Of course, this could be £100, £10,000 or £1 million depending on the size of your marketing budget today - but this one question has proven to be the most illuminating thing that you can ask a marketing leader (your Chief Marketing Officer, Marketing Director, Head of Marketing or equivalent).
This is also an excellent question for marketing leaders to ask themselves. It helps you/them to understand both the strategy they’re pursuing and their understanding of what is working /not working amongst their marketing activities today.
The most important thing to say about this question is that there is no single right answer. The silver bullet is not TikTok ads, billboards on the tube, attending more trade shows or a shiny new marketing automation platform. In fact, it’s not really about the ‘what’ of the answer at all, but the ‘how’- the thought process that has been used to answer your question. Ideally, a thought process that has happened long before you’ve asked the question. Think back to your exams at school – we are more interested in seeing the workings than the final answer.
The first distinction to draw between the types of answers you may hear is whether your marketing function is run as a cost centre or profit centre. If your marketing function is run as a profit centre, you may hear answers along the lines of: ‘if you were prepared to accept a slightly lower return on investment (ROI) then I could increase our spend in channels A and B and make slightly more profit overall’ or ‘I could test these new channels where I’m not sure about the ROI but I have a hypothesis that I’d like to test’.
On the other hand, if your marketing function is run as a cost centre, you’ll typically hear a more qualitative answer with a list of activities that could be run without an estimate of the return on any potential investment that you might expect to receive or hires where the expected impact is vague. This ‘spray and pray’ approach to marketing is something I see frequently and I’m going to talk about separately in another post.
Some of the best answers I’ve had to this question have said “I wouldn’t spend any more money because I’m happy that within my target returns envelope, I’m spending the most I could in the right areas”.
Another important distinction in answers to this question is whether marketing leader focuses purely on brand-new customer acquisition versus the other ways in which your marketing function can support the growth of your business and the maximisation of customer lifetime value. Examples of this might be choosing to invest in a customer loyalty programme or other aspects of the customer experience that could drive repeat business/retention and customer advocacy. Marketing leaders who are thinking holistically may even talk about how extra spend should be placed somewhere else in the organisation to benefit the outcomes of marketing activity for example, to improve sales operations, customer success or accelerate conversion rate optimisation efforts.
These types of activities too often fall into the important, but not urgent category, but the best marketing leaders will understand that modest investments in customer experience can yield fantastic returns, albeit over a slightly longer time then short-term investments in performance marketing or the like. This also shows that they are not motivated by having the biggest marketing budget but rather on achieving the best outcomes for customers and the business.
A third category of potential answers I’ve heard relates to resolving a specific pain point that the marketing leader is experiencing. For example, one business I’ve worked with recently has experienced multiple tracking issues because of consolidating several different websites, and in that case, allocating additional marketing spend towards hiring specialist analytics and tracking resources on a short basis would be well justified. I would follow up by asking about long-term additional spending choices in addition to the understandable short-term issues.
Equally, it might be that your business is going through a particular period of short-term focus e.g., last quarter of the financial year – and your marketing leader may raise a long-term initiative e.g., project work to understand customers and their needs (e.g., a customer segmentation). Or they may talk about hiring additional analytical resource, demonstrating a desire to become more evidence based in decision-making which I take as a real positive. In most cases, I would expect a marketing leader who seems to have a lot of conviction about a particular set of channels or activities for additional investment to be basing their thinking on a robust market and customer segmentation.
The inverse of this question can also be extremely insightful: “if you had £1/ £100/ £1m less marketing budget, what would you change and why?”
A great answer to this question will talk about activities which are currently delivering close to the minimum ROI the marketing leader is prepared to accept, for example reducing your bids in paid search (PPC) or reducing spend in a particular customer segment, product category or geographic area where returns are less attractive. One often overlooked area of marketing budgets is the amount of money spent on marketing technology and data providers. Contracts were often signed several years previously with supplier friendly annual inflation clauses (which I will of course be advocating for in an upcoming piece on pricing…), and many tools are used rarely if at all. In my experience, a simple review of the martech/adtech tools that a business is using can yield some cost savings.
A less ideal answer to this question is to simply reduce everything by a small amount or to reduce investment in aspects of the customer experience without considering the consequences. Again, we’re just trying to understand that your marketing leader is thinking about what is working and not working, to make investment decisions as objectively as possible.
In summary, when I ask these questions, I’m much more focused on how they are answered than the specific activities that are described by marketing leader. I’m looking to understand:
Whether the marketing leader is thinking critically every day about where they spend their time, their resources and their budget;
That they are motivated by commercial outcomes for the business and using ROI measurement as a key tool to achieve this - demonstrating that they operate marketing as a profit centre, rather than as a cost centre;
Whether they have a sufficient balance of tried and tested core activities, but are also open-minded about testing new activities;
That when they test new activities, they do so in a robust way that will provide a definitive answer as to whether something works or not (I’d rather test one channel extensively for three months and find out for sure if it works rather than three channels in a more superficial way); and
Whether they are thinking holistically about how marketing can maximise customer lifetime value across both the areas marketing directly touches and elsewhere in the business rather than just focused on attention grabbing campaigns or shiny new marketing tools.
This exercise isn’t designed to catch someone out, so allowing your marketing leader time to prepare an answer to this question will lead to a better conversation (you could even direct them to this post!). When I meet a management team for the first time, I will include a question like this on an agenda that I will share well in advance. I’ve also used this when interviewing candidates for marketing leader roles, with reference to their current or previous roles, and it has often been the most insightful part of the conversation.
If you’d like to discuss how you can help your marketing leader answer these questions for your business, please Contact Me.
All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.
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