January 15, 2014 • By Dave Spector
Here’s the right and wrong ways to answer…One of the most vexing questions posed to marketing managers in any industry is: “how much should our budget be? Whether you are being asked to submit next year’s budget or a funding request for your next campaign, knowing how to answer your management or ownership’s budgetary questions is vital to your success (and job security)! Hotel sales and marketing leaders face this question at least once a year. As an external vendor, we get asked this question all the time. After 30 years in the hotel marketing profession, here’s our thoughts on the right and wrong ways to answer the property owner when you face this thorny question:
The wrong way:
- “Whatever you can give me, I’ll do the best I can.” On the surface, this happy answer would appear to position you as an easygoing team player, but it’s actually the most dangerous answer of all! Essentially, you are allowing ownership/senior management to unilaterally control the resources you have to achieve revenue targets that only you know how to achieve. If you fall short and are held accountable for missed targets, you will deeply regret not having asked for the proper amount before you accepted responsibility.
- “I didn’t spend all of last year’s budget, so I don’t need as much next year.” This answer only works if you exceeded revenue targets while under-spending the budget… which doesn’t happen very often. Unfortunately, if you are good enough to pull off that amazing feat, be prepared to be asked to do it again every year!
- “Our sales goals are 20% more than last year, so I need 20% more budget” It’s not that easy. Revenue rarely correlates in an exact linear fashion with marketing budgets. Instead, think about where the expected revenue increases are expected to come from and what kind of budget you need to achieve it? Perhaps the increased target is from meetings and groups, which takes less budget to generate leadflow than transient/leisure. Conversely, if the targeted revenue increases are expected to come from channels that cost more to penetrate, be ready to ask for more budget to attack those channels.