Return on Marketing Requires an Investment

One of the most important decisions a business owner or CEO will make is establishing a budget for marketing. Like talent, product and infrastructure, marketing must be viewed as a necessity in business.  Marketing expenditures are essential investments for growth.

An average SMB (small-to-medium size business) will typically set a marketing budget at 4% to 6% of sales revenues.  There are several factors that can impact this budget.  As an example, a well-funded startup may invest 20% of revenues for aggressive consumer acquisition programs and advertising.  Notice, the “well-funded” qualifier.  Likewise, there is always difficulty in setting a budget for a pre-revenue company. Entrepreneurs will often spend most of their investments in product and then struggle to bring in sales. Startup costs must include marketing.  For every dollar invested in product, people and infrastructure, an equal dollar should be set aside for investment in sales and marketing.

Here are three simplified phases for marketing investment planning:

1.  Brand Awareness:  Your marketing investment should start with focus in reach and awareness including brand identity, a website, company advertising and direct and social marketing.

2.  Engagement: The second phase invests in additional marketing programs that support your sales efforts including lead generation, publicity, web marketing (SEO and SEM), market validation, events, advertising, presentations and customer case studies.

3.  Nurture:  Finally, maximize your marketing investments with customer communications, CRM services, loyalty initiatives and nurturing programs to maintain the valuable potential and existing customer relationships.  Once you have them engaged, use your marketing spend wisely to develop and grow your relationship.

After your marketing budget is defined, you will want to establish how you will measure the success of your investment.  ROMI is the acronym for Return on Marketing Investment.  The calculation is total revenue divided by marketing spend.  ROMI = Revenue ($) / Marketing Spend ($).

Some marketing activities such as branding, advertising, PR and social media are harder to track impact and influence. As a rule of thumb, the simple ROMI equation gives you a thumbnail sketch of your return on your marketing investment.  ROMI is a good KPI (key performance indicator) for leaders to use in the business dashboard.

If you are a startup or pre-revenue, the marketing spend will be set as your budget for purposes of forecasting. Some may argue that there should be other factors added or subtracted, such as attributable revenues; however, most businesses have a difficult time tracking every dollar spent on activities such as advertising. Start with the broadest “buckets” and as you increase your marketing reporting and tracking sophistication, you can scrutinize spending with finer analysis.

Marketing is an investment.  Success in ROMI requires budgeting, reporting and analysis in order to fully actualize the benefits.

In lean times, business owners have a tendency to cut marketing spend. Lost time and lack of investment, even during challenging periods, impacts long-term growth. The result may not be felt right away. It is an illusion. Prolonged periods of reduced marketing spend can dramatically reduce sales opportunities. The fewer dollars you put into a marketing budget the greater the exponential impact on future revenues.

Similar to an investment savings account, the more you put into your “growth” marketing account, the higher potential return on your investment. The more dollars spent on high risk marketing activities, the greater risk to returns. Any sound investment advisor, marketing or financial, will counsel a business owner and CEO to invest based on the organization’s risk tolerance.  Marketing investments should be treated like any financial investment.  Know your risk tolerance, invest accordingly.  If the business has low tolerance for risk, eliminate marketing spend in expensive tactics that are difficult to measure. Always diversify your investment to mitigate risk.

In order to qualify for a return, it requires an investment.  Failing to set aside funds to market is failing to invest in business sustainability.  Expectations of sales without an adequate marketing budget is a business built on luck. Though we would all like to be lucky, if you plan to sell something, invest in marketing to create the sale.

I have a problem with too much money. I can’t reinvest it fast enough, and because I reinvest it, more money comes in. Yes, the rich do get richer.” -Robert Kiyosaki

By Jamie Glass, CMO & President of Artful Thinkers and Managing Director of Sales & Marketing Practice at CKS Advisors.

Market to Your Strengths

Market to Your Strengths

Recently at an entrepreneur camp for high school students, I worked with several teams in preparing a 3 minute pitch to sell their inventions and innovations to a panel of professionals.  My focus was to help these young entrepreneurs identify their business and product strengths so they could convincingly sell us on their idea in a very short amount of time — much like the real world.

I shared my experience in managing sales teams and evaluating investor presentations about what works and what does not work in pitching.  I let them know that even the most seasoned professionals can mistakenly focus on the “hot” features without direct alignment to what makes you stand out against your competition.

My lesson, you must compete for mind share before you get market share. Whether selling your idea, your services, your business or just you, always use your valuable marketing resources to promote what makes you better than the rest — your strengths!

Have you identified your market strengths?  Recently? And once you found your strengths, have you effectively managed and built them up in your marketing?

The easiest tool to define your strengths is the simple risk assessment that every marketing plan must include — SWOT Analysis.  No matter the size of your business, you must know your Strengths, Weaknesses, Opportunities and Threats.  

Complete a SWOT Analysis to Find Your Strengths

If you have already completed a SWOT analysis on your company, product or service, dust it off and review it today.  Is it still accurate?  Hopefully you have evolved!  Your strengths are not set in stone.  They are dynamic based on competition, economics, innovation, market growth or decline and shifting attitudes toward your business and products from consumers and employees.

If you have not completed a SWOT Analysis, take out a piece of paper now. Draw four boxes and label them: strengths, weaknesses, opportunities and threats.  In each box, list out what you currently say, believe or understand as your strengths and your weaknesses, the opportunities you see where you can grow and threats in your business to achieving your goals.

This initial SWOT Analysis is meant to be quick; however, a thorough strategic marketing plan will take more time and resources for a complete evaluation.  You will ultimately want an assessment that has multiple inputs including employees, executives, vendors, partners and current, potential and lost customers.

A SWOT analysis is useful to make sure you are current with messaging on how you are perceived and understood in the market place.  It is a business planning tool that should be evaluated quarterly to make sure market opportunities are seized and threats are assessed and mitigated.

The next step is to audit your current marketing programs and communications to see how effective you are in defining your strengths.  Are you placing all your strengths on the first page, first paragraph, above the fold and in your elevator pitch?  Review your marketing tactics to see how well you represent your strengths. Start your assessment with:

1.  Branding – Do you clearly communicate and represent your strengths in the essence of your brand and your identity?

2.  Communications – Do you detail your strengths in all your marketing communications, including sales presentations, collateral and on your web site?

3.  Sales – Can your sales representatives and customer-facing employees recite your top five strengths?  Where are they detailed in your standard sales presentation?

4.  Public and Analyst Relations – Does your boiler “About Us” include your marketing strengths?  Are you able to weave your strengths into every new release?

5.  Social Media – How often do you remind your fans and followers about your strengths?  Are they listed in your social profiles?  How many weekly posts include mention of your strengths?

In order to create demand and achieve anticipated growth, you need to market to your strengths. Make sure you are consistent, clear and current in your messaging and get the word out why you are better than all the rest.

What Does the Brand of YOU Represent?

Winning in the Branding of YOU

Branding is an art and science for marketers.  They blend the key attributes of a product, service or company and position them to appeal to a consumer.

Using scientific research, data and analytics, the brand marketer artfully crafts visual and written communications targeting emotions and logic of the intended audience.  The ultimate goal is to drive to an action, such as buy or like me.

How does this relate to the branding of YOU?  We are all a brand.  Seth Godin defines a brand as “…the set of expectations, memories, stories and relationships that, taken together, account for a consumer’s decision to choose one product or service over another.  It is how we present ourselves, talk about ourselves and how we are remembered by others.  Branding applies to all aspects of life, professional and personal.  It is the first and last impression of YOU.

If every encounter in life was a personal moment for YOU to brand yourself, what are the words and actions that repeatedly represent YOU?  More importantly, would you want everyone to repeat them over and over again?  Will you be remembered as “Have it your way” (Burger King) or “I’m lovin’ it” (McDonalds) or “Avoid the Noid” (Domino’s Pizza)?

Professional branding is critical for your career.  The words that others use to describe you, are your brand.  You own it.  It may be a definition that comes from a collection of interactions or a single opportunity you had to gain respect and credibility in a brief encounter.

There are several ways for you to represent the brand of YOU.

1.  Introduction.  This is your 90 seconds at a shot of fame.  Whatever comes out of your mouth or you share in an email, is your opportunity to make your brand pitch.  It is the firm handshake opportunity.  Face-to-face, you have an opportunity to say with confidence who you are, what you do and what you represent.  It is the YOU moment.  In email, it is your invitation to draw someone in to know and learn more.  It should be short, to the point and always conclude with a call to action.  Think of it as your 140 character tweet about YOU.

2.  Social Media.  What you post on the Internet is your brand.  And, it does live forever.  It is how you are represented on Facebook, Google+, LinkedIn, Twitter, Instagram, YouTube, blogs, and so on.  In other words, the brand of YOU is everywhere you put a comment, post or uploaded something to the world wide web!  Before you hit send or enter, think how it represents YOU.

3.  Your CV.  A curriculum vitae (CV) provides a summary of YOU by experience and skills.  It is your brand summary.  Your CV should clearly articulate your strengths.  It is the summary on your LinkedIn profile.

4.  The YOU Meme.  The one way to control your brand is to have a practiced “meme”. “A meme is an idea that behaves like a virus–that moves through a population, taking hold in each person it infects.” says Malcolm Gladwell.  Your branding meme is what others take with them and tell others, over and over again.  It is your “viral” message.  A meme should delivered in 60-90 seconds and cover all the unique characteristics that you want others to remember about YOU.

The creation, care and management of the brand of YOU is very important. It has tremendous monetary value.  You are your best brand PR agent, you are the one to spread the word about YOU. The impression you make in the marketplace will confirm YOU are a good “buy” or confirm why people have no interest in buying what you are selling!  How others talk about YOU will affirm what YOU represent.

Take time to think about the qualities of YOU and what YOU represent, then how YOU can position this to others to create actions or get results.  Rehearse your meme.

Like You

Like the Brand of YOU

You can always improve on your brand; however, reputation management is a costly proposition if you have a damaged brand.  Even a lot of money can’t always repair a brand.  We all like brands that represent qualities that are good and positive. Be authentic, truthful and confident.  Make sure that your brand represents the real YOU.