Putting Revenue Generation Back Into the Marketing Equation

By George Brown, Salesworks Systems Inc.

Are your organization's marketing dollars well spent? Do you get a tangible return on investment for your marketing budget? How do you know? Can you measure the actual revenue generated by your marketing expenditures?

All too often, the answers to the above questions are "don't really know, hard to say, don't really, and can't tell".

Few would suggest that marketing as a function is irrelevant; certainly not us. It has a vital role to play in a business' ongoing success. Yet all too often, considerable marketing dollars are spent with either little more than a vague hope of any future return, or worse still, with results that do not drive any incremental revenue.

The CEOs we work with always want know their marketing's return on investment. Fuzzy marketing concepts like brand identity, building long-term relationships, or brand awareness don't have identified revenue capture identified with their approaches and are all developed by marketing management people who don't understand the importance of this metric. CEOs want marketing ROI. If you can't link your revenue generation directly or indirectly from your marketing programs twelve months or less out following its deployment - you're wasting your company's investment.

Take the example of a medium sized financial institution, anxious to build their brand recognition in the local market. An external PR firm is engaged. An advertising campaign is developed, and launched. It's hugely successful, by traditional measures. Unaided awareness skyrockets, almost overnight. The campaign becomes newsworthy. Company spokespeople are increasingly tapped for sound bites; their commentary on current events becomes another form of (seemingly free) advertising. All is proceeding fabulously. A considerable investment is made. The marketing department grows. But when the dust has all settled, what has happened to top-line revenue? Very little, unfortunately, in a relatively strong market. Are these marketing dollars well spent?

We would suggest not. Marketing has a vital role to play, but first and foremost, an organization's marketing efforts must in some tangible, measurable way actually generate revenue. Otherwise, those dollars can almost certainly be better deployed elsewhere. Admittedly, it will sometimes be difficult to positively identify the exact cause-and-effect relationship between marketing expenditure and incremental revenue obtained, but such an approach is nonetheless pivotal to ensuring that revenue growth is as strong as it can possibly be. Today, marketing management has organizationally moved from a staff position designed to support sales departments to a line position directly responsible for creating revenue based on marketing ROI.

How is this achieved? First of all, a hard look at an organization's marketing budget is needed. Often, outside eyes can more readily spot areas of sub-optimal spending, simply because they are unaware of all the "sacred cows". But sacred or not, bovines that do not create more "pasture" than they consume, should probably be pruned from the herd.

But a far more beneficial, longer-lasting approach is to gain a complete understanding of how your business systematically generates revenue in the first place. In some ways, this may sound trite. But do you really know what the key revenue drivers are in your business? Do you understand how they may be shifting, over time? Do you know where your business development efforts consume far more resources than can possibly be replaced with the revenue likely to be won? Do you know where your next big "waves of demand" are likely to emerge? How well are you positioned to capitalize on them? What needs to change in your organization in terms of products, people, processes, or technology?

This activity we call a Revenue Optimization Audit. Its central purpose is to identify firm-wide performance shortfalls and points of leverage with respect to revenue generation. Once completed, the Audit forms the basis for a Revenue Action Plan to raise revenues to their maximum possible levels, in the most effective and efficient manner. Of course, a key element of this Audit is how marketing dollars are spent, and what those expenditures result in.

And, what can be done in concrete terms to put revenue generation back into the marketing equation...

Next issue: Post Merger Sales Disorder:

So what's to be done about this Disorder? We'll outline four critical elements of the "cure".

About the Author:
George Brown is a leading corporate strategist and international authority in sales and marketing, George has thirty years' experience in every aspect of sales management, establishing best sales practices, leading and motivating sales teams, and achieving product positioning and sales training success.

About Salesworks
Based in Vancouver, Canada, SALESWORKS is an internationally established, leading-edge sales process consulting practice with a proven track record in increasing top-line revenue for clients by identifying and exploiting major leverage points and shortfalls in their organization's people, processes, products, and technology.

Our consulting services have helped numerous organizations maximize sales by ensuring that all their resources and business processes are optimally configured to generate maximum revenue. We have consistently delivered solid results for clients in fields as diverse as information technology, distribution, law, accounting, insurance, financial services, health care, and retirement and assisted living.

For more information, please visit our website at http://www.salesworks.com.