Do you view marketing as an investment or as an expense? How you view this will determine the importance you place on marketing in your business. Let’s start with defining what marketing is.
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What is Marketing?
Marketing is the process in which you introduce yourself to your target market with the intention of finding potential customers. It differs from sales in that the sales effort is the process in which you try to turn those potential customers into paying customers.
Marketing is a critical part of the overall sales generation process of your business. Without it no one knows who you are and you have no potential customers to sell your products and services to. Many businesses make lead generation the responsibility of the sales team. They feel the salesman should be making his own cold calls and outreach to find his next customer.
While this can be a good strategy if the salesman has a strong contact network and cold calling skillset, it is not the most efficient. A separate marketing effort that focuses solely on lead generation and produces qualified leads to the sale team will result in more sales.
Marketing is an Investment NOT an Expense
How can you implement this? Look at marketing as an investment in your business and not an expense. If you see marketing as an expense then your marketing effort is most likely not producing enough leads to feed the sales team.
When marketing is used only to provide brand awareness it is very difficult to measure its effectiveness. So, whenever possible create marketing campaigns that can be tied to the number of leads that the campaign generates. For example, if you have a trade show you can determine how many qualified leads the show generated allowing you to measure the return on investment of the show.
Unfortunately, this isn’t possible all of the time. There are marketing costs that inevitably cannot be associated with specific results. What can we do about that?
Measure Marketing Results
To determine the overall return on investment from marketing you will need to measure and analyze the results of your marketing efforts as compared to the total cost of marketing. You can choose whatever measurements feel make sense for your business; however, here are two good performance metrics you can use:
Cost per Lead: Take the total costs of your marketing efforts and compare that to the total number of qualified leads generated for the period you are analyzing (Marketing Costs / Number of Leads). This will give the costs of each qualified lead that your marketing efforts generate. Once known, you can look for ways to reduce the cost per lead in order to get the most out of your marketing efforts.
Marketing Return on Investment: To view marketing as an investment compare the total costs of marketing to the value of the leads generated. First determine the possible sales value of all the leads generated from marketing for the period being analyzed. Then compare that to the total marketing costs (Total Marketing Cost / Total Lead Value). This provides marketing as a percentage of value provided. By lowering this percentage you are becoming more effective in your marketing efforts by generating higher value leads and/or by reducing your overall costs.
When you view marketing as a cost you don’t see the value that it brings to the organization. By looking at marketing as an investment, this paradigm shift forces you measure the results that marketing provides and compare that to the costs. By doing so, you naturally look for ways to make marketing more efficient and effective thereby driving costs down and benefits up.
Question: Do you view marketing as an investment or as an expense? You can share your answer on Facebook, Twitter, or LinkedIn.