Is it Time for a Zero-Based Budget? A CMO's Perspective
By Latané Conant for 6Sense
As companies grapple with adapting to a rapidly changing economy, I’m reminded of a Warren Buffett quote I heard years ago: “You don’t find out who’s been swimming naked until the tide goes out.”
Having lived through several economic low tides, I’ve had some opportunities to see which companies are swimming in the buff and which are sporting full-coverage suits. And through these experiences, I’ve learned a few things about what makes a good swimsuit — in other words, what practices keep a company covered in both good economic times and bad.
The crux of coverage is smart money management. In good times, we’re accustomed to top-down or bottom-up budgeting, but when the tide goes out, we start to hear the dreaded term “zero-based budget.”
Zero-based budgeting requires starting with (and justifying) a new budget each period, rather than adjusting the previous period’s budget. The idea behind it is that it makes leaders really reevaluate spending and priorities rather than carrying on with prior assumptions.
In a tough economy, you could hardly fault anyone for thinking that’s a sensible idea. But the truth is that zero-based budgeting can be short-sighted if it prevents you from continuing to invest in things that will set you up for success once the tide comes in again.
So I don’t advocate for zero-based budgeting, but there are benefits to embracing a zero-based budget mindset across the team.
How can you move the needle?
In marketing, there are some easy places to apply that mindset. When you look at your budget, there are likely only a few needle movers. One of those is events. This is a good time to look at ROI of your events and ensure that they’re producing enough pipeline to justify the investment. Be sure to think about all the expenses involved, as well as all the ways to optimize pipeline generation — including before, during, and after the event. This mindset forces you to be more rigorous about getting end-to-end yield.
Another needle-mover is digital. A lot of us have been trained to optimize our digital spend for a form fill. But that approach casts too wide a net, and in the end we spend a huge chunk of our budget getting the wrong people to fill out forms. When money isn’t flowing the way it used to, it’s even more important to make sure you’re spending your digital budget attracting your ideal accounts and your ideal personas within those accounts.
With fewer people in market, customer acquisition costs (CAC) and lifetime value (LTV) become more important than ever. That’s a good reason to double-down on marketing to your in-market ideal customer profile (ICP) — ICP accounts in segments with the best CAC and LTV. Without refining those two things, you’re guaranteed to waste your digital spend on attracting the wrong accounts.
Time for tradeoffs
Keeping your pedal on the gas in times like these requires tradeoffs, and it’s important to foster that mentality among your team. The message is this: We’re not stopping. We’re not slowing down. But we’re spending our gas money on the routes that are proven to take us where we want to go.
That means leaders across the organization have to be ready to make sacrifices for the greater good. If product marketing needs an extra manager to meet the company’s revenue goals, and you’re in digital, you need to look at your budget to see what you can give up to help make it happen. Is it painful at times? Yes. But nothing is more inspiring than seeing a highly functioning marketing team stepping up to make those trade-offs.
Another way to work for the greater good is to ensure everyone is optimizing their time. This is key to preventing layoffs — and that’s a greater good everyone can get behind. Create clear KPIs for every team member, outlining what they’re expected to produce and drive.
When you do lose an employee for whatever reason, don’t immediately backfill. Take the opportunity to pause and ask whether that position is addressing today’s challenges. If not, don’t backfill the position. If so, hire with caution. Don’t just vet the candidate — also vet the role, set your KPIs, and be crystal clear on your expectations right from the start.
Now is the time to retrench, refocus, and make sure you’re optimizing your team through good onboarding, playing to people’s strengths, and ensuring that the team you have is set up to work efficiently.
Be smart about tech
Technology can be a great catalyst for change and innovation, but you need to be smart about how you invest in it. Now’s the time to step back and look at usage, adoption, and ROI by technology. Look for solutions that automate manual tasks and promote good data hygiene. As a marketer, that’s essential — you can’t run a campaign without the right audience, the right persona, and the right contact information. That requires good, clean, up-to-date data, and it’s incredibly time-consuming to maintain that manually. We should all be looking to arm our teams with the best data available, and to automate data hygiene as quickly and aggressively as possible.
Tech can also be instrumental in optimizing the customer journey to remove friction and make it easier to buy from — and that’s never more important than when customers are hesitant to part with their money. Prioritize tech that makes it easier for people to interact with and buy from you.
Look at tech that increases sales efficiency as well. That means optimizing average selling price (ASP), cycle times, and win rates. To ensure that reps are as effective as possible, AI, predictive analytics, and intent data are all essential, but you can also investigate tools like sales engagement platforms and conversational intelligence technology.
Proceed with confidence
If only the economic climate were as predictable as the tide, we could know what’s coming and how to prepare. But since it’s not, we need to be smart about meeting the current moment while also preparing for whatever changes lie ahead.
With a zero-based budget mindset — and the right mix of fiscal responsibility, a team mentality, and strategic technology investments — marketers can be confident that they’re covered, regardless of what the tide decides to do.
Latané Conant is the Chief Market Officer of 6sense and author of the bestselling book, No Forms. No Spam. No Cold Calls. She’s passionate about empowering marketing leaders to confidently lead their teams, company, and industry into the future. Latané is laser-focused on leveraging technology and data to build marketing programs that result in deals, not just leads. She’s known across the industry for her creativity, competitiveness, and boundless energy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.