Increasing uncertainty has led many businesses to revisit zero based marketing (ZBM) as a methodology for cutting costs and driving growth. Even big brands such as Unilever have made the switch. In this article we’ll answer why now, more than ever, zero based marketing demands careful consideration as part of your marketing planning. Discover why you need to revisit zero based marketing and how to adapt to this changing approach.
Why now for ZBM?
Zero based budgeting is a cost discipline that is far from new. First popularised in the late 1970s, a zero based approach is precisely that – your budget is a zero base. Every expense is analysed and justified before allocation and there is also no consideration of previous budget allocation. When applied to marketing you get zero based marketing.
As a needs based model, zero based marketing increases efficiency, effectiveness and also boosts profitability.
These benefits take on a renewed importance in today’s post-covid, digitally dominated world. ZBM represents a low-risk approach to transforming marketing costs and provides the flexibility to quickly course correct if performance is not meeting organisational expectations.
The advantages of zero based marketing
Done properly, ZBM delivers more than an exclusive focus on cost savings. Always questioning “why”, a zero based marketing budget aligns expenditure with wider organisational goals, allows for testing of assumptions and improved resource planning.
In this sense, zero based marketing is thoughtful. Unlike traditional budgeting and top-down cuts that impact on service provision, the foundation of ZBB aims to provide savings in a cost-effective manner that preserves future growth. As McKinsey suggests:
ZBB is not a slash-and-burn exercise that cuts costs without regard for the expense. With deep visibility into costs, changes can be made to surgically cut the fat and help build up organisational muscle.
Zero based marketing Vs traditional budgeting
The big question is can zero based marketing really outperform traditional budgeting? Yes, it can. According to Anaplan, companies that have adopted ZBB report cost savings between 10 and 25 percent[1] and this applies to marketing also. McKinsey argues that such savings can be realised in as little as six months[2].
How to adapt to zero based marketing
As a marketer, ZBM represents something of a challenge and a new way of working. By definition, ZBM removes the predictability of the annual marketing budget. On one hand, ZBM encourages marketers to evaluate all budget lines and their relative returns, thus increasing bang for buck. On the other hand, the process involves governance, extra approvals and measurement that tests the core marketing skills. Ultimately, is a framework to operate within to the benefit of your profitability to reinvest elsewhere.
If you start and end with numbers, understand your data sources and how to measure return on investment, ZBM is an easy process. If you have challenges articulating one of these three, you may find it a shock to the system and require outside support to guide you through. Rest assured, we have the expertise and training available to help.
Plan your marketing budget for 2021
Debating how to plan your marketing budget for 2021? A marketing consultant helps you to strategically assess where you are, where you want to be and how to get there.
The CIM qualified team at Think Beyond work with businesses of all sizes across the UK, preparing their marketing strategy and marketing budget for the year ahead. Our specialist consultants do more than provide campaign set up and support. We work closely with you to research, plan and deliver a bespoke end-to-end marketing strategy that is focused on growth. In summary, we are here to support you with whatever marketing challenges you have.
Find out how we can accelerate your marketing plans by calling 01565 632206 or email sales@think-beyond.co.uk.
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[1] https://www.anaplan.com/blog/zbb-zero-based-budgeting-guide/
[2] https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/five-myths-and-realities-about-zero-based-budgeting#