In order to develop a proper professional services marketing budget it pays to start with your desired business outcomes.
With the third quarter well under way, it’s probably time to start thinking about budgeting next year’s marketing activities. So, where do you start? Take this year’s budget and add 10% (or maybe cut 5%)? Look at this year’s budget and see where you over-spent and where you under-spent? Pull down an industry benchmark and just shove a number into a spreadsheet? Make a ridiculously aggressive ask in order to negotiate a soft landing to preserve this year’s budget?
I’m willing to bet that just about every marketing leader has done some or all of these things in preparing a marketing budget for the year ahead. But, I think we all know there are better ways to go about it. The balance of this post offers some thoughts on how to develop an outcomes-driven marketing budget.
What Goes Into a Professional Services Marketing Budget Anyway?
Every firm and marketer probably thinks about this differently (hence, the reason why industry benchmarks aren’t always that useful). I tend to see the marketing budget as any investment the firm makes to either create future demand for the practice or generate new leads for the current year. This includes the cost of both internal resources and external resources. With that reference in mind, I would suggest that a useful marketing budget should include:
- Salaries for marketing staff — This should primarily include internal resources responsible for determining marketing strategy, creating marketing plans and tactics, and developing and commercializing thought leadership (both online and off).
- Market research and thought leadership development — External fees spent with agencies and other partners to conduct research, translate it into intellectual property, and to create and promote the content used to generate interest for the firm in the marketplace.
- Event management — Costs associated with managing a firm’s presence at tradeshows and speaking at events.
- Media and sponsorship — This would include traditional forms of media, digital media (SEM, display and social ads), and any industry or academic sponsorships.
- Marketing technology licensing — This would include annual licensing fees for marketing automation systems, webinar software, analytics platforms, social media publishing and listening tools, SEO analysis tools and other software used to attract and convert potential clients online. Depending on the size of your firm this may include CRM licensing fees as well.
- Website enhancements and maintenance — It’s important to remember that a public website is essentially a piece of custom software. It requires ongoing support and maintenance. We also generally advise our clients to set aside budget for continuous improvement of their web properties. The web is a pliable and fluid medium. The most effective sites are being regularly iterated and improved.
Your marketing budget might include:
- Professional development and training — Ensuring your team’s skills are current and meet the ongoing needs of the firm. While some firms have formal, separate training budgets others do not. Regardless, if you’re budgeting your marketing effort it’s probably not a bad idea to simultaneously budget any skill development that needs to happen to achieve your goals for the year ahead (whether that’s part of the marketing budget or not).
- Salaries of business development support staff — Unfortunately, a lot of firms struggle to distinguish marketing from business development. In these firms, the marketing effort primarily consists of supporting RFIs and proposals. If this is your firm, then the salaries of support staff might be part of your marketing budget as well. But, in general, I would argue this should be part of a sales or business development budget.
- Agency fees — The cost of relationships with marketing agencies or other external partners not already captured within this list of activities.
That said, your marketing budget should not include:
- Salaries for business development staff or partners — Marketing and business development are two separate disciplines. The cost of a dedicated business development professional is a sales cost not a marketing cost. The same would be true of the time spent by partners selling new work or follow-on work with existing clients.
Don’t Start with Costs: Stay Focused on the Top of the Ledger
Over the years I’ve noticed a fair number of marketing people touting their success in cost savings on their LinkedIn profiles. And, every time I see it I think the same thing — that’s probably not a marketer I’d want on my team.
Marketing is responsible for future value. The purpose of marketing is to create demand for the practice. To identify unmet client needs and fill them with new products and services. To identify underserved opportunities in the market and develop the intellectual property and solutions needed to go get them. These things don’t happen when you’re focused on cost savings. Every calorie you burn negotiating discounts with media partners and software companies is a calorie you could’ve spent figuring out how to create new top-line revenue for your firm.
Now, don’t get me wrong. Of course, you should seek to save some money when the opportunity presents itself or when business conditions require you to do so. Just don’t make it the focus of your energy or your budgeting process. Too often marketing budgeting starts by looking at what we spend now and seeking to identify ways to reduce spend. And, then thinking about what new things we could do with those new found resources. But, that’s starting at the wrong end of the ledger. You can’t create growth and future demand by strangling the resources you have now.
Building an Outcomes-Based Marketing Budget
In my experience, the best way to develop an effective marketing budget is to start with what you hope to achieve. Ask yourself a handful of simple business questions:
- What does our business look like now?
- What would we like it to look like 2-3 years from now?
- What marketing capabilities do we need to make that desired future state a reality?
- What marketing activities would we need to pursue in order to make that desired future state a reality?
Answering these questions should give you a comprehensive list of what needs to be done to achieve your desired business goals. From there, you’ll need to look at what you are doing within the context of that list and where you need to change. Then, ask yourself a few more questions:
- Where are we below par in our marketing efforts now? What will it take to get to parity?
- Where are we above par? What will it take to stay in a leadership position?
- What activities are we not doing at all? Where and how should we start?
- What activities are we doing now that we should stop all together?
If you take the time to develop complete and thoughtful answers to all 8 of these questions, what’s left is to assign budget amounts to the new capabilities you need to build, the new activities you need to start doing, and adjusting any budgets associated with existing activities you’d like to improve or stop. Add in any programmatic costs (website maintenance, licensing for marketing technology) and you should find yourself with a complete and effective outcomes-based marketing budget for the year ahead.
