Marketers often face the challenge of how to prove their worth to the executives in their company.
The problem is quite common, and one reason for that is that marketers and execs (CEO, CFO, CMO, etc.) face different goals and objectives.
Marketers need to empathize with the other side and understand what challenges executives face. Since those challenges are fairly obvious, that's not hard to do.
Setting and Meeting Financial Goals
Execs need to set and meet financial goals. They focus on sales, profit, return on sales, return on investment, etc.—because that is what stockholders, boards, and other stakeholders expect of them.
Marketers might have many goals, such as reaching audiences and writing great content, but those tend to focus more on the diagnostics of financial outcomes rather than the outcomes themselves. So, if you are in marketing and don't map your goals to those financial outcomes, you will be seen as less relevant.
MarketingProfs has an upcoming Master Class designed to help marketers set financial goals and measure them.
Now, some goals require you to explain to execs how those goals translate into their—execs'—terms. If you use the language of economics (execs love economics language), proving your marketing will be less of a problem.
For example, you might have a goal of getting leads, but then you have no control over whether Sales will close the lead. What you then need to do is translate that goal into leading and lagging indicators—terms economists use to describe the general economy.
Revenue is a lagging indicator because it's the result of past actions. If sales are good today, that doesn't say anything about what will happen tomorrow. Leads, on the other hand, is a leading indicator. That's why it's helpful to analyze the conversion funnel to track leading indicators (which Marketing controls) to lagging indicators (which Sales controls) so you can demonstrate the funnel's predictive power.
Revenue Is Not Profit
Execs need to think about both revenue and profit. Marketing, typically seen as a cost, takes away from profit. So, one way to prove marketing to execs is to translate the marketing spend into incremental profit, like this:
ROMI = (Incremental Profit Because of Marketing Spend) / Marketing Spending
Of course, then your job is to attribute incremental profit to Marketing. That's where marketing research, A/B testing, and other such methods are useful.
The point is to show execs you understand the difficulty involved in making a profit. All parts of a business (finance, accounting, etc.) have difficulties and make assumptions (e.g., How exactly does accounting measure goodwill? Does finance really know the interest rate five years from today when calculating net present value?). You lose credibility when you are unaware of the problems or the basic assumptions.
Execs need to grow the company. Most of what marketers do to achieve market growth is focused on getting more market share. But you can prove marketing to execs by pointing out other ways to get market growth.
There are two other growth directions you can point the company toward.
First, you might take your current product and use a brand extension to offer a new product in the current market. A second direction might be to take your current product and look for entirely new markets to enter. Both directions require you to focus on the benefits of your current product.
A consumer/B2B example of that is Arm & Hammer, which sold baking soda to consumers. Realizing the benefit was odor control, the company leveraged that benefit into an ingredient brand: Its product became an ingredient in someone else's brand—in kitty litter, laundry detergent, toothpaste, and more.
That ability to leverage a brand into other markets isn't restricted to B2C markets. It's restricted only by people's inability to think about benefits instead of features and attributes.
Execs need to think about the strategy of their company. As noted earlier, they are concerned about market growth, which includes how the company and its products are positioned in the market, how competition (new entrants and substitute products) may affect their future, and many other questions.
Marketing has much to say about strategy. It can be the foundation of competitive analysis. It can also provide insights into market trends: Are current customers about to move on to other vendors, or are they interested in a new substitute that just entered the market? Customer insights provide what is necessary for new market opportunities and company growth.
Marketing can also demonstrate the value of the company brand. The company brand in the general market is one thing; here, I'm talking about the value of the brand in employee retention and opportunity. People want to work for a company with a good brand name.
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Execs tend to hire outside consultants to answer questions that are essentially marketing questions. If you want to prove your worth to execs, think like a consultant: Think strategically and with a sense of how all of that relates to the company's financial objectives.
(And if you want help getting a sense of how to think strategically, contact us.)
Continue reading "Proving Marketing to Execs (Part 1)" ... Read the full article
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