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Using Financial Goals to Prioritize Marketing Objectives

October 29, 2018

B2B marketing plans need to be grounded in an organization’s financial and strategic growth goals

Developing marketing plans can feel like walking a high wire, especially when conflicting priorities and limited resources need to be brought into balance. By following a segment-driven and financially grounded approach to planning, organizations can achieve that balance. The SiriusDecisions Marketing Planning Process incorporates a business’s financial goals in the strategic alignment phase and uses them to inform a purposeful and well-aligned marketing approach. In this issue of SiriusPerspectives, we describe how to document financial objectives and use them to inform the prioritization of segment objectives.


Understanding the Business Objectives

Marketing leaders should first obtain the organization’s overall financial targets, which are typically set in terms of annualized revenue or bookings. Financial objectives must be divided into components so that efforts and resources can be aligned to meet them. Most organizations define financial targets using internal segmentation that corresponds to the organization’s operating structure and its preferences for understanding results. Business segment leaders typically have established revenue targets that serve as process inputs. Following are the most common dimensions for initial segmentation:

  • Business unit. The organizational structure of a business commonly groups business elements around a distinct profit-and-loss statement. This allows for a natural way of reporting that aligns to the financial reporting structure of an organization. This approach may or may not align with the segmentation used in an organization’s go-to-market approach.
  • Product/solution. The grouping of products, services, solutions or offerings is another common way of segmentation that’s often aligned with financial reporting. This method is often used by product-led organizations and may represent a finer subset of a business unit–led approach.
  • Geography. Sales-led organizations often structure the way results are viewed around geographic segments. Where geographic segmentation is the primary dimension, this exercise should begin by focusing at the regional level.
  • Audience segment. Businesses organized around the different audiences they serve may choose to set primary targets by the audience segments highlighted within their audience framework. Segments may focus on dimensions such as industry, company size or account type.
  • Campaign. While less common, organizations with a mature, truly integrated campaign process may choose to structure the view of results around their campaign approach. In this model, campaigns represent a combination of audience and buyer need.

Many organizations divide the business objectives among combinations of these segments. The prioritization process must account for this layering of components to ensure setting of the right objectives. A dominant factor (e.g. geography) is usually present across all groups, and the subsequent dimensions can be layered in.


Specifying the Sources

To set objectives for each covered segment, marketing leaders should begin by categorizing targeted revenues or bookings according to their likely sources. These sources are used to prioritize marketing’s focus within the segment, so all expected financial results across the segment should be calculated – not just returns expected to be sourced by marketing. Financial sources fall into the following categories, which combine to form 100 percent of the segment’s financial objectives:

  • New logo. These are bookings or revenues created by doing business with organizations that are not current customers.
  • Retained. These are bookings or revenues sourced from existing customers through repeated/recurring sales of the same offerings to the same buying centers. Any growth in the retained category is achieved through price increases on the purchased offerings.
  • Cross-sell. These monies are derived through selling into additional buying centers (or new departments) within existing customer accounts. Cross-sell bookings and revenues include the purchase of any offerings by these newly acquired buying centers.
  • Upsell – additional offerings. Some business models rely on selling additional products or services to the buying centers currently purchasing from them.
  • Upsell – additional units. Some growth strategies rely on selling a higher volume of the same product to existing customers and buying centers. This is common in organizations using a software-as-a-service model.


Asserting Marketing’s Priority

Establishing financial expectations by likely sources creates a starting point for marketing leaders to determine how marketing should direct its focus. Consider additional factors to prioritize how marketing should apply its resources within the segment. While it may seem like common sense for marketing to align its efforts in direct proportion to the size of the revenue sources, this is generally not advisable, as the largest revenue sources typically require less marketing support.

In an example scenario, renewals represent nearly 80 percent of future revenues, but the business has determined that minimal marketing help is needed with renewals, while more marketing attention is needed to generate business from new logos.

There may be no single right answer, but when marketing decides where it will focus resources, it must socialize that intention. This exercise offers an approach to prioritizing and apportioning marketing’s energy and resources by applying a percentage to each source. Marketing leaders should consider the following factors:

  • Ability to help. To prioritize a revenue source, marketing leaders must first assess their function’s ability to help the business reach its target within the segment. This assessment should take into account whether marketing has the tools and capabilities required to make a difference and the skills necessary to drive better outcomes.
  • Anticipated impact. While marketing may be able to help, the type of help it can provide may prove to be either the key to success within the segment or an inefficient use of resources. Determine where the type of help would result in the greatest positive change to the business.
  • Organizational receptiveness. Marketing should prioritize its efforts in areas in which the business’s stakeholders, including sales and product, are committed to accepting marketing’s efforts. While marketing leaders may choose to direct their attention toward changing internal perceptions of how marketing can help the business accomplish its goals, assessing organizational receptiveness acknowledges that a near-term focus of resources can make a greater impact in areas in which those resources are welcomed by organizational partners.
  • Future value. In some segments, marketing resources may be necessary to establish a foothold in a new market that is not expected to create revenues in the current year, but is expected to become a growth area in the coming years. This type of decisionmaking may tip marketing’s priorities toward new logo acquisition in a developing geography, or an investment in preparing existing customers for future upsell of an exciting new offering that is in development. Elements determined to be producers of future value fall into the category of improving the position or readiness of an organization to grow.


The Sirius Decision

Let’s face it: Marketers love to execute. But to make the strongest possible impact, marketing must tie its efforts to the most important objectives of the business, starting with financial growth. Marketing and sales need to collaborate on this process, repeatedly comparing their assumptions to enable the development of a cross-functionally aligned plan. Avoid overemphasizing future value, which can compromise the function’s credibility by creating a perception that marketing’s priorities are misaligned with the goals of the business. The key to achieving the right balance lies in the work marketers do in the planning stages to fully understand the conditions they face.



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