Take Responsibility For Your Revenues
Learn how marketing leaders need to elevate their roles to senior management and adopt economic expertise to drive company revenues.
Marketing leaders must take a greater place in the management team and become responsible for the company’s revenues. They need to be braver both in the space they take internally – and how firmly they stand in their own strategy – We need courageous marketing managers who dare.
In many companies, marketing is closely linked to sales, and the marketing manager is measured by the number of leads generated after tactical campaigns.
Marketing leaders are not super sellers. The time axis of sales and marketing is very different. If ‘Marketing is forever, sales are for the fiscal year.’ Therefore, senior management needs to stop going to the senior marketer when they need pressure on the top line.
B2B companies have something to learn from B2C companies when it comes to long-term branding. As we discussed in our previous article, too much focus is placed on short-term sales campaigns that should produce results immediately, and too few resources are devoted to long-term branding.
Listen to David Jordan speak about the need for B2B Marketers to be braver and bold on BBN's podcast BBNmixtape.
The renowned B2B Institute emphasises that marketing budgets should be distributed approximately equally between branding and tactical campaigns that drive sales.
To be part of the senior management team, marketing leaders must also become economists and managers. It requires expertise. If you do not understand economics but only speak “marketing language”, you will be run over by the CFO. A marketing manager's job is to show to senior management that marketing is a strategy where the goal is to increase revenue. Skip terms such as "attributes" and "conversions". Instead, talk about financial goals, what actions lead to profit and how the company matures new audiences in the long term. Business managers are interested in hard numbers, marketing leaders must therefore speak business and use the C-level’s own language, put an investment analysis on the table and say: “I want to invest 100 million in this campaign, which will give us 300 million back. Here is the investment analysis.” There is no doubt that marketing is an investment that leads to increased income. For the many CEOs, or CFOs, who may have had one course in marketing early in their education at business school, this is not as obvious.
Marketing leaders must be able to have a finance-driven discussion rooted in marketing and psychology, which makes cash flow seem logical, launched with time and risk, making the CFO say: “Yes, let’s rock’n’roll”. The senior marketer today must show insight and document that the money you have received to invest in marketing has an effect. It is difficult to prove exactly the effect, you'll never get a 100 percent answer to that. But the better you get, the more influence and respect you get in the management team.
The marketing leader must also make the CIO an ally to work more strategically with insight, technology, and analysis.
They must have close contact with the entire organisation and customers’ customers. Often, the focus is too narrow, and marketing leaders forget that demand in the B2B market is closely linked to what happens in the B2C market. Therefore, one must talk to customers about what is happening in their downstream activity – and question what this means for their business.
Senior management sees advertising as increasing market share by using prices, goods or distribution – the most aggressive means in the marketing mix. Instead, they should focus on creating value for customers, which makes them voluntarily give up their money again and again. Increasing market share through price reduction or noisy advertising is completely wrong. The most important thing a B2B marketing leader can bring to the management team is to develop new markets. One should move away from a “red ocean” situation, where the focus is on production and cost in an already established market and into a “blue ocean” situation, where the focus is on developing new markets and taking a new position.
Advice for dividing the budget between tactical and brand-building activities
Elevate discussions to be about the financial objectives. This is what the management team and the board are concerned about. Say you want to split your marketing budget 50/50, half of which will go to creating sales here and now, while the other half will go to maturing future customers.
You have to look at the cycles of your business; how long does a decision-making process take for a potential customer? Identify who is influencing your target group's decision to think that your brand is a natural choice, and then make a plan for both tactical and brand-building activities. Companies that do not mature new target groups will not grow either.
Take responsibility for the customer journey. Research firm Gartner highlights that the role of the marketing manager has been turned upside down over the past decade. It has gone from brand and creativity to involving the entire customer journey: Technology and data, sales and growth, and to a certain extent, they are also measured by the company’s profitability. Today, our perspective must be more multifaceted. Data-driven decisions will always be based on assumptions. Therefore, creativity must be rooted in insight. We need to gain knowledge and understanding, and our strategies must quickly adapt to customer journeys in continuous change. This requires the CMO to be an active contributor to group management as the one with the most knowledge of customers and their needs – both now and in the future. The role of the marketing director will, in turn, indisputably become more demanding. This is why we need to invest in insight and analysis from data and, most important of all, foster a culture where employees learn and further educate themselves continuously and where the department strengthens and diversifies their talent and skill base.
Use communication and content to get attention. The average person is exposed to enormous amounts of information daily, and you have to work to ensure your particular company's brand cuts through the noise. Emotional, creative communication gets attention faster, and it is remembered better. Therefore, we need to work according to the mechanisms of the brain when creating brand communications. When the target group evaluates products and services against their needs, we want them to remember our brand instinctively. The brain is much faster than Google; if you communicate with this in mind, you are more likely to grow long-term.
Tobin’s Q, or Q-ratio, is a tool for estimating whether a business or market is over or undervalued. The Q-ratio is obtained by dividing the cost of replacing the company’s values by the company’s market value.
Critical measurement parameters
The KPI is essential, but we must not exaggerate its importance – Customer satisfaction is a widely used KPI, and while essential, many companies have too high a focus on customer satisfaction and should divert some investment to allocate more funds for innovation – which tends to be undervalued.
One measurement parameter more marketing leaders should use is relative attractiveness. Many companies score well on quality and satisfaction; businesses must compete on innovation. The sum of quality and innovation makes you attractive in the market – you are chosen again and again in favour of authentic alternatives. Attractiveness as a KPI is linked to the lifetime value of the customer base. This means you can, for example, use Tobin’s Q to calculate the company’s value. A low value (between 0 and 1) means the cost of replacing the company’s assets is greater than its actual market value. The company is overrated. Conversely, a company will be undervalued if the Q-value is above 1. The marketing manager can use these tools to achieve more robust cash flows and greater influence on the senior management team and the board.
NPS (Net Promoter Score) needs to go right away. There is no evidence in the research showing that NPS affects enterprise growth.
A few last words...
B2B marketing managers with knowledge of branding will be very attractive in the coming years. For maximum benefit, the role will have to exist in the middle of the organisation. A symbiosis with sales and an upbuilding culture with mutual recognition for newly acquired customers must be formed. The path to sustainable growth and more significant market share over time is about winning new customers. This results from a team effort where everyone deserves a hand on the trophy. Therefore, there must be a greater internal understanding of the importance of brand investment, and B2B marketing managers need to attract more attention to their brand values. It’s time to make B2B shine, and it’s something marketing managers need to do together. Don’t forget how big B2B is: according to a post in Marketing Week, businesses that sell to other businesses make up 50 per cent of the global economy. Fifty per cent of all listed companies in the UK and 72 per cent of all companies in the US are classified as B2B companies.
Rising costs curtail marketing spending power in 2023
“The annual Gartner CMO Spend and Strategy Survey results are in: CMOs face budget constraints again this year — as enterprises look to contain expenses to weather inflationary pressures. CMOs may be disappointed that marketing budgets couldn’t recover further after jumping from pandemic lows in 2021, but budgets certainly aren’t a disaster. The watchword for CMOs is that it’s not the dollar in your pocket that counts; it’s what it buys.”
Source: Gartner