How to justify what you do to the FD
24th September 2019
For many marketing professionals there is often a tension between them and the Financial Director of their organisation. ‘What’s the benefit of this to the business,’ the FD may ask or ‘Show me the impact of this marketing initiative on the bottom line’.
Experts suggest that around 5-10% of gross revenue should be spent on marketing your business. That’s a significant chunk of the budget, so it’s not unreasonable for the FD to ask to see something in return.
It can be difficult to show the exact outcomes of a campaign, particularly since results are not always instantaneous. If you are undertaking an integrated campaign that uses different tools at the same time, it can be tricky to identify which particular aspect was the most successful. To paraphrase John Wanamaker (one of the early pioneers of marketing): ‘Half the money I spend on marketing is wasted; the trouble is I don’t know which half’.
Having said that, there are techniques that can be used. And today’s digital age certainly makes the task a lot easier than it has been in the past.
What’s the difference between an output and an outcome?
Firstly, let me differentiate between outputs and outcomes. Outputs are measurements of what you’ve done. They do not measure the value or impact of the activity. For example, an output from an exhibition might be the number of brochures you’ve given out or the number of business cards you’ve collected. Alternatively, you could be tracking the number of clicks on a link in your email campaign.
Outcomes are the achievements you have made as a result of the activity you have undertaken. For example, how much sales revenue have you generated as a result of attending that exhibition or networking event or dispatching that ezine?
Both outputs and outcomes can be interesting and valuable, but outcomes measurements are best at providing the ‘so what’ factor. Giving out brochures or business cards at an exhibition may make you feel good and are easy to measure. However, what you really need to understand is the value of any business generated from that activity compared with its cost.
Make sure you establish your marketing objectives
Before starting any marketing activity you should therefore think about your outcomes measures. You need to consider and define at the outset what ‘success’ will look like.
Digital campaigns are a lot easier to track than traditional print. Pay per click advertising, sponsored links and email marketing will all generate lots of data. You can look on Google Analytics or the Google Search Console to delve further into the stats. However, much of this will be output information and will not give you your ‘so what’ factor?
Through Google Analytics you can identify trends or spikes in activity that can be associated with particular campaigns. However, what is really needed is accurate and reliable tracking information, particularly at the point when a potential customer first makes contact. This is easy to do, but is often overlooked or undervalued by organisations. It can be as simple as asking potential customers ‘where did you hear about us’ or adding identification codes so that you can see from where any direct orders have originated.
This information should be recorded, preferably on a specialised CRM (customer relationship management) system. You can then analyse it regularly to find out what marketing activity or combination of activities are most effective; the average time it takes from marketing activity to enquiry to sales order; the cost of marketing per sale and a host of other outcomes measures.
It’s not only the FD who should be interested in this information. As marketing professionals, it should be an integral part of our job. Only when we’ve got a true grip on our outputs and outcomes can we look our FD in the eye and demonstrate the real difference we know marketing makes to the bottom line.