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.

Capitalize on the Dog Days of Summer

iStockPhoto

Dog Days of Summer

There is a constant drum beat in business circles that summers are difficult for getting anything done. There are a variety of excuses that justify this belief, including, “everyone is on vacation“, “people don’t work when kids are out of school“, “buyers are not engaged“, and of course “decision makers are unreachable“.

The hard reality is these excuses are self-fulling prophecies.  We are more wired, more connected, more engaged today.  Business is not done during the hottest months of the year because we assume we will get a no before we ask for the yes.

The facts prove people are working all summer.  Monthly average work week data shows that we work the same amount in the summer as we do all year round.  Decision makers average 49 hours per week.  We are more productive than ever.  So, why are you not capitalizing on the hottest months of the year?

The Dog Days of Summer are the best time of the year to build up prospects, qualify leads, refresh your marketing strategies and compete for mind share.  While everyone else falls into the excuse trap, you have an opportunity to make noise and get noticed.

Laying back until September to heat it up your marketing and selling efforts only pushes you into the most distracting time of the year.  Right after Labor Day, decision makers are budgeting for 2013 and events are abundant.  Daily sales calls peak and we are all flooded with competitors emails and advertisements trying to capture top of mind awareness.  Simply, your odds are much better to get noticed during the summer months.

Here are some suggestions on how to capitalize on the final dog days of summer:

1.  Reach out to current customers.  Estimates are that it is 7x less expensive to get business from a current customer than a new customer.  Update your current customers on your latest business activities and see if they are ready to buy more.

2.  Prospect for opportunities.  Run reports from your contact database to see who has not been reached in the past six months.  Put them on your priority contact list and create a campaign to heat up some buying interest.  Activity creates action.

3.  Build sales plans for key accounts.  Spend time to craft detailed sales plans for your top prospects.  Identify decision makers, buying cycles, budgets and key influencers at your top target companies.  Read up on their latest news and research their business to identify critical needs.  Use your sales plan to carefully craft the value proposition for doing business with you and then set the appointment to make the pitch.

4.  Promote, promote, promote.  As others hold back until after Labor Day, you have the opportunity to use public relations and social media campaigns to gain attention.  Take advantage of the slower news cycles and go for the headline.  Do whatever you can to get the attention of those seeking your products and services.

5.  Summer close out sales. There is a very strategic reason why Christmas in July sales dominate the dog days of summers.  Retail outlets and online storefronts are looking to clear out inventories.  The other reason is June, July and August sales are the time people will typically start shopping for school and holidays.  Consumers expect a deal.

6.  Refresh your sales and marketing strategies.  Review your strategic plans. What has worked, what is not working and what market opportunities exist for the business in the next 18 months. Tactics follow strategy.  If you are only doing the work and not evaluating the impact on your strategy, you could be heading in the wrong direction.

7.  Pivot now.  Review your key performance indicators and adjust if you are are going to miss your mark.  Making a change now can benefit you in the last quarter of the year.  Don’t wait, start executing your changes and new strategies to achieve your business goals this year.

It is time to heat it up!  You have fewer people competing for attention and business right now.  Take advantage of it.  People receive fewer emails, fewer calls, so use this as an opportunity to make a direct connection today and set the wheels in motion to capitalize this year.

Jamie Glass, Outsourced CMO and President of Artful Thinkers, a strategic sales and marketing consulting company and Sales & Marketing Services Managing Director 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.