Avoid Marketing Irrelevance: Stop Asking What Is Our Budget? and start asking, "What is our sales target?"
Established industries are often disrupted. Think of the technological disruption to the stock markets and traditional travel agencies, or the disruption to the entertainment industry from streaming services.
In any case, the incumbents argued, "It is not that easy to dismantle the status quo and start over." Yet that is exactly what the upstart did every time, and the dinosaurs eventually died out.
Nowadays there is disruption not only in marketing but also in the business world as a whole, and the C-Suite needs to be aware of this.
In traditional organizations, managers set goals and overarching strategies; Then manufacturing, research and development, and design put together plans to achieve these goals. Meanwhile, IT, marketing, finance, and other "support" departments set the budget they need to meet both the organization's goals and the needs of the main departments.
The marketing plans in this scenario are broken and become mortar for the other building blocks of the company. They rarely communicate how marketing efforts are directly related to business goals.
If that sounds like you, watch out.
Why the traditional role of marketing in business needs to change
In today's world, the traditional role of marketing in business has not only been turned upside down, it has been completely reinvented.
The first step a brand takes with a version 1.0 product is marketing – i. H. find out how customers interact with a brand. What do you like and what do you dislike? How much do you spend? How often do you buy?
When a company learns more about the behavior of its customers, it is able to define an overall sales target for different types of customers.
From there, finance, marketing, and technology work together to build a tech stack for customer acquisition goals by customer type – and the marketing budget naturally falls outside of those requirements. Technology supports and powers marketing and finance by enabling insights and connections across the enterprise; and then R&D, manufacturing and design learn not only from the insights of marketing, but also from the analysis of finance in order to iterate and develop even better products.
This is not to say that marketing or finance is the center of an organization; It means that all departments make a meaningful contribution to the organization.
As a marketer, when you ask about your budget today, you will get blank looks as budgets are defined in terms of the cost of acquiring a new customer or achieving retention goals.
For example, in the acquisition phase, your marketing budget might be $ 10. Of course for each customer won. To do this, you need to know the entire addressable market, products and buyer personas.
It's the opposite of complex; In fact, it's the easiest way to do marketing because never before have we had the information and the ability to learn, analyze and iterate on this scale!
How marketers can avoid irrelevance
Marketers need to take a step back and reevaluate their processes and role in the business by starting with "What is my budget?" to "What is my sales target?"
First, get used to working closely with finance and knowing the numbers. How much sales come from existing customers vs. new customers? What is the churn rate? What is the customer's lifetime value? Is there an overview of what it really costs today to win a new customer?
It is also important to work with an "incrementality only" mentality. Marketing cannot take credit for every purchase. Costco is a great example of a company that has grown successfully with no advertising and minimal marketing; that's because his products are good and can practically sell themselves. If Costco started spending $ 100,000 a month and then splitting that amount through new customer signups, it would be an overly optimistic and incorrect view of the cost of attracting new customers – if marketing were to attract new customers at all!
By continuously A / B testing and measuring incremental results, companies will begin to understand the real cost of customer acquisition and retention. And knowledge is the first step towards improvement.
Also, it is better to work with bits and information than to work without information. Maybe you just know how much churn costs, and that's fine. Divide up a portion of your budget to target this. Use incrementality tests and find out the real cost to see the bigger picture.
Finally, make an amnesty agreement "from this point on". You may have told your C-suite that you can get customers for $ 1.50 when in reality it is $ 10. Executives will be thrilled to have accurate information and will help improve marketing from then on. You probably didn't believe in the $ 1.50 figure anyway, and if you also come up with a plan to grow the business that can win customers for $ 10, you are the hero, not the party killer.
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When you begin to rethink the role of marketing in business in the ways outlined in this article, the respect of the board, CEO, and CFO will come in, increasing the influence of marketing, and giving you more authority to do great work.
Additional resources on the role of marketing in companies
Why you need to align marketing with business goals
Six tips for moving from B2B marketer to solutions architect (and why you should)
The Evolving Role of the CMO (and All Marketers): Five Guiding Principles