“Marketers should know what budget they have to spend”

I read this statement in an article written by a marketing expert earlier. Of course, at one level it’s true…the last thing any business wants is the marketing department going wild with the corporate bank account.

But I see a lot of marketing commentary which goes along the lines of “once I know the budget, I’ll work out what I can do”. Every time I see that, I can’t help but feel everyone is missing the point.

After a trial run, perhaps, to make sure the numbers are robust, how much money would I give to a marketing department which is bringing in high quality leads which convert into customers on a reasonably predictable basis?

As much money as I had.

When your starting point is a budget, your results are always sub-optimal. As a business leader, your primary focus needs to be on outcomes.

Let’s imagine two companies operating in the same sector with broadly similar stats for their respective marketing campaigns. They both start off with a marketing budget of $1000 and ultimately sign up 100 customers on the back of that activity, ie the cost per customer is $10.

Company A spends their $1000 and stops. Company B spends another $1000 next month, then the same the month after, then the month after, and so on.

Which company is going to take a dominant position in that industry in pretty short order? Company B, of course.

What company A forgot was that the real business objective is “sign up as many customers as you can for $10 a time”, not “don’t spend more than $1000 on marketing”.

You might think this is a silly example, and of course it’s more complicated than this in real life. But this is the sort of decision businesses make every day. I’ve seen it more times than I care to remember.

If you want to build a better business you throw every penny you’ve got at a marketing campaign which brings in profitable customers. You don’t set arbitrary and artificial limits and then shut up shop when you reach them, pat yourself on the back, and head off to the pub for a celebratory drink.

Sure, if coasting along is your preferred management style, you might as well. But if you’re serious about growing your business, focus on outcomes instead.

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