There’s a debate in marketing about the merits of zero-based budgeting.
It doesn’t necessarily mean spending less. What it does mean is figuring out, from scratch, what you need to spend in order to achieve specific returns.
Which sounds pretty sensible.
Mark Ritson discusses Unilever’s announcement that they are adopting a zero-based budgeting approach to marketing. His summary is useful:
The zero base approach is not a cost cutting method or belt-tightening approach. It’s just a better, more strategic way to plan your marketing. First you forget about the total spend and where that spend was allocated last year – hence the zero. Second, the marketing team do their research, construct their marketing plan and conclude it with a budget in which they ask for a certain amount of investment and promise a specific return for that investment. Senior management review the plan and either grant the amount or push back and ask the team to make changes.
The appeal to the business is obvious—it forces departments to be accountable for their spend, and do the work to justify it. It seems to me that we should think about working towards a zero-based model for customer insight.
Does that sound like a turkey voting for Christmas?
It might be if we all switched overnight, but I think the principle of accountability and being able to demonstrate return is important if we want customer experience to be taken seriously.
It’s important, I think, to make sure that budgeting doesn’t lead to prioritising short term returns. If a marketing team spends its budget on vouchers rather than brand-building then they’re almost guaranteed to see an impact on sales in the short term. But what’s the long term benefit?
Similarly, for customer experience, you need to understand the links between investment in particular transactional journeys and longer term customer attitudes and behaviours. The benefits can take a long time to filter through; but they’re real, and they’re measurable.
It’s up to us to start proving it.