Is Your Marketing Team a Cost Center or Profit Center?

What value do you bring to your organization as a marketer?  If you had 2 minutes to tell the CEO what value you provided in quantifiable means could you do it?  Most marketers would struggle with this.  Ask a sales person this same question and they’ll tell you how revenue in sales they’ve driven, how they’re tracking to their targets and what big deals they’re working on.  In very simple terms that’s the difference between being perceived as being a cost c enter versus a profit center.  The ability to articulate the value you bring in tangible terms that are measured financially.

When you’re a cost center you’re the first to get cut either by budget or head count, you’ll be the last voice listened to when strategic decisions need to be made if you’re even asked for input, and you’ll be behind the eight-ball when you need to justify your organizations existence and outputs.  Let’s face it if you’re a cost center in marketing you’re not even a great operations team then.

So how do marketing teams fall into the cost center trap?  Is it the inability to measure results? Is it the inability to to define what those results should be? or is it historically this is how marketing has been positioned in your company?  Whatever the reason the fact is there is no reason for you to be a cost center.  Even before the digital age, strong marketers measured and understood not only the impact their work had on the bottom line, they were driven by results, and also understood the impacts of the mechanics that made up their advertising campaign to develop formulas to create these results.

“When I write an advertisement, I don’t want you to tell me that you find it ‘creative.’ I want you to find it so interesting that you buy the product.”
– David Ogilvy

The scariest marketing teams however are the ones that don’t even recognize they are cost centers.  So how do you know if you’re a cost center?

  1. If you can’t articulate the value you bring to a company in financial terms. You’re a cost center
  2. If you don’t actively measure your marketing spend, programs and campaigns to business results that can be broken down into either revenue growth, customer growth or operational savings. You’re a cost center.
  3. If you don’t know how your budget is being spent. You’re a cost center.
  4. If you spend every dollar of your budget every year on exactly what you said you were going to spend it on at the start of the year… you’re likely a cost center.
  5. If you don’t have an operational rhythm that reviews both results of current campaigns and applies learnings to future campaigns. You’re a cost center.
  6. If your biggest KPIs are aided and unaided brand awareness.  You’re a cost center.
  7. If you’re measuring visits, clicks and traffic only. You’re a cost center.
  8. If every member of your marketing team can not tell you what they are accountable for and how they measure it to business results.  You’re a cost center.
  9. If the first thing you talk about for your marketing campaign is “how hip or cool it is”. You’re a cost center.
  10. If your marketing team hasn’t talked to a sales team in the last 2 weeks. You’re a cost center.

There’s more that you can add to this list I’m sure.  At the end of the day without strong business rigor, operational process, measurement and accountability put in place, the likelihood of you being a cost center is extremely high. As a marketer I’ve often heard other marketers complain about how sales teams are put into the spot light, how things like CEO Clubs aren’t fair. How marketers aren’t recognized.  Yet I’ve never heard a marketer take accountability for this situation.  Sales rewards are easy to measure.  How much revenue did each sales member make? and take the top ones to Hawaii. Of course companies will reward this behavior, as it tangibly impacts the bottom line.  I won’t get into psychological arguments as to if the carrot or stick approach to sales is the right approach. The fact is companies recognize measurable impactful work.

Set the Right Goals

As a marketing organization there are only three KPIs that should matter, that every marketer should be held accountable to:

  1. Revenue generated
  2. Leads or new customers acquired
  3. Operational savings.

I don’t care if you’re in PR, a brand marketer, a product marketer, a direct response marketer or something else.  If you can’t measure one of those three things you will never make the shift to being a profit center. The biggest excuse I hear why marketers don’t measure this is “it’s hard”.  My reply to that, “it’s call work for a reason”.  If marketers were able to measure and understand the impact their work had before the digital age, then there is no excuse in today’s day to not be able to measure one of these results is downright embarrassing.

“On the average, five times as many people read the headline as read the body copy. When you have written your headline, you have spent eighty cents out of your dollar.”
– David Ogilvy

You need to know not only how you impact one of the three critical KPIs, but how the components of your work influence that overall number. To not only measure your results, but to drive fundamental improvements in the work you create as you iterate and develop new marketing components over time.  If you’re building brand campaigns, then you need to be able to articulate at the bare minimum the number of new customers your marketing is bringing in at the top of the funnel, that actually convert to the bottom.  It’s more expensive to acquire new customers than to retain existing customers.  So knowing how many customers you bring in coupled with the average value of a customer can provide a very compelling story for brand marketing to also articulate the impact to revenue you have in the long term. Further this approach builds the foundation for guiding principles on how you spend your media dollars, and where best to target customers.

Be Strategic In Your Channels

Building on the KPIs once you have that established, you need to think about how all your marketing channels come together, and what specific outputs you want.  Staying on the brand marketing track for a moment. If you think you’re a brand marketer in the digital age, because you’re buying brand terms in search, then you’ve missed the target. By the time someone is Googling your brand name, they’re brand decided.  Brand marketers should be looking at non-brand terms, and develop strategies to optimize and convert customers from non-brand searches to branded searches.  You need to understand your customers journey across all touch points, to be able to define the right metrics and how each channel relates to the customers journey from a non-customer to active engaged customer. Brand marketers should be so laser focused on attribution analytics simply because it’s how you can tell if your brand marketing is driving assists and conversion down funnel.

Know your customer experience, and know what influences them and you’ll be able to make meaningful impacts to your business bottom line.  If you do this right, you’ll also be making a deeper connection with your customers as well, as you get better at understanding not only the content they consume, but how they consume it and more importantly what that means to them in the larger context.

Become a Performance Marketer

watch this video and skip to the 18:14 mark. It’s a great example of how traditional media such as TV commercials, is being re-invented and rethought in today’s digital age. Why Mariah Carey and Arnold Schwarzenegger are relevant as talent in the creative as well, taking insights even deeper beyond a simple media buy.

If you aren’t only thinking about your creative, but how your media is bought, and you don’t understand or have a road map of how each part of your media plan connects, then you’re likely not getting the most out of your media. If marketers aren’t holding their media buyers to a level of accountability to provide measurements that can be translated back to business results, then that media spend is likely not a good spend.  Their is a reason that Google has been focused on multi-channel analytics reporting and now multi-device reporting in both Google Analytics and DoubleClick reporting suits.  Google understands that consumers don’t click and convert, they move across devices and channels before converting. Given they are the biggest media company on the planet, it is to their advantage to solve this for marketers to continue to provide the best value to marketers that invest their media dollars with them.

Also as you become more of a performance marketer don’t fall into the blame trap.  When Alec Baldwin in Glengarry Glen Ross in one scene responds to “weak leads” with “F**K You! You’re Weak!”.  I get it. Every sales team gets the same leads evenly distributed.  The ability to close is the reflection of the sales team member BUT, as a marketer you have a responsibility to provide the absolute best leads possible, and when you’re a performance marketer, you should understand what a solid lead looks like vs. a weak lead.  Further if marketers put the blame on sales teams inability to close a lead, then the marketers aren’t performance marketers, and most likely then you’re a cost center.  Being a profit center means taking accountability for the role you play in sales cycle and not deflecting blame across organizations or teams. Doing this will never improve the conversion process, and customer acquisition strategy.

Become Accountable Today

If you think you need to wait for your annual planning sessions or quarterly reviews to become a profit center, then you’re wrong. If you think this message needs to come from your CMO then you’re wrong. If you’re an individual contributor, take the time this week to sit down and figure out what data you have and how you would measure results to at least one of the critical KPIs.  Start change in your teams and organizations by doing the work needed to better measure your results.  My experience has been when you get to that level or results, you also see investments occur more into your space, but more importantly you get invited to more strategic conversations that happen at higher levels.  More importantly when you’re at that table, you’ll be able to provide true value as you will likely have more insight on how to influence the consumer.  Isn’t that what great marketers do?

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