Marketers often face the challenge of how to prove their worth to their business leaders.
The problem is quite common, and one of the reasons for this is that marketers and managers (CEO, CFO, CMO, etc.) face different goals and objectives.
Marketers need to empathize with the other side and understand the challenges managers face. As these challenges are quite obvious, it is not difficult to do so.
Setting and meeting financial targets
Execs must set and meet financial targets. They focus on sales, profits, sales, return on investment, etc. – because that is what shareholders, boards and other stakeholders expect of them.
Marketers can have many goals, such as reaching an audience and writing great content, but they focus on diagnosing financial results rather than the results themselves. Therefore, if you are marketing and do not map your goals to these financial results, you will be considered less relevant.
MarketingProfs has the upcoming master class the goal is to help marketers set and measure financial goals.
Some goals require you to explain to the execs how these goals are interpreted in terms of their execs. If you use economics language (execs love economics language), proving your marketing is less of a problem.
For example, your goal might be to get sales leads, but then you have no control over whether Sales closes the sales lead. You then need to turn this goal into leading and lagging indicators – terms that economists use to describe the general economy.
Revenue is lagging behind as a result of past activities. If sales are good today, it doesn’t say anything about what will happen tomorrow. The stove, on the other hand, is the leading figure. That’s why it’s helpful to analyze your conversion funnel to monitor leading indicators (which drive marketing) and lagging performance (which drives sales) so you can show the predictive power of funnels.
Income is not a profit
Execs need to think about the benefits of both and profit. Marketing, which is usually considered a cost, takes away profits. So, one way to prove marketing to execs is to convert marketing costs to the following profits:
ROMI = (Profit due to marketing expenses) / marketing expenses
Of course, it is your job to give extra profit to your marketing. There are useful marketing research, A / B testing and other such methods.
It is up to the execs to understand how difficult it is to make a profit. All parts of the company (finance, accounting, etc.) have difficulties and make assumptions (eg How exactly is goodwill accounted for? Does the finance industry actually know the interest rate when calculating the present value after five years?). You lose credibility if you are not aware of the problems or basic assumptions.
Execid must grow the business. Most of the things marketers do to achieve market growth are aimed at gaining more market share. But you can prove marketing by pointing to other ways to grow your market.
You can direct two more growth directions to the company.
First, you can take your current product and use a brand extension to offer a new product in your current market. Another direction may be to take your current product and look for entry into completely new markets. In either direction, you need to focus on the benefits of your current product.
A consumer / B2B example of this is Arm & Hammer, which sold baking soda to consumers. Realizing that the benefits were odor control, the company used these benefits as a brand of ingredients: this product became an ingredient in someone else’s brand – cat litter, laundry detergent, toothpaste and more.
This ability to use the brand in other markets is not limited to B2C markets. It is limited only by people’s inability to think of benefits instead of functions and qualities.
Execs need to think about their business strategy. As noted earlier, they are concerned about the growth of the market, which includes how the company and its products are positioned in the market, how competition (new entrants and substitutes) may affect their future, and many other issues.
Marketing has a lot to say about strategy. This can be the basis for a competition analysis. It can also provide an overview of market trends: are current customers moving to other vendors or are they interested in a new replacement that has just entered the market? Customer knowledge offers a new market opportunity and company growth.
Marketing can also show the value of a company’s brand. A company’s brand in the overall market is one thing; here I am talking about the value of the brand in retaining employees and opportunities. People want to work for a good branded company.
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Execs tends to hire external consultants to answer questions that are essentially marketing issues. If you want to prove your worth to execs, think like a consultant: think strategically and sensibly about how it all relates to a company’s financial goals.
(And if you want help understanding strategic thinking, contact us.)