There’s the well-known notion that, when you’re in a recession or economic downturn, many companies try to tighten the purse strings and where’s the first place they usually cut back? Marketing budgets.
This is understandable: marketing is the soft target because it’s one function that traditionally hasn’t been directly linked to revenue or profit, and so it’s easy to say: “Let’s simply shave off 30% of the marketing budget.”
But what if the marketing director could interject and explain that shaving off that 30% would directly impact revenue by x or y? The budget cutters would have to look elsewhere. The problem is that marketers have often lacked the proof and the reports to show how what they’re doing is directly influencing revenue. If they were armed with the relevant data, they could then defend their budgets and, what’s more, motivate for more.
This is one of the primary differences between B2C and B2B marketing. In B2B, you have the capability to track marketing spend all the way through the buying cycle: from how many leads are generated and how many become qualified sales to how many of those actually turn into opportunities and then how many turn into actual sales. You can even track brand awareness into leads.
The reason that it’s much easier to do this in B2B is simple: not only are there fewer leads but the sales ecosystems in B2B businesses are generally better defined. You can now close the link between sales and marketing teams. You’re tracking hundreds or thousands of leads, not millions, as you would have to do in B2C. And this is the key: once you link marketing spend back to the lifetime value of a new customer and you effectively “close the loop”, you can completely justify that marketing spend.
How do you close that loop, though? By using marketing automation platforms, which link into sales CRM platforms. You then use the two to link back marketing spend into responses, looking at the revenue and profit generated. If you do that over a sustained period of time, you start to develop models: the holy grail of marketing.
There’s the well-known phrase by successful US merchant, John Wanamaker: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” This may have been the case for decades but this is no longer valid. Because of marketing automation platforms, your spend is now measurable. And marketers who ignore the closed loop are not only wasting huge opportunities; I believe they’re also being irresponsible.
Using marketing automation platforms is one thing but you need people with the expertise and skills to create strategies that govern those platforms and tell them what to do. This then puts the chief marketing officer in the pound seat, as marketing is now seen as a function of profit. There is now clear accountability and businesses can see which products are selling better, and which sales people are performing better, too.
Marketing used to be an expense but now it may be seen an investment, giving CMOs a meaningful seat on the board by proving its return. I believe that this is no more essential than now, as our economy finds itself in the doldrums and we’re all looking for ways to help our businesses thrive.