5 building blocks for a successful budget request
It’s time for the annual budget requests.
With the critical FCA report about the generous profitability of asset managers fresh in everyone’s memory, cost levels are yet again under the scrutiny of the board. And rightly so.
After all, for a great number of asset managers the distribution- and marketing budget represents a large share of the annual costs. It is therefore no surprise that from the beginning of June until late November, we will receive numerous inquiries regarding benchmark information about the size and distribution of marketing budgets per country, media type, target group and channel.
Another frequent question we receive is: “How do I make my budget request more viable? Hence, we have gathered the five building blocks for a viable budget request.
Link your budget request to the corporate objectives
The marketing budget is seen as expenditure, until you succeed in exhibiting what the organization gains by it. Budget requests are made significantly more promising when marketing objectives are linked to business objectives. For example, be crystal clear about how the budget is utilized to attract new customers and increase customer satisfaction. A marketer that is able to explain how marketing activities contribute to customer satisfaction, customer retention and acquisition is in a better position to successfully obtain budget.
Clearly show the decisions you are making
Provide insight into what you want to focus on during the coming year. The world is in constant flux and simply too big to do everything well. Following the advice of BCG, McKinsey and others, your board members will understand this all too well. If they do not see clear choices, they will become skeptical. Unmistakably show which strategic choices you plan to make. Obviously this has to be based on research. A difficult matter for many marketers. Think about choices concerning the channels you want to exploit. A popular choice we often come across is ‘digital first’. Another example that intrigues us is a medium sized asset manager. Each year they choose one country to spend the decision the lion’s share of their budget to generate a large impact in that one particular country.
Be transparent about results
When applying for budget explain right away how you are going to account for results. Being straightforward about what you want to accomplish, why and how you are going to measure and report, induces trust. Be sure to link what you are measuring to relevant indicators, such as customer satisfaction, retention, leads etc. Regrettably, some marketing teams only report activities. This does not win over the respect and trust of colleagues and the board.
Know what generates revenues
Be sure to know which strategies and funds generate handsome margins, now and in the future. That information is available at the finance department, strategy department, market intelligence or any other department that is into figures. Find out which department that is and find out which funds, solutions and strategies will create the most added value for clients and prospects in the current economical cycle. Additionally, find out what the contribution margins are. Include this analysis in your request.
Know what others are up to
Know what the total expenditure is in your markets and what the distribution is across competitors, countries and customer segments. This helps you decide whether it is useful to spend your budget in certain pockets. This also creates insight into the potential impact of the budget. Will it just be a drop in the ocean? Or is it enough to make a difference in a particular market or customer segment. This makes your application more viable, as it will be based on demonstrable research and facts.
All this is not rocket science, just common sense. If you take these five aspects into account in your budget request, we are convinced that your chance of succeeding will significantly increase.
Vincent Hooplot & Michiel Breeschoten