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The Lightning Strike Marketing Strategy: How Legendary Executives Plan & Leverage Lightning Strikes (Part II)

The Lightning Strike Marketing Strategy: How Legendary Executives Plan & Leverage Lightning Strikes (Part II)

โ€œIโ€™m not sure thatโ€™s in my budget.โ€

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Sep 23, 2021
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The Lightning Strike Marketing Strategy: How Legendary Executives Plan & Leverage Lightning Strikes (Part II)
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Arrrrr! ๐Ÿดโ€โ˜ ๏ธ Welcome to a ๐Ÿ”’ subscriber-only edition ๐Ÿ”’ of Category Pirates. Each week, we share radically different ideas to help you design new and different categories. For more: View the mini-book archive | Listen to another category design jam session | Dive into an audiobook | Enroll in the free Category Accelerator email course


Dear Friend, Subscriber, and Category Pirate,

In Part 1 of the Lightning Strike Strategy mini-book series, we wrote about how you can create an annual marketing strategy that solidifies your leadership position, primarily by aligning your Information War, Air War, and Ground War efforts.

This mini-book is going to take this idea one step further.

Why The Marketing Department Needs To Have A Direct Relationship With The Finance Department

Listen to the way most CMOs talk about their budget, and what youโ€™ll hear is this:

โ€œIโ€™m not sure thatโ€™s in my budget.โ€

Most CMOs at both large companies and rapidly scaling startups think of the marketing budget as โ€œtheirs.โ€ And what they got hired to do was to be the arbiter of what gets spent, where, based on their own individual wants and needs.

In reality, this sort of behavior is the reason CMOs are often told to sit at the kids table. They arenโ€™t treated as true executives, and oftentimes are left out of โ€œadult conversationsโ€ between the CEO, COO, CPO and CFO or CRO. (Itโ€™s not uncommon then for the acting CMO, when left out of a meeting regarding the strategy of the entire company, to clench his or her fists and stomp on the ground, insisting, โ€œHey! Iโ€™m an executive too!โ€)ย 

The truth is, as a CMO, the marketing budget isnโ€™t your budget.

Itโ€™s the companyโ€™s budget.ย 

Just like the product budget isnโ€™t the Head of Engineeringโ€™s budget, and the HR budget isnโ€™t the Head of HRโ€™s budget. Everyone works for the same company. Marketing just happens to be the largest discretionary budget in the company. And while other budgetsโ€”such as sales, product development, HR, etc.โ€”are intimately tied to headcount, marketing is the only place where there doesnโ€™t have to be a correlation between the number of employees and the amount the company is willing to invest. In addition, marketing is the only place where the company can (on a whim) either cut back radically, or spray gasoline and crank up the furnace radically.ย 

As a result, marketing becomes one big honeypot of money everyone is trying to stick their hand in. And many in the company will try their hardest to get a chunk of the marketing budget for themselvesโ€”leading to a death of 1,000 cuts.

  • The product manager says, โ€œIโ€™m rolling out a new product in March.โ€

  • The sales manager says, โ€œWe need more leads in this territory.โ€

  • The product designer says, โ€œWe need beta testers.โ€

  • Etc.

This is not a very strategic or intelligent way of thinking about (or using) your marketing budget. Itโ€™s the mistake that causes โ€œmarketingโ€ to turn into a service bureau for โ€œserving internal customers.โ€ Weโ€™ve even heard marketing people say stuff like, โ€œOur goal is to add value to the business.โ€ As if marketing was some external appendage and not part of the business. Like there is the real business and then there are support functions of which โ€œmarketingโ€ is one.ย 

If your CEO and/or CMO think and talk like this, quit.

Become Best Friends With The CFO/CRO

If you want to run a legendary organization and do legendary marketing, you must have a legendary relationship with the finance department.

Savvy CMOs work directly with the CFO to create a strategic escape valve for the company every quarter. If youโ€™ve been the CMO of a global company like Procter & Gamble for the past 10 years, this is probably something you are intimately familiar with (and if not, then hey ho, letโ€™s go). If youโ€™re the CFO, CEO, or CMO of a newly public company or startup about to IPO, you might have *heard* about this but have yet to figure out how to implement it into the organization. And if you are a newer company with newer entrepreneurs and executives, or are a first-time CMO yourself, then what we are about to tell you is probably going to be a bit like learning the earth isnโ€™t flat after all.ย 

Since the marketing budget is the largest discretionary budget in the company, it should not be thought of as โ€œthe marketing budget.โ€ It should be thought of as โ€œthe companyโ€™s budget,โ€ of which marketing has the most flexibility and creative potential.ย 

However, in order to do anything of consequence with a companyโ€™s marketing budget, itโ€™s crucial to understand how that budget sits in the context of the rest of the companyโ€”which is why the CMO needs to work directly with the CFO.ย 

When there is a direct line of communication, the CFO may ask the CMO to take a percentage of the quarterly budget (often from the โ€œAir Warsโ€ bucket) and hold back the equivalent of $0.25 to $0.50 in earnings per share (EPS). The idea is that as you head into the last month of the quarter, the CMO will then check in with the CRO/CFO on the forecast. If the quarter is looking light on sales, the budget money in the escape valve can be โ€œheld backโ€ if the company needs it to meet EPS guidance. (Being light on the top line is never great as a public company, and missing EPS guidance will put the company in the penalty box with investorsโ€”and make the stock drop like a turd from a tall cow.)

The inverse then applies in strong quarters. Savvy CFOs of high-growth companies do not want to over-perform their guidance by too much. Because when you overachieve, expectations change: โ€œThe company had a blowout quarter this year, now we need to have an even-more-blowout quarter next year.โ€ย 

So, what happens?

The CFO/CRO tells the CMO, โ€œI need you to spend $2M in 2 weeks. Can you do that?โ€

How To Do Legendary Marketing At The End Of Each Quarter

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