Making Money On-line: Why CMOs Must Shift the Dialogue from Marketing Budgets to Revenue Targets

Thursday, 9 June 2016

Why CMOs Must Shift the Dialogue from Marketing Budgets to Revenue Targets

In 2007, David Court wrote an article entitled The Evolving Role of the CMO, as part of McKinsey & Company’s quarterly publication. David spoke to how the CMO was in a position to spearhead the evolution that marketing is is in the middle of, or was back then. This evolution consisted of changing consumer behavior, managing complexity, responding to evolving buying patterns, shaping the public profile, and building new marketing capabilities—the list goes on!

You might ask, why am I referencing an article that is almost a decade old (that’s half or one third the life span of some millennials)—the answer is simple—the CMO is still evolving.

As part of this continuous evolution, more and more CMOs are shifting away from a conventional marketing budget and are interested in setting, attaining, and measuring revenue targets. Scrutiny towards marketing is nothing old, nor will ever go away—perhaps that’s the only constant most marketers can identify with. However, that scrutiny has helped create a culture of accountability amidst this incredible time of change.

So how do you make this shift?

Marketing cannot exist in silos. As the CMO becomes more and more accountable for the entire customer experience (CX) these swim lanes become blurred—in a good way. The interconnectedness of sales, marketing, customer experience, and support create one holistic view of the customer. Where the shift needs to take place is at this individual level—no longer is that customer a budgeted number of what your organization will spend to sell, service, or support them, but instead they are associated to a revenue number that you will generate through their evoked behaviors.
Reporting has to not only be a snapshot in time, a historical digest, but it has to also reflect a future state that incorporates overall business goals. Reporting to me is like driving. I’m constantly checking my rear view mirror but 90% of the time I am moving forward. Revenue targets can help you evolve that conversation at the C suite level from a cost center to a revenue generating essential component to the organizational strategy.
Budgets typically don’t increase—in fact they decrease. CMOs have to do more with less and this trend continues to shape how we market. I always share with my clients that it’s a lot easier for us to determine a budget if we first understand what the revenue results are that we want to achieve. Your allocation towards technology, consulting expertise, and education should be a byproduct of the revenue results you create. Thus budgets often create constraints where revenue targets help excite you and your team towards a common goal—a future state.

Put it into effect today. Shift the dialogue from this is what I have budgeted to this is what my revenue target is—the impact will surprise you.

To find out the latest trends and how companies are realigning their marketing budgets during this marketing evolution, download the eConsultancy Marketing Budgets Report 2016.