Marketing Is Not A Cost – A CEO Who Doesn’t Understand Marketing Is
Marketing Is Not A Cost – A CEO Who Doesn’t Understand Marketing Is
Most CEOs of privately held Business-To-Business organizations have not taken the time to measure what their customers are worth to them over their lifetime, and so they have no way to build a rationale for what they are willing to spend to win more customers.
A TRUE STORY:
A CEO of a $10 Million professional consulting business wanted to see an increase of 20% in sales each year for the next three years. But the size of the approved marketing budget was just $150,000 per year. The company struggled – and ultimately failed – to reach its goals, and was constantly modifying its sales forecasts, and creating excuses about the inadequacy of the plan. This company was trying to get the most out of marketing for a minimal amount of investment.
A far better strategy was executed by the above company’s competitor, whose CEO decided to view marketing dollars as an investment. He analyzed his customer base and discovered that 80% of the company’s revenue for the last 3 years was coming from the same 10 accounts. Further, he realized that each of these accounts had, over their lifetime, generated a total of $2.4 Million in revenue at a 20% net margin.
The only relevant question for this CEO quickly became how much of his account profit he wanted to invest to win more key growth accounts. By investing all of his profit, the CEO grew the company at a rate of 100% per year for 18 months, and then at a rate of 40% after that… pretty impressive!
HOW TO INVEST IN MARKETING:
Think for a moment about what an investment advisor does. Let’s assume you and your spouse have $10,000 to invest in your retirement. You give the money to your advisor and he recommends a solid mutual fund that should earn between 7 -12% in the next 10 years. If you assume an average of 10% in earnings a year, then you will have more than doubled your investment in 7-10 years. Good job!
What did that investment advisor really help you to do? He worked with you to manage your money over time – and helped to deliver a measurable return.
THAT’S what your marketing team is supposed to be doing – taking your company’s money, directing that money into the market through programs and initiatives, and managing it over time to give you a measurable ROI.
LESSONS LEARNED:
Say you and your spouse told your investment advisor that you wanted to get as much money as possible out of your retirement investment, but that you only wanted to put a small amount of money in. Your advisor would explain that the dynamics of the marketplace make that an unwise investment… and would likely steer you in another direction.
It’s the same with marketing. As a CEO, it is your responsibility to improve your understanding of marketing so that you don’t set your team up for failure. You can’t get blood from a stone. You have to put money into the market in order to pull money out. Educate yourself on the marketing process, and how to activate it for your business. A great place to start is to build a model for what your customers are worth to you, then you can work backwards to a rationale for what you can spend per customer to win new ones.
Good luck!
Marketing Is Not A Cost A CEO Who Doesnt Understand Marketing Is - To learn more about this author, visit Michelangelo Celli's Website.
Like this article? Share it with your friends
If I had a nickel for every time I’ve heard a CEO say, “we want to get as much marketing as possible for the least amount of money,” I would be a rich man. Believe me. I have measured it. Why is it that so many CEOs and their management teams are still approaching marketing from the position that it is a cost? Because they have absolutely no metrics to justify how they are spending their marketing dollars.
Most CEOs of privately held Business-To-Business organizations have not taken the time to measure what their customers are worth to them over their lifetime, and so they have no way to build a rationale for what they are willing to spend to win more customers.
A TRUE STORY:
A CEO of a $10 Million professional consulting business wanted to see an increase of 20% in sales each year for the next three years. But the size of the approved marketing budget was just $150,000 per year. The company struggled – and ultimately failed – to reach its goals, and was constantly modifying its sales forecasts, and creating excuses about the inadequacy of the plan. This company was trying to get the most out of marketing for a minimal amount of investment.
A far better strategy was executed by the above company’s competitor, whose CEO decided to view marketing dollars as an investment. He analyzed his customer base and discovered that 80% of the company’s revenue for the last 3 years was coming from the same 10 accounts. Further, he realized that each of these accounts had, over their lifetime, generated a total of $2.4 Million in revenue at a 20% net margin.
The only relevant question for this CEO quickly became how much of his account profit he wanted to invest to win more key growth accounts. By investing all of his profit, the CEO grew the company at a rate of 100% per year for 18 months, and then at a rate of 40% after that… pretty impressive!
HOW TO INVEST IN MARKETING:
Think for a moment about what an investment advisor does. Let’s assume you and your spouse have $10,000 to invest in your retirement. You give the money to your advisor and he recommends a solid mutual fund that should earn between 7 -12% in the next 10 years. If you assume an average of 10% in earnings a year, then you will have more than doubled your investment in 7-10 years. Good job!
What did that investment advisor really help you to do? He worked with you to manage your money over time – and helped to deliver a measurable return.
THAT’S what your marketing team is supposed to be doing – taking your company’s money, directing that money into the market through programs and initiatives, and managing it over time to give you a measurable ROI.
LESSONS LEARNED:
Say you and your spouse told your investment advisor that you wanted to get as much money as possible out of your retirement investment, but that you only wanted to put a small amount of money in. Your advisor would explain that the dynamics of the marketplace make that an unwise investment… and would likely steer you in another direction.
It’s the same with marketing. As a CEO, it is your responsibility to improve your understanding of marketing so that you don’t set your team up for failure. You can’t get blood from a stone. You have to put money into the market in order to pull money out. Educate yourself on the marketing process, and how to activate it for your business. A great place to start is to build a model for what your customers are worth to you, then you can work backwards to a rationale for what you can spend per customer to win new ones.
Good luck!
Marketing Is Not A Cost A CEO Who Doesnt Understand Marketing Is - To learn more about this author, visit Michelangelo Celli's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
Joe DagerJoe Dager is President of Business901, a progressive coaching company providing no-nonsense direction in areas such as Lean Six Sigma Marketing and organized referral marketing. What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joe’s ability to combine his expertise with “out of the box” thinking is unsurpassed. He has always delivered quickly, cost effectively and with ingenuity. A brilliant mind that is always a pleasure to work with.” - James R. If you want to learn more about Business901, start a conversation with us. We can be found @ Web/Blog: Business901.com Web/Blog: FundingYourNonprofit.com LinkedIn Profile Follow me on Twitter - Visit Joe Dager's Website |
|||
John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
|||
Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
|||
Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
|||
Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
|||
David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
|||
Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
|||
Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to Michelangelo's articles
 | |
|
|  |
 | |
|
| |
 | |||||||
|
 | ||
|
||
 |
||
 |
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Sample Press Release Business and Income Canadian Leadership Solving Problems Radical Green Business |
|
 | ||
 |
Top 50 SEO Posts - 2008
Top SEO Posts of the Year | |
 |
Top 50 Geek Business Blogs
Top 50 Geek Business Blogs | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
