By: Michael Sapp – Bayshore Solutions Controller
Newton’s 3rd law of motion states that when two objects push or pull against each other, the forces are equal and opposite. Simply stated, for every action, there is an opposite and equal reaction. You probably have noticed it before firsthand – when you try to get the buy-in from your CFO to increase your marketing budget. The harder you try, the more pushback you get.
Here’s a little secret – although they are viewed as relishing every opportunity to say “no” to anything that involves the budget, CFOs really want to be able to say “yes” to a worthwhile venture.
So, how do you pull on the heartstrings of the one holding the purse strings?
You go to the numbers.
The best offense in your arsenal is developing a solid plan to not only procure the resources you need, but to also illustrate the return to your C-suite. Consider the following tactics as you look to increase your marketing spend.
Where do you compare?
Most companies try to define their marketing budgets as a percentage of sales. Although this may be an arbitrary number for some companies, there is merit to a healthy percentage of sales being cycled back into producing future sales.
Here are some general marketing budget benchmarks by industry (as a % of revenue):
- Telecommunications 5.4%
- Advertising/Consulting/PR 5.0%
- Healthcare/Pharmaceutical 4.7%
- Transportation 4.6%
- Media/Entertainment 4.3%
- Real Estate 4.2%
- Professional Services 4.1%
- Travel/Tourism 3.8%
- Manufacturing 3.1%
- Energy 2.9%
- Retail Trade 2.7%
- Financial Services 2.7%
Where does your company rank?
If you fall outside of your benchmarks, use it as a rallying point for realigning with your industry peers.
Sharing is Caring – & Promotes Approvals
The CFO is charged with being objective and using data to validate the majority of the company’s initiatives, marketing included. A major reason for the friction between marketing and finance results from the difficulty in measuring the ROI of marketing’s efforts. If a CFO does not have any data to validate a claim, it becomes “subjective” and therefore more risky.
How to help ease this friction? Give up all of your data. This means sharing all of your analytics, all of your tracking data, all of your media buys and impressions, etc. There’s no room for silos or hoarding information.
Then, work with your CFO to determine and agree on the targets/ratios that signify a successful campaign or healthy ROI in financial terms. Of course, make sure you or your marketing solutions provider has systems in place to successfully procure all of this data.
Focus on low-hanging fruit
Rather than pushing for PR/branding initiatives that have long-term benefits that are harder to objectively measure, aim for channels that can generate immediate, measurable return, such as demand generation.
By focusing and targeting your marketing programs to drive awareness in a specific product or service, you can reap the benefits quicker and curry favor for ceding more dollars into like-type campaigns. As your initiatives gain traction, you’ll have more leverage for going after the meatier programs.
There’s no silver bullet to curing the divide that sometimes exists between finance and marketing, but there are many areas for a potential partnership. Have a plan, have the data, and have an open and honest conversation with your CFO. Before you do, though, contact the Bayshore Solutions team to discuss new ways to supplement, measure & validate your marketing strategy.