Our marketing budget is under a lot of pressure at the moment from the CFO. How can I prove to him that cutting the marketing budget is the wrong thing to do now?
Your CFO understands numbers. From his point of view, when sales are decreasing or not increasing at best he needs to reduce cost to minimise the damage. Words like campaigns, creativity, gut-feel decisions, etc, translate to more uncalculated risk, more expenses and less profit in his mind. The entire business world, globally speaking, made a fatal mistake long time ago by putting Marketing under ‘Expenses’. Rent and auto lease re expenses. Marketing Budget is an asset. Why? Because, unlike rent and your delivery van lease, Marketing – when done correctly – helps generate revenue. That is the definition of an investment. This statement can cause more arguments with your CFO, so I wouldn’t recommend opening with that. However, the purpose is make you, Marketing, understand the kind of mindset you need to maintain.
Show him last year’s data. Highlight revenue drop when you spent less than usual or when you stopped completely for whatever reason. Most likely, the data will show a parallel relationship. Next, paint a dark picture in his mind about how revenue can be worse than now if you stop your Marketing activities or reduce it to an ineffective level. On the other side, explain how you need their help in making the budget more ‘accountable’ by using metrics to measure the Marketing ROI. Don’t worry; they know how to calculate these. By demonstrating your commitment to work together and to be more responsible for the budget, Finance will come around. Worst case: you’ll have your budget reduced, but not killed…and that’s just my two cents.
Loaay Ahmed (MDes, FRSA)
Strategic business therapist, academic and founder of The Outsider's Perspective. Loaay has decades of experience in guiding his clients, small and large, on how to navigate their business challenges. Through the 1-hour consultation, coaching and mentoring sessions called Strategic Business Therapy, you can address your business challenges in a one-to-one setup. SBTs are practical and effective. Book a free first session.
If you have a question and you would like Loaay to answer, send it to ask@theoutsidersperspective.com with the subject line "THiNK! Question"*.
This article first appeared in bazaar magazine as part of the monthly column Loaay's Two Cents (2009-2015) where readers sent in their burning questions. The chosen ones were featured in the article and answered by Loaay Ahmed.
* Please note that Loaay will answer you directly. Only selected questions will be released as posts on this blog. If your question is selected to be shared on the blog, your name, company name and any other private information you shared will remain private and will not be published.
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