Planning for the Unknown: How to Create Your 2021 Marketing Budget
Planning for the Unknown: How to Create Your 2021 Marketing Budget
For most companies, November is prime budgeting season for the upcoming year. From operations to marketing, every department is trying to predict what next year will bring, what’s achievable and what’s not, and the resources it’ll need to achieve those goals. This budgeting season is especially challenging amidst overwhelming ambiguity. Economists are divided over the fate of the U.S. economy in 2021, with roughly a third predicting GDP will return to pre-pandemic levels in the second half of next year, another third saying the first half of 2022, and the remainder predicting it will be towards the end of 2022 (source: MarketWatch).
Add to that the uncertainty of when the next wave of COVID-19 will hit, and you’ve got a very murky view of 2021 on which to base sales and marketing budgets. And yet, the show must go on, as they say, and budgets must be set. Here’s how to plan your marketing budget for next year, with enough flexibility to achieve your goals no matter what the year may throw at us.
Evaluate the ROI of your 2020 tactics
Before thinking about what you’ll do next year, take a look at what worked in 2020. There’s bound to be a lot of noise in your data (as in everyone else’s) given COVID-19 disruptions, but you should still be able to draw conclusions as to which tactics were successful and which were not. If you need help calculating and comparing ROI, take a look at our Marketing ROI post. Even if you don’t have that level of data available, you can still use high level results such as gross number of leads, clicks, impressions, etc. to gauge rough effectiveness.
Set 2021 SMART marketing goals
As I’ve said before in previous budgeting posts, the first step in budgeting should always be defining what the budget is going to achieve, i.e. your company’s commercial goals and objectives. Start with your sales team’s revenue or unit sales goals for the year, and work backwards to define what that means in terms of new customer acquisition, customer retention, price increases, etc. From there, determine what, exactly, marketing needs to do to support those goals. How many qualified leads must you generate for the sales team? How many prospects must you attract to get that many leads? What tools or content must you produce to help your sales team nurture those leads? If you need help translating sales revenue into needed number of leads, the Marketing ROI post can help.
Be flexible: identify multiple paths to achieving each goal
For 2021, flexibility is going to be key. We simply don’t know whether or when in-person events will resume, so if that big trade show in Q1 is your heavy hitter lead generator, you’re going to need a plan B for that budget if you’re still going to hit your lead gen goals. On the bright side, trade shows and conferences tend to be one of a company’s biggest marketing expenses, so if they’re still a no-go in 2020, you’ll be left with plenty of budget to work with to still hit your mark. You might consider reallocating that budget to new content production and trade publication advertising to get that content in front of prospects, something you can ramp up on short notice if planned events are cancelled.
Likewise, if your sales team’s face to face meetings with customers are your main account nurturing tactic, you may consider a backup plan that reallocates that budget to webinars or speaking engagements, to keep your brand front and center for your customers.
Don’t try to save your way to growth
It’s likely most SG&A line items will take a haircut next year, and marketing is usually one of the first to be hit. While this can’t always be helped, it’s worth discussing with the powers that be how cuts to the marketing budget will impact the top line, and not just for 2021.
As we explore in detail in a prior post about economy-related marketing cuts, slashing the marketing budget can have major adverse impacts to growth in the long-term, long after the short-term bottom line benefit has been enjoyed. If you have to cut, you’ll need to be very strategic about it, and there’s no way to do that without understanding the ROI of your marketing tactics (have we said that enough?)
There’s no way to know what lies ahead for us in 2021, but it’s still possible to create a flexible marketing plan and budget that will help you reach your commercial goals. As always, we're here to help.