During the analysis you’ve realised that hardly any existing customers visit your reception, so the cost per result of doing the activity is very high compared to the other options. Therefore, you’d decide not to do it.
However, the other two ideas come at a relatively low cost compared to the potential gain: a combined cost of $1,800 vs the potential of an additional $100,000 in revenue (20 enquiries at $5,000 potential revenue each), so you decide to add them as lines to your budget.
Measuring the ROI
Not only does this analysis help you decide what activities you should do because you have looked at the potential results, it also allows you to measure the return on your investment. By measuring where your engagement, leads or customers have come from throughout the year or per campaign, you can measure which of your marketing activities were effective.
Here’s the same example but we’re measuring the ROI:
As you can see, the results you expected weren’t the actual outcomes but if it’s your first year of doing this or if there are changes in the market, then your expectations are unlikely to match the results exactly. But what it does do is give you a benchmark for the next year so when you go into the planning phase again, you use the data from this year to refine your predictions for next year, to be more accurate.
Benefits of a zero-based marketing budget
Not only does a zero-based budget help you justify your marketing budget recommendations, it also helps you prove the ROI of your investment; something a lot of organisations struggle to articulate.
Whilst you can argue for hours whether to use a first touch or last touch* attribution method to decide where to credit the win, the truth is, unless you have sophisticated systems reporting and analysis, you’ll never know.
A zero-based marketing budget will get you to challenge why you are doing some of the existing marketing activities, and whether they are still worthwhile.
The important thing is by using the zero based budget, you are planning for success and learning to monitor your results which will help you improve your future activities and lead to marketing dashboards that help drive your organisation forward.
If you’d like any assistance, please contact us on 1300 763 505 for an obligation free consultation with one of our Business Consultants or book an appointment here.
*First touch – where they first found out about you, the new service etc. OR Last touch – what was the final thing they saw before they acted.