According to the 2017–2018 Gartner CMO Spend Survey, nearly half (47%) of CMOs still depend on basic budgeting methods. These include rolling previous year’s budget into the next financial period and/or applying a percentage increase or decrease incrementally to the last budget. Rarely do the same conditions exist to require the same decisions. This can lead CMOs to overspend in non-productive areas, as well as other mistakes.
The goal is to establish zero-based budgeting (ZBB) with your financial partners. Many CMOs lack the kind of financial depth that informs effective budget management. Collaborate with the financial experts to craft the best budget.
Another area of improvement for CMOs is in customer focus. The study reveals that CMOs are spending more on retaining customers instead of gaining customers. Customer retention spend versus customer acquisition spend is at a ratio of 2 to 1. Long-term strategy requires that the goal should be building lasting relationships that are profitable with the right customers—old or new. Existing customers should be profitable with long-term brand loyalty. Focus on understanding customer value in terms of lifetime value, profitability and average order value.
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