Benchmarks and Risk Tolerance: B2B CMOs Discuss 2025 Budget Models

Last Friday's CMO Coffee Talk featured a broad discussion about 2025 budgeting. TL/DR - easier said than done this planning season!

Are market conditions improving in Q4 and into 2025? How aggressive should companies be, what is marketing's role in driving growth, and how best do you budget for that?

The chat highlights below reflect a wide range of thinking, risk tolerance, ROI calculations and much more.

If you are in the CMO Coffee Talk community, don't miss some great customer acquisition cost (CAC) ratio examples and benchmarks in the #swipefile channel in Slack.

If you are a B2B CMO or head of marketing and want to join a community of 3500+ of your peers, let me know or click here to learn more and to sign up.

How many people are budgeting based on pipeline and pipeline multiple?

I’ve found a key to “budgeting” is having frequent dialogue with my CFO all year long. So the CFO is on board when we get into the formal process, a supporter, and the process is easier

Ive always found it helpful to compare a bottoms-up approach with a top-down strategy to see if they closely align. Two people or two groups

I try to start with a shared agreement on our unit economics. We need to understand which sources are driving quality pipeline and Closed Won, and which are speculative.

We build a lead to bookings model by source, by segment by month

Dreamkiller!? LOL

Love the “dream killer” phase!

I'm going to steal your terms - wishlist & dreamkiller

October is the Dream Killer stage <~~~ stealing this

Csuite answer: YES. ALL of these.

Might be interesting to see how budget discussions differ depending on your backing - private vs. e.g. heavy PE influenced

One framework I have used is a "people to program" ratio expense model.? Too high % to people and you have the risk of lower productivity/efficiency,? too high % to program and you get lower quality execution/burnout, etc.

Our PE budget process has 21 steps, it started last week with strategy and runs through February 25 with ratification from congress (board)

What is that ratio you seek?

how do you account for agencies? People or program? (And if program is that a bit misleading?)

Working in early stage companies, unfortunately our iterations, evolution of GTM motions breaks historic models almost every year. Feels like groundhogs day every year…we begin again.

I'm at a Series B in the sub $30M ARR range and keep people to 40-50%, tech 5-10%, the rest on program

Insight partners has some benchmarks against their portcos, latest ratio is closer to 40/60 people to programs due to AI and tooling efficiency improvements

Agree on the ratios!

What about tech stack %?

anyone new in their company and have no confidence in their previous conversion rates, where are you starting to give you confidence in your bottom ups approach?

I am the opposite. I consider agencies or contractors as part of program budget because if I need to scale them back or cut them, it’s a lot easier than letting people go.

I count contractors in People, but the agencies I use for SEO / CRO and for Events I count as Program budget because it’s hard to separate the actual person cost from the services provided

there's too much rushing and jumping between platforms at budgeting time even in mid sized organizations. good reporting and analytics that flows through regularly and is always available from as few platforms as possible makes things easier.

Insight benchmarks are great if youre struggling with where to start. Cant be applied perfectly every time, but a good gut check

Do a lot of folks here use the bowtie internally? And have alignment on this across teams?

What CAC ratio are y’all using? New CAC or blended CAC?

Simplicity for me is 50% people, 50% programs, but then I review line by line.? Depends if more Enterprise vs. SMB.

agree, their benchmarks are super valuable.? Love Gary Survis.

https://www.insightpartners.com/ideas/saas-marketing-benchmarks-and-trends-marketing-spend-2024/

I’ve developed both bottoms-up and top-down strategies, and bottoms-up aligned to a growth model and working with the benefit of great historical data is the closest to “the truth” that I’ve seen and the best way to then manage the budget throughout the year based on real-world assumptions. I would gladly throw “the truth” out the window for a model that the CFO understands that slashing budget has real implications on hitting growth goals. Is there a more defensible model that makes more sense to finance folks? My background is mainly VC-backed.

Excellent distinction. Contractor expense I track as people.? If work tied to recurring execution involving additional program expense like events, then will count that work against program expense.

25% of total budget or revenue team budget?

Sounds like 25% of the revenue team budget

Right and in an exit situation that’s how the buyers will consider your contractors as people expense anyways.

25% of the budget and deliver 75% of the pipe. Welcome to my world. ??

where does everyone fit in tools, under programs or separate from marketing budget?

What percentage of the pipe you bring and what percentage of the budget you get. — what is your ratio?

Percentage of pipe marketing brings will depend on the stage of the company.

What do you mean? I’m expected to have pipeline growth in days from scratch. Isn’t there “some email campaign we can run that drives a bunch of revenue?”

Agency absolutely program - I expect their efficiency/effectiveness to be higher than an FTE as they have a) the expertise b) they aren't fully loaded / burdened cost

There’s some validity to what CFO’s saying given that marketing should have an outsized impact/focus on pipe. Maybe 25% of budget for 50% of pipe more reasonable?

How do you account for indirect activities that influence pipeline - such as PR, user communities, sales enablement decks. Etc. ?

A magical email campaign that can go back in time and create demand

This too: https://www.insightpartners.com/ideas/saas-marketing-periodic-table/

Yes or just do a webinar and a white paper and it should “rain leads”. Didn’t you know?

Could you invite Chris Walker to present on unified GTM metrics and analytics vs segmented pipeline commits (by department siloed) approach?

So he can just tell you what doesn’t work without any real idea of what does? Oh can’t wait!

I assume marketing budget has to cover 100% of pipe, just like sales has to cover 100% of closed won. Especially in my company, where “opps sourced by AEs” is just reopening closed lost opps.

Just put it on TikTok and it will sell itself

When the discussion with the CFO is focused on pipe and % of revenue attribution, how do you position branding investments?

Opps sourced by AE, has anyone seen that above 15% like ever?

Once ??

How do you attribute pipeline to marketing in long B2B sales? What's an attribution model that's helpful?

It will go viral right?

same for pipeline - 90-95% mktg for me

How is everyone thinking about budget allocation for retention n engagement of existing customers?

I've seen it budgeted, but not achieved...

And yes, actually been bringing back the leading indicators like leads everyone hates, because without them people think opps fall out of the sky.

This marketing periodic table is super valuable

What are everyone seeing in terms of quality vs. quantity investment in terms of lead generation.? "Less can be more"? etc.

Branding is reputation.? B2B Buyers do 80% of their research before they contact you.? Reputation is critical to be considered.? It floats all boats and makes the other spend more effective and efficient.?? (my general talk track).?? I show them a journey and lots of data on what we are missing out on.? What Tanya is saying!

I use it as part of the overall story. It all has to work together to improve effectiveness and it's not a one or the other. I use stories like why do you buy apple products vs XX product? It's because of the brand that equates to the trust in the solution.

Lets deep dive on MQLs

Yes - I’d love to hear from anyone who’s been successful having budget conversations at early stage / pre-PMF, and their CEO/board want them to budget like a post-PMF company with? pre-existing benchmarks and long track record and can’t understand that earlier stage that doesn’t exist and we’re in the “test and iterate” phase, not the “scale and optimize”.

when I came in as VP Growth Mktg - customer marketing wasn't even on the budget/ radar. first thing I noticed/ changed

It should be more balanced with input from AE/Founders, partners, and marketing. I would be careful about signing up for 100%.

I agree with much of what she said. My business has LOOOONG lead times (often 18+ mos) so we frequently have leads that are hard to attribute distinctly to Marketing. And often we will have folks come to the website and then email Sales directly. My CEO is understanding of this, but I’m still trying to apply a bit more rigor to our lead tracking.

In my previous company we were highly focused on expansion and retention so it was about 35-40% of the budget

Yes, early stage, this can be higher if the right sales team was hired or strong founders.

Retention and expansion can no longer be ignored or left to the Sales/commercial/CS team.? in the current B2B SaaS environment, Marketing has to ensure support of both of these.

Founder culture and first time ceo situations can be super challenging!

3 cheers for no first time founder CEOs!

I’m not signing up for sourcing 100%, but if we don’t calculate covering all of it with the budget then doesn’t happen. We have very few truly cold opps, maybe 5%.

Always ask for more than what you need haha

Producing your own top down & bottom up budgeting is just a lot of work. It’ll show you your own internal struggles with how to suspend disbelief

Here’s the TC article on John Mulaney https://techcrunch.com/2024/09/19/john-mulaney-skewers-san-francisco-at-dreamforce/

What programs do you put in the “customer budget” that are separate from new logo programs?

Is Customer Marketing tied to retention or upsell / expansion?

I would say both

It can be either or both

ours is both

THat’s the best way to get the headcount ;-)

The hard part I have with getting approval to invest in customer marketing is the indirect nature of its impact on revenue. Everyone wants it. No one wants to pay for it.

My experience…customer marketing is the most difficult practice area to measure and defend.

100%. It is so frustrating.

dedicated targeted ads - to retain, increase product usage/ feature knowledge, and expand (new products), awareness etc.

events for the same ^^

better, personalized email programs here

general branding - identifying & activating our advocates to spread brand, wom

Customer recognition programs, advisory councils are a few examples

I compare SKU sales and seeing how the campaigns we are running are creating lift in activity, opportunities and bookings. It's not direct but it shows that focused emphasis across these solutions are showing positive results compared to the rest of our portfolio.

fyi that is a "this" pointer finger... always feel like it looks like a middle finger ??

CAB/EAB

Advocacy

Community

User Conference

When bugets are big, everyone wants a "growth marketer" and they don't need that brand marketing fluff. But when budgets are small suddenly everyone wants brand marketing again :) Because a strong brand greases the wheels on your growth engine!

Here is another story on Dreamforce/ Mulaney…https://sfstandard.com/2024/09/19/comedian-john-mulaney-brutally-roasts-sf-techies-and-ai-at-dreamforce/

Any suggestions around ratios between demand gen vs awareness vs customer marketing for companies 5 to 10 M arr?

Customer marketing us usually the story funnel

Reputation work (G2, Captera, etc)

Should there be a more thorough conversation on LTV(customers) vs CAC (new customer acquisition) not just % break in marketing spend but an overall strategy in where we want to go with each other —

Tough to answer this…depends on how much of the market you have captured, and what the growth strategy for the business is.

I've tracked retention impact, expansion opps, and qualitative feedback (are we hearing: love to see xyz, love that event, see you're taking customer voice seriously, etc)

how funny I feel the opposite happens! no budget - cut brand, big budget - invest in brand

Invaluable discussion today. thank you.

^^ I don't agree, but see that

definitely much more Martech investment next year, and pulling back on analysts. Both moves to increase efficiency.

I’ve seen this go both ways. Currently, I am lucky to have a CEO who values brand so I have some flexibility for that in my budget.

on top of those 3, do you have an integrated person/ team? to help bridge?

If we don’t have good product-market fit, it may be better to shift the mktg dollars to fix that versus towards marketing in market. Some dollars may need to shift to Product to fix product first to better match the market, as an example. Or pick the right markets first. Otherwise, our likelihood of meeting expectation will be really low.

Agree with him completely on that, though I work in the context of enterprise sales, big tickets, long cycle. I only speak to the CFO about pipeline influence and SQLs.

Other metrics are useful for Marketing but just cause confusion outside of that.

Fully agreed on giving a consolidated CPL / CAC.

I should clarify that I don't mean PAID brand advertising. I mean that the request becomes community and organic and thought leadership because the misconception by non-marketers is that it's "free"

ooo wld love to have? that orchestration convo again

Agree with his point - I also use a blended CPL, but I am also trying to get to more accuracy in Salesforce along with Sales to better track our conversions through the funnel. It’s been a challenge, to say the least.

mid market “industry” events worked great for us this year circa brand awareness, but relatively poorly in terms of CPL. will still do in person events but much more channel partner centric - cyber sec space

a campaign manager who is over multichannel is a very good way to look at this. when i did cm for ESRI we had this viewpoint multichannel

Yes!!! Integrated marketing— 100%

What are your favorite mid market events?

Breaking down silos is huge, create a truly more integrated motion across the marketing teams. Great point

Curious if others are focused on CLV for 2025

we did FutureCons, MES, CRN Xchange. “Favorites” is a loaded term…

Starbucks and Nike (new CEO) are also getting folks back into the office.

Matt does a GREAT webinar / has good content on this ...

Lisa Vecchio has led this several times - she'd be great to speak to integrated marketing/gtm - https://www.dhirubhai.net/in/lisavecchio/

I am in a heavy “status meeting” culture. It drives me crazy - I miss Asana and other ways of doing things, but it seems to be generationally driven (average age at my company is 58).

In the enterprise context, I budget by product and/or solution P&L, and measure pipe and activities against that

Out with attribution and in with funnel conversion improvements

same! APAC & EMEA

that's called an intent signal

My budget dumpster fire was…working for a PE-backed company, we didn’t get the budgets finalized until 3 months into the year. I got approvals and hired some new roles in January. When the budget got finalized, they had FORGOTTEN one of my director-level hires. And, because PE, the budget was fixed. So every month I had to find the “extra” $ to pay this NYC-based director ????♀? (for reference - I succeeded and came in under budget. I just had to skip a conference)

can we rebrand CAC? hate saying that word out loud

CAC by product makes sense.? All products are not equal.

CAC Payback is very relevant

CAC by product is also important.

How about Full Up Cost?? FUC

BAC Buyer acquisition cost?

Is anyone on this call satisfied with the way their budgeting process works and plays out through the year? Looking for inspiration for a better approach.

CAC by sales channel as well

yessssssssss

and layers... geo, targets

I am, but my company is very small and VC backed by an investor who generally trusts us so I just don’t have the same bureaucracy others do.

For budgeting in that situation (established mature v new products) I’ve adjusted distribution of budget for cac:

new products 50/50 sales/marketing

Existing mature gtm products: 70/30 sales/marketing

I have a great relationship with the CEO. He trusts me to make the right decisions and spend what is needed. He’s gone to the CFO on my behalf to increase the budget when they forgot to add travel.? Do marketers really need to travel???

sounds like TRUST

This right there is where the budgeting process gets messy. We need more sellers. Do we? Or do we need more marketers? Which is true?

“Trough of professional disillusionment” is my favorite phrase so far

needs a tshirt

Budget argument 2 hours ago, more SDRs or more sales reps? Outbound vs inbound?

CEO is so key. Mine gives lots of freedom, and is very S&M savvy

I suddenly want to create a graphic...

(for the tshirt)

Does anyone include Customer Success in the Sales & Marketing cost?

dooo itttttt

Only customer marketer support of customer success team

not cost beyond mktg efforts - but in the convo, as i plan customer mktg & budget

“CRO: We want more sales doing more outbound… CFO: we need to lower our CAC… CMO: let’s scale sdr team in mkt to help drive efficiencies…”

Unpopular opinion…tough CFOs can make you a much better marketer. Forces you to be really really commercial in how you frame what you do. ??

along with Dream Killer October

Appreciate all your expertise!

love this group so much

Thank you for a brilliant session.

OMG that is what I’m struggling with right now - will be there next week for sure

So timely!

thank you everyone for sharing, always good thoughts to consider and take away

Decision next week - with the CEO asking them to invest more. I think this is the time to invest more because no one else is

slight growth

Is the 5/6% of revenue mentioned - all marketing budget including Headcount?

I am at 5% to revenue without headcount

Our (typical) 5.5-6% has been external spend including contractors but not FTE.

Growth, PE backed, expanding vertical targets

We're PE backed now, been given "zero budget" files to build everything from ground up, assume nothing, defend everything.

Our EBITDA has gone from -39% in 2023 to 17% YTD and how we got here was painful including a -77% reduction in my budget YOY. The complaint is our sales team in not bringing in new logos. Renewals are fine but our ACV isn't high enough to afford us to spend more in marketing. So am I expending more budget next year? No, I'm expecting flat especially with being PE backed.

not including headcount

marketing only

Tech or no?

Meaning — martech included or not?

This varies significantly by industry.? Healthcare is MUCH lower.

I'm not really tech, we're tech training so not always recurring revenue

I’m curious out of your entire budget (including headcount & everything), what % is spent on headcount vs programs vs tools vs ???

We have a new p/e firm and they are pushing to get to 5-6% including headcount .We were at 9% pre P/E investment.? I just don't want to broadcast that to the entire group right now.

Also depends on how much is under “martech” vs. rest of GTM tech spend

12.8% of revenue including people and programs, with strong double digit growth.

We're being asked to shift from 26% of revenue from inbound to 80%. How quickly unknown....

We treat customers as an ABM segment

+1 Matt - we are doing a lot more expansion support

We definitely have moved to cross sell focus as much as new business

Copy that, oof that's rough

Account-based is increasing, with more of an enterprise focus, but board needs to see new logos. So the advice is “do it all”

do it all wonderful....

Where is sales/CS in terms of future budget projections in this conversation

I am being asked to reduce spend on paid and invest in non-paid demand with Content Creation as the lead focus. We are def addicted to the MQL that paid brings every week - but the ROI on these to revenue are not delivering.

Does anyone have have the program / variable spend should be for medical device / med tech companies?

What is the source of the market uncertainty? Is it GenAI impact? Or perhaps dependency on the per seat pricing metric?

We have nurtured the board and CEO to know there is plenty of upside in Expansion (e.g. we did not expand to all the potential over the past 3-4 years).? So yes they want new logos but we are trending to weigh in on expanding at global 2000 companies.

Does anyone else feel like defining the ROI on $10k spend is just too low to make any real impact? That perhaps it’s more awareness than conversion?

One problem is customer contraction:? renewals end up lower because customers have let go of a lot of people. It’s some AI plus their own slowdowns. So that brings in more need for growth to overcome customer dollar churn

Not sure if this is what you’re asking but the source of uncertainty is the data. Buyer decision making is just slow…sales velocity numbers.

When talking with CFO/Board: I always talk about how much does it cost for a $1 of net new booking… our net selling expense (all sales and mktg) is .96 for a $1 of NNB

100% we just had Sales, Marketing, Product and CS + RevOps leadership in a pre planning session.

This one may be a bit left field but it's a real challenge sometimes for me being in the field without visibility over the HQ strategies.? What are your experiences in achieving successful communication about budget planning without sounding defensive?

for me it does include martech

I feel your pain. I finally had success to shift from the MQL model to the MQA and MQC model. Early days but PE is happy with it.

The last few years, my approach has been to hit the guided budget target, +/- 5%. Fortunately, this has led to leaving room for opportunistic spend throughout the year. Going into exec way above target lessens one's credibility (IMO).

Replying to "12.8% of revenue inc..."

What is your revenue -? trying to gauge current scale and emphasis on marketing led growth.

Does anyone have a percentage of digital/ paid spend to content and beyond that is used as a best practice?

agree, there has to be a threshold.

It will for sure be a bumpy road reducing from paid given their level of quality

My gut tells me direct attribution is under reported as well and Paid is playing a role in the journey.

Year-over-year data (opps created) should be the foundation for budget building

Additionally, when I present the proposed budget, I take a swag and present a high level version of the entire Marketing roadmap. This way, exec reviews the $ in context.

Good point. We're not doing transactional marketing but outside of marketing it's mostly viewed as transactional.

has the board been receptive to showing the ongoing touch points within an account while not specifically translating to an opportunity?

We have just started ABM - so bring some of that to the table now- They are excited by the touches but asking when will we see pipeline.

Speaking of Intent Data, anyone have experience with intent data in the EdTech space? How good is intent data when the customer is a school. I’m guessing not so reliable.

Love his point though - this is what I can do with what I have.

My theme for this fiscal's spend and activities, is ALL about efficiency.

We are heavily focused on MQL — and then SQL (pipelined deal) with a gap in between.

and just use the numbers to show it; this is our historical conversion rate, etc. so this is the math on what this budget will get us

and maybe I can squeeze a little bit more, but not double digits more

The coldest inbound lead is warmer than the warmest outbound lead

I am finding this new obsession with ROAS as the only measure in my new org

I am trying to shift the mentality away from MQL.

And our Sales org revolts against pursuit of MQL...

Here for the discussion away from MQL; I see several others, too. let’s get a side call going!

When I started, the PE firm asked for Marketing to be responsible for 100%. I put my foot down and said no. 60/40 with Mktg coming in at 40 and the 60 being split between AE and Channel. Where have we landed after two years? Mktg is 59%, Channel is 31% ...then there is the AE team...

Is that 59% direct attribution or direct and influenced?

We are at 70/30 marketing/AE (BDRs as part of marketing). Inbound is 50%

WE have built a strong engine for MQL creation but the conversion to pipeline is not where it needs to be yet.? WE are investing in customer lead (just starting), ABM and even simple things like Webinars are working,,, when we tie to strong sales motions this seems to drive the most... (kind of a duh moment)

Has anyone had a scenario where their budget was cut, and they still exceeded the projection?

We are 50 % sales lead, 30% marketing, 20% partner.? Target is global 2000 enterprise accounts with emphasis on expanding in the logos we have

that was our scenario this year, budget cut by about 5% plus a reduction in headcount. We put more emphasis on streamlining our tech stack and added more DG campaigns

I closely attach my team to Sales to mitigate any discussion on reducing programs. Sales = Advocates.

I have a large BDR (outbound) team rolling up into Marketing - I look at the total budget and am able to shift between where I want to invest to hit goals… ie: maybe I don’t need 3 BDRs in 25, I can take that budget into Mktg Headcount or program spend

Thank you. This leads to a counterargument of why marketing always asks for more and whether ELT believes in what we do.

Stopping advertising to save money is like stopping your watch to save time.”

so true - they don’t really know what we do.

We are generating a lot of inbound leads but the SDR team not under me is not doing a good job nurturing. We have a small SAM so this is very frustrating. Working with my sales counterpart to focus on training and better scripts/approaches to nurturing so hopefully this will help.

that's heard, and frustrating, I always had the best results when I had SDRs under me

I’m getting the SDRs in 2025 and this is what I’m most excited about. Making the overall PG budget fungible.

That’s tough.

That’s a problem.

IF SDRs are not under you, it is very hard.. but I have had luck making sure both teams have the same goals (pipeline targets)…. / Have also funded my own IB BDR in the past to further qualify before passing to SDRs

This has been a very therapeutical session, thank you.?

Same issue here - I’ve spend time with our head of product on producing a better sales narrative - interesting for me they can’t do this on their own. Half tempted to raise my hand to own BDR so I can control conversion but not sure??

Thank you for this conversation (therapy session). Have a great weekend. Look forward to the “moving away from MQL discussion”??? Thanks everyone.

We need a silver lining

I think SDR under Marketing is a key to life!

Are any teams shrinking/getting rid of SDR team?

thank you for this, very helpful and insightful - have a great weekend all. Silver lining is that it’s the weekend!!

Additional thought as we close - Sales and Exec don't care about our marketing KPIs. Frame them as business outcomes/KPIs. #KnowYourAudience

Appreciate the help realizing I might not be crazy.... have a great weekend.