Zero-based budgeting – What it is and how to streamline your operations to succeed at it
Imagine you are on a diet. It’s a pretty unusual diet where you can eat anything you want. The only problem is that you have to speak with a gatekeeper who is standing at your kitchen door and justify why you should be allowed in to eat the food. Ok, maybe that’s a little creepy, but put the creepiness to one side for a moment and think about the effect that would have on your eating habits. Firstly, you’d make far less trips to the kitchen. The idea of having to stand at the kitchen doorway at ten o’clock at night to have a detailed conversation about why you need to eat the leftover pizza from the day before when you’ve already had dinner is a bit too much of an ordeal. But secondly, you’d spend a lot more time thinking about your visits to the kitchen, so that when you do finally go in, you get more out of them. Gone would be the day when you would nip in for a quick snack to tide you over whilst you watch your favourite programme. Each kitchen visit would be carefully planned, not just to satisfy your cravings, but to deliver the calories and nutrients needed to last you through to the next mealtime.
So what does all this have to do with marketing? Well, ZBB or zero-based budgeting to give you it’s full name, works in much the same principle. Instead of a marketing department being given a budget at the beginning of the year to do what they want with, they’re not given any budget whatsoever. If they want to do something that requires budget, they need to carefully plan their proposal, provide detailed deliverables and justify the expense. If the campaign looks good, the budget will be approved and the marketing team can put their plan into action. If the campaign is, like our leftover pizza slice – surplus to requirements and not really needed, the budget won’t be approved and the team will have to go back to the drawing board and think of something with better deliverables. As with the weird diet we invented above, over time – the campaigns become less frequent but more effective at delivering results. Less money is spent and more quality is delivered. At least that’s the theory anyway.
Ask the likes of Unilever and Diageo however, and they’ll tell you it’s not just an abstract marketing theory. These global powerhouses have both put this into practice with very positive results. In both cases, sales are significantly up whilst marketing spend has either flatlined or been reduced. It’s not just the big guns that are putting ZBB into practice either. Companies big and small are starting to embrace this methodology, so if you’re thinking it might be worth implementing it in your organization, what do you need to know?
Well, if you want to make ZBB work, your marketing department will need to run like a finely tuned race engine. Central to everything will be collaboration. If you want to truly maximise the effectiveness of each campaign, you’ll need input from a range of skillsets and a place where you can put forward and discuss the best ideas without having to huddle round a desk or book out a meeting room every two hours. Efficient working practices are also key to the success of ZBB. Having a standardized process in place to take an idea scribbled on a piece of paper through to a formal proposal which can be put before the board will ensure consistency of delivery and a great chance of board approval. Better measurement is another key consideration of ZBB – you cannot evaluate what you cannot measure. Project activities need to be logged in a proper project initiation process. This does not have to be dull and boring, a good project management system can bring projects to life by offering more visibility on activities and surfacing insights and data regarding performance that was not possible previously.
So, once you have your approval, what then? ZBB to an extent, involves a greater risk as you’re putting more of your eggs into one basket and big campaigns have a tendency to drift off-course. If you’re the one in charge – having a bird’s eye view of the project including skills availability, road-blocks and progress will give your project the best chance of success. Above all, the goal behind zero-based budgeting is to ensure marketing spend delivers a return on investment. More effective working practices means a lower project spend and a higher likelihood of delivering that all important ROI and of course, here at screendragon we can help with that. Our unique project, resource and workflow management software is the ideal platform for high performing marketing teams helping to minimize inefficiencies and maximize ROI. Want to know more? Book in for a free personalised demo of our software today.