In our daily conversations with marketing leaders, it’s amazing how often we’ve found this simple two by two matrix useful. Obviously, marketing budgets are allocated to help companies meet their revenue plans, but all too often the two fail to match up. This tool makes it easy to see whether your marketing investment truly makes sense.
By filling in details about your marketing budget and anticipated revenue in each of these four areas, you can quickly establish a clear picture of how well your investment is aligned with your business objectives. We have used this tool with clients at many levels, from the corporate entity to the business unit to the brand or product level. In most cases, companies have the information, but they have never connected the financial forecast to the marketing plan at this level.
We have found that when the percentages above and below the diagonal line in any area vary by more than 15%, the budget may be misaligned. In some cases, there is a strategic tradeoff that justifies additional investment, but many clients do not have good reasons for such discrepancies. Typically such problems are the result of legacy investments, squeaky wheel syndrome, or poor planning.
In a time when budgets are constrained and marketing is under pressure to enable earnings, failure to align budgets to revenue objectives is unacceptable. It impedes your ability to impact key areas of your business, it promotes underinvestment, and, worst of all, it slows growth.
We urge each of you take the time apply this simple framework. If you have challenges, we know how to make the assumptions to test your alignment. Nothing is more embarrassing than not having the answers if your CFO or CEO asks these questions.
If you find that your budgets are misaligned, it is likely that your marketing resources, programs and capabilities are as well. Restoring balance is not an insignificant undertaking, but we can help by sharing how other clients have dealt with this situation. For more information, please contact us.