Note: this post was originally written by Angela Petros.
It is that dreaded time of the year again when law firm CMOs are asked to come up with their budgets for next year. How to avoid getting caught in the trap of having your budget automatically set at what it was this year or worse because of cost pressures, last year’s budget less x%.
Here are 3 steps for running a better budgeting process for law firm marketers
Step 1: Build your bottom’s up analysis
Building a bottom’s up analysis is critical to understanding what the marketing team needs to achieve its goals. A simple way to go about it is as follows:
- Understand what the firm’s revenue goals are, in as much detail as you can, for 2014 in total, by partner, by practice area, and by group for example. How do they expect to achieve those goals? Understanding the mix between net new sales and sales to existing customers is critical because very different programs drive each of the goals.
- Map the marketing goals to the business goals. Is marketing signing up to support 100% of the revenue goal or something less than that; is marketing going to be focused in a particular practice area or geography, on a particular set of clients?
- Build the marketing programs to support the marketing goals and then layer in the tactics that make up the marketing programs.
- Estimate the rough costs of each of the programs. Once you get into the discussion of what marketing needs versus what the firm can afford, then you can have the easier discussion about simply taking whole programs off the table if savings are needed. For example, if the firm needs $x of savings, then perhaps we don’t have a holiday party for clients which will save us $y. This certainly gets away from the death by a thousand cuts where you take a bit of savings from one program and a bit from another. It also avoids the quandary that marketing agrees to deliver the program with the same impact but for less money.
Step 2: Benchmark against your peers
Figure out what your budget is as a percentage of the firm’s revenue. Talk to your peers and get as much benchmarking data as you can to understand what everyone else is spending as a percentage of revenue. In our industry, Sirius Decisions does some good benchmarking work and for similar b2b businesses to ours, they recently recommended ~6% of revenue be invested in marketing. However, this is just a starting point, if you are launching a new practice area, office, services, merging with another firm requiring a firm rebrand you need to make the case for more dollars to support the initiative before moving back to steady state spend.
Step 3: Showcase the results you have driven in 2013
Due to advances in marketing technology, it is much easier to track the results of marketing and determine return on marketing investment. As you are asking for more dollars, be sure to lay out the results of what has been accomplished in 2013 and the investment it took to get there. Some honest assessment of the programs goes a long way, what worked well and should be continued or expanded and what did not and should be discontinued. Don’t be shy about presenting the results of tests or pilot programs that had disappointing performance – it highlights the fact that the marketing team is data driven and constantly testing new ideas to see if they can lift performance.
Good luck! Look forward to your thoughts on how your budgeting process for marketing is run in your firms and tips you have for other marketers in law firms as they look to set their budgets for 2014.
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