Are You in This Predicament?
Chief Marketing Officers and Marketing Departments are the target of the presidents of their companies. Not a desira
ble spot to be in. However, they are there.
They are being told their Marketing Department has to show it is producing more in revenue for the company than what it is costing the company yearly.
Basically, it comes down to this. Marketing has to show it is responsible for more sales or profits than the department costs.
It has to have a positive return on investment.
How Did This Occur?
More and more prospects are doing their own research online for products or services they need. They no longer need a company’s sales rep to furnish this information to them.
Prospects no longer are taking phone calls or meeting with sales reps during the early stages of their research. They don’t contact a sales rep until they’ve done quite a bit of research and they have narrowed their choice down to several companies they want to work with.
This has caused a major problem for many companies. How do they make sure prospects know about them? How do they make sure prospects know their company has the best product or service they need?
Since sale reps can no longer do it, the marketing department has to.
The Marketing Department Has to Take on This Role
That creates a problem for most CMOs and marketing departments. This role is unfamiliar to them. In the past their role primarily was brand development. They made companies aware of products their companies had.
Think of Avis Car Rental – “We Try Harder” or Coca-Cola – “The Pause That Refreshes.” Ronald McDonald for McDonald’s, Charlie The Tuna for Starkist Tuna or The Pillsbury Doughboy.
CMO and Marketing Departments never had to make sales. They never had to show they were making more for their companies than they were costing them. This is all foreign to them.
Most CMOs and Marketing People are Creatives
They come up with the catchy phrase or the unique idea. They are not accountants. Money and figures are the farthest things from their minds. Yet they are now being asked to put on a financial hat. How do they do this?
Get on The Same Page as Your President
What your president is looking for is how many sales are your marketing efforts generating. Is the money from these sales higher than what you spent on your marketing efforts?
Since all prospects do not buy, buyers go through different stages before they actually buy. It’s best to look at the most general stages here. Doing this makes it easier to track. Here are 4 stages easy to track:
Prospects – All of those people or companies that may need your product or service.
Leads – Those people or companies that raise their hand and express an interest in the product or service you offer.
Great Leads – Those people or companies that are very interested in your company and the product or service you offer
Hot Leads Ready to Buy – Those people or companies that are ready to buy your product or service right now.
In each marketing campaign, you have to have different marketing pieces to move the people or companies through each of these stages.
- General marketing gets them to raise their hands.
- More specific marketing lets them know about your company and what you offer. It also tells them more about the product or service you have. They want more info.
- Very focused marketing explains why your product or service is the best for their needs and why your company is the best one to provide it to them.
The Marketing Funnel
At each stage of the process there are less and less people or companies. That is where the concept of a Marketing Funnel comes from. A funnel would look like this:
You have to track each person and company through each step of each campaign you run. You know how many initial prospects you contact. You identify how many of those become leads. Moving further along you know how many become great leads and, last, how many are ready to buy. You turn those ready to buy over to your sales reps to make the sale.
At the same time, you need to track what your marketing cost at each level.
You ask the sales department on an ongoing basis how many sales they made to those ready to buy and the dollar amount of those sales. You then look at the total cost of your marketing in that campaign. Dividing the total sales by the total marketing costs gives you the Return on Investment.
If that is positive, the company has made money on your efforts. If that is negative, money has been lost.
In every marketing campaign you continually revise and improve your marketing to move more people and companies from one level to the next and to lower the cost of the marketing.
The president of your company is already getting information on the number of sales made and the amount of those sales. He or she also knows what your department is costing the company. So your president knows whether the cash flow is positive or negative.
It’s Up to You to be Proactive
Furnish that information to your president before he gets it from other sources. Do it quarterly. Better yet monthly.
More Detailed Marketing Analyses Can be Confusing
You may wonder if it’s time to do more a detailed analysis of your marketing.
For the last several years companies have been promoting different analytical tools in an attempt to help marketing departments evaluate their marketing. You can find out how many people or companies visit your website or read a report there. You can find out how long they remain on your website. There is much more additional information you can obtain.
The problem is most times this analytical information just complicates determining whether or not your marketing is producing sales and how much. The number of people visiting a website does not tell you how many are leads. It also doesn’t tell you where they’re at in the process.
You can’t go to your president and say 1,000 people viewed our website last month and hear him respond “Well, we actually lost $60,000 last month.”
The Simpler the Marketing Funnel the Better
It’s best to keep the number of levels in your marketing funnel as few as possible. It’s also best to develop your own system to track the number at each level.
You can work with your sales department to determine the levels right for your department. You can ask your IT people to design a simple system to track it for you.
Make Your President Your Friend
Take the target off your back and that of the marketing department.
