Marcel Duy, Product Director, Digital Business Planning at IKEA
How do you enable the measurement and evaluation of investment data? Go beyond the “R” in ROI. Visibility into budget data and real-time spend gives marketers the ability to see where dollars are going, and pivot quickly when needed.
In our report The 4 Actions of High Growth Marketing Teams, we found marketing organizations that prioritized and invested in budget and spend data received larger budget increases post-COVID than those that didn’t.
How do you know that you need to improve your investment data strategy?
Here are the three critical signs that your marketing organization needs to take action immediately, plus how to fix them..
Half of the marketing organizations who saw a budget increase of 25% or more characterized their reporting as easy and intuitive. We found that organizations with clear and straightforward reporting on marketing budget and spend across any segment received the largest budget increases post-COVID.
We also found a strong correlation between company growth and easy reporting. Marketing organizations at companies with 10% growth are 2.5 times more likely to easily report on budget and spend than those at companies that are declining in revenue.
Undefined processes result in lack of efficiency and lead to spreadsheet chaos. With disconnected information and high levels of human error, it’s much harder to get things done correctly. This type of disorganization can also cause the larger problem of using incorrect information to make big decisions. In order to receive a budget increase from a watchful finance department, marketers have to focus on streamlining their processes.
89% of marketing organizations that saw a budget increase post-COVID said they could easily report on marketing spend across their organization, illustrating just how critical clarity is for reporting.
When the team doesn’t know where dollars are forecasted, they may inadvertently assign them to another line item and end up over-committing their budget. Just as problematically, they may not see there are still dollars left to be spent and thus avoid implementing a new program or making a necessary change because they don’t want to overspend. Clearly, visibility into the budget is critical.
If there isn’t enough visibility into where marketing dollars have been spent, it’s also nearly impossible to track the success of any strategic pivots. Without spend clarity, the organization can’t follow the investment changes made according to the strategy changes, and how those changes impacted your ROI results.
The most significant lesson marketers learned from 2020 is the ability to pivot at a moment’s notice is paramount. When it’s not possible to shift dollars, immediate goals have to come to a halt, getting in the way of progress and causing delays in taking important steps to respond to market shifts.
Your marketing organization must implement processes that can handle budget transfers without triggering manual work. Just as importantly, those changes all need to be tracked so they can be easily reviewed at any point. When transferring your budget to another area, make sure you’re avoiding the pitfalls of double-counting and other financial management challenges.
A common occurrence with global marketing organizations is struggling to figure out how to manage reallocations between budgets in different currencies. Your ideal budgement management platform will handle the work of transfers, track all the changes, and manage currency conversion.
While it’s always important to track performance to ensure marketing’s efforts are reaching their goals, organizations must go beyond this first step to measure their impact on growth. Evaluating budget and spend are also necessary to protect marketing from budget cuts.
To articulate the value of your marketing budget, focus on two areas of investment data strategy: the granularity of reporting on marketing budget and spend, and the executive team’s access to real-time financial information for the marketing organization.
When your organization knows precisely where dollars are being spent, it’s much easier to adjust budgets and move spend to the places it can have the most significant impact. Having clarity on your budget and spend means you can respond quickly to changes, whether from local markets or global shifts.
Two thirds of organizations that had post-COVID budget increases of at least 25% had executive teams that were highly satisfied with their real-time access to the marketing organization’s financial performance. When the C-suite felt they had all the access they needed, marketing organizations were more likely to receive those budget increases.
There was also a correlation between leadership access and revenue growth. Over half of organizations with a 25%+ increase in revenue growth had executive teams that were highly satisfied with their access to financial performance information.
Executives with accurate investment and spend data in real-time are able to make better and quicker decisions. Having that up-to-date insight helps them justify the reasons behind their spending decisions, giving marketing organizations a better chance at budget increases in the coming year.
Learn more about the actions high-growth marketing organizations take to win bigger budgets post-COVID in our report!