to buy ads. It’s as simple as that.

So here’s the trick, acknowledge it and then use it to your advantage. Go to your boss and say, “Hey, boss. I want to set aside some money. If I can get a stretch goal blah blah …” and pick your engagement rate, and I’m going to tell you, the engagement rate should be 15%, yes 15%. “If I can get a 15% engagement rate on paid social media, will you let me attack that stretch money and then double down on this tactic, and run with paid social media a little bit more?”

— Get help setting up a social media posting schedule —

Here’s the trick:

Once you get a commitment, take the email addresses of people that you want to target. Emails are a key identifier that you can then buy ads for and specifically to target those people.

Use the email addresses and send an experience to those people via paid social media, simultaneously, send them an email. When you do these two things in combination, we have seen an increase and engagement by 22% (22% over just doing one by itself).

This lets you aim for a stretch goal of 15%, but you’ll most likely hit 22%. That’s how you can quickly increase your marketing budget.

If you use all of these tricks, you should not have an issue getting marketing budget buy-in from your executives. If you need additional help, feel free to review our free resources.


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