Monday, January 10, 2011
Is your marketing department a profit center?
In most organizations, sales & marketing are looked upon very differently. In a nutshell, sales is what makes money for the organization, and marketing spends money. Marketing may very well be spending money to make money, but it’s still seen as a cost center. Sales, of course, is all about making money and is very much a part of the profit center equation.
One of the biggest challenges for marketers is to demonstrate that their work is in fact a part of the profit center. Marketers must draw a direct line, a direct correlation, between their activity and new sales, increased customer loyalty, greater lifetime value, and overall revenue preservation and growth.
The levels of fiscal responsibility being expected from marketing organizations is only going to continue to increase. The opportunity for marketers to increase their contribution to the organization, and expand their place at the table with sales and other revenue-generating parts of the organization, is getting bigger.
I’ve thought about this more often the past couple weeks in particular as I’ve been asked to review marketing plans that lack the kind of fiscal responsibility and tie to revenue I’d expect as a CEO or CFO. In fact, many of these marketing plans focus more on justifying volume of activity than they do impact on revenue and new sales.
These same marketers get upset when their budgets are cut. They don’t understand why they CFO doesn’t understand the more aggressive trade show plan.
But your CFO doesn’t care about trade shows. She doesn’t care about how many press releases you get out this quarter, or how consistent all of the sales collateral will look when you’re done with it.
Not everything in your marketing plan is direct response; it’s not all directly tied to new sales or retained customers. But if you’re not at minimum filtering your marketing plan on what’s going to somehow contribute to revenue preservation or growth, I don’t know how you can justify the spend. And without that justification, if I was your CFO, I’d probably want to cut it as well.
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