Marco was pumped. During his morning jog, he had conceived a brilliant idea for improving the Locke+Emmons Web site to enable customers to buy products more easily. He knew that the improvements he had in mind would cost money, so he anticipated getting resistance from executives who would have to approve the expenditure.
But he felt sure he'd win them over. "After all," he told himself as he strode into his office, "the new site will do wonders for our brand image."
Later that week, Marco presented his case for an enhanced Web site to the executive team. He confidently described his proposed changes. And he provided detailed studies comparing Locke+Emmons's brand-image strength with competitors', as well as proposed costs.
But though his audience listened politely and asked a few questions, Marco detected little real excitement. Still, he finished his presentation and thanked his listeners when Ann, the CFO, promised they'd get back to him next week.
Over the coming days, Marco waited impatiently for word about his proposal. Though perplexed about the team's apparent lack of enthusiasm, he still felt certain that he had made a compelling business case. So he was shocked when Ann finally called him into her office and explained that she couldn't approve funding for the Web site changes.
"We've really got to be careful about our spending," she said, "and updating the site just isn't our top priority."
Let's Talk Business
Though Marco didn't realize it, he had made an all-too-common error in the way he presented his case: He didn't speak the language his executive audience used and valued. Instead, the focus of his argument was that improving the Web site would burnish his company's brand image.
He was probably right. But the phrase "brand image"—useful in his own circle of fellow marketing professionals—had left his audience cold.
Marco would have had a much better shot at winning approval for his proposal if he had spoken the language of business. For example, he might have said: "Because our Web site is confusing to visitors, 15 percent of the people who come to the site depart without buying anything. That translates into between $100,000 and $300,000 dollars in lost sales every quarter." If he had spoken in terms of lost sales, he would have quickly gained his audience's attention.
How can you master the language of business?
- Shift focus from marketing activities to business results. In talking about your projects with non-marketing executives, don't just rave about webinars, brochures, and trade shows. Take things one step further by explaining the business results that each activity will generate. For example, explain that a new brochure and webinar will generate leads. Leads will point the way to new sales. And sales will generate cash flow—which will help the CEO fulfill his promise to shareholders to grow the company 10 percent in the coming fiscal year.
- Prioritize your marketing activities. Identify marketing activities that have the most potential to stimulate the growth your company is after and to generate the best returns on its investments. You've got only so much budget, energy, and time—so invest those limited resources in the activities that will give your company the biggest bang for its marketing buck.
Those activities may include developing new products or services, using a different distribution channel, and participating in more tradeshows. Each marketing department's situation is unique, but the goals remain the same: Improve your firm's cash flow, generate fatter profit margins, increase returns on assets, turn over inventory faster. Which of your, marketing activities will generate the business results most important to your organization?
- Demonstrate your business acumen. Even if you're not accountable for sales results, demonstrate your awareness that what you do affects those results. Equally important, use business language to express your desired accomplishments. For instance, you don't want to "spend two million dollars on newspaper inserts"; you want to "invest two million dollars on inserts that are projected to offer a ten percent return."
- Learn how Wall Street talks business. Regularly review stock analysts' reports—you'll learn a lot about how Wall Street translates marketing-related activities into financial language.
Consider the following excerpt from one such Wall Street report, written by Tom D'Amore for the November 11, 2005 edition of Morningstar.com:
We think Johnson & Johnson is an exemplary wide-moat company. It boasts trusted brand-name products, world-class R&D and marketing capabilities, and global scale and reach. We would eagerly buy the shares at a slight discount to our fair value estimate....
J&J is a model of consistency and stability. The firm has delivered 19 consecutive years of double-digit earnings increases and 42 consecutive years of dividend increases. Cash flow from operations covers the dividend...nearly 3 times. J&J has an excellent record of capital allocation and generation. Returns on invested capital averaged 22% during the past five years.
A key reason for J&J's success is its decentralized management structure. The company encourages entrepreneurship among local managers to stimulate creative new product development.... Sales and marketing expertise and quality manufacturing skills are [also] important distinguishing core competencies.
Notice this analyst's attention to J&J's brand power, marketing prowess, and cash flow. Such reports speak volumes about how Wall Street weighs these factors to put a financial value on companies. By understanding how Wall Street "talks business," you see more clearly how the investment community perceives marketing and other activities in your company and industry.
Learning to speak the language of business takes practice. Start by trying your hand at the above suggestions. The results you'll get—including winning funding for important marketing efforts—will be well worth the effort.
Continue reading "The 10 Biggest Mistakes Marketers Make—No. 3: Failing to Speak the Language of Business" ... Read the full article
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