What’s the point of marketing?
Sadly, I have heard this question asked too many times by too many business people. It may be a little too contentious to say that the people who ask this tend to share the same fate – lack of fulfilment and failure…..so I won’t say that.
What I will say, on record and supported by 3 decades of working with different businesses, is that those who “get” marketing are much more likely to succeed than those who don’t.
Let’s boil it down to the core argument – if your prospective customers haven’t heard of you how on earth can they buy from you? Of course, we all know that nothing in life is that simple. It would be naive to think that simply by spending X on marketing Y profits will be delivered. The CEO of a growing SME has to spin dozens of plates, each one squealing for investment like chicks in the nest. The demands from existing customers and operational teams tend to be the loudest and they are the priority, but I can safely say that every successful business I have worked with strikes a healthy balance between delivery and growth.
If your business isn’t growing, or at least planning to grow, it will go backwards…eventually.
There is a general rule of thumb that 10% of net profit should be put back into marketing. I don’t know who came up with this but, in my experience, it seems about right, maybe even a little on the light side. If you achieve £500, 000 pre tax then £50,000 being deployed to continue the growth curve doesn’t seem like a lot of money. The key is how you spend it.
Many SME business leaders, who have “dabbled” in marketing will identify with the famous comment from John Wanamaker (1838-1922), the hugely successful US merchant and businessman, whose original 16 department stores became part of Macy’s, when he said:
“Half the money I spend on advertising is wasted, the trouble is I don’t know which half”
Of course, these days advertising is only a segment of marketing and, with the growth in digial, it is easier to correlate spend with ROI, but the essence of his words resonate. Great marketing is part science and part art. Once you accept that, spending money on marketing becomes easier.
The choice is yours but here are three things that I firmly believe:
- Great marketing will gradually help you to find new customers and enable you to access new markets
- Great marketing will also help attract the best employees
- Great marketing gives everyone associated with your business the confidence that you know what you are doing as it shows you have faith in your products/services and your people
The important word here is “great”! Please save your money and don’t do average marketing. Great marketing doesn’t have to cost a fortune by the way, but it does need to be bold, innovative, challenging, thought provoking, disruptive and truthful! You can’t just make it up and you do have to be able to justify your claims.
Going back to the original question “what’s the point of marketing? As many times as I get asked that question, I also hear people say, “marketing doesn’t work”. In most cases these words come from people who have “tried” marketing and, because the phone didn’t immediately ring, concluded it had failed.
That is no surprise
Great marketing is a journey that cannot end. Look at the long-term development of Aleksandr and Sergei, the now globally famous meerkats from Compare the Market – they even have their own web site and product channel. Ask why Coca Cola, arguably the most famous consumer brand ever created, continues to pump millions of dollars into marketing when surely only the remotest parts of the world aren’t aware of the brand. People and society change and keeping these brands relevant requires permanent and deep investment in marketing.
Ok, so these are huge brands and you are entitled to ask how this equates to your B2B growing SME, and you would be right but the general rules do apply and to be successful it is imperative that your business becomes, and remains, relevant to the market it serves. Great marketing will help this, because, if nothing else, it will force you to ask your customers if your business is still relevant to them.
If achieving great marketing is the goal, then sound planning is the fuel needed to achieve the goal. Some of the smallest but most profitable businesses I have worked with are meticulous about planning, in all aspects of the business, not just marketing and business development.
But as this is the area we are looking at the first question you must ask is do you have a growth plan? Is it written down and does it include targets and milestones? If not, that is the place to start. Very few new clients that we work with have a formal growth plan in place but if you aspire to sell the business, or seek investment at some stage in the future, you cannot develop your growth plan early enough. Day one after you launched would have been good!
Your growth plan identifies where you expect (hope?) that future business will come from, how you will secure a share of that business, what timescales are realistic and what your forecast ROI, after investment costs, will be. It will help you to consider the opportunity cost and it will force you to examine your credentials – if you don’t have them or can’t acquire them in the markets you wish to grow in, you will fail.
Only when you have the growth plan in place should you really invest in marketing. Here is one important thing to keep in mind – for a growth SME marketing should be the servant of business development. This is where your business does differ from a consumer brand like Coca Cola; you are unlikely to create a situation where the customer market keeps coming back to buy from you without any prompting from the sales team, so, whilst building a brand, a proper, brand would be nice, keep your feet on the ground from a marketing point of view and make sure it never loses touch with your sales objectives. Every £ invested in marketing needs to work hard to increase sales.
Once the growth plan is in place, you can build the marketing strategy that highlights where you should focus your budget and why. Please make sure you have designed a full marketing strategy before you start spending money on stuff like advertising, PR, web sites, digital etc – plan your journey first.
Let’s look at some elements of the marketing strategy that are completely necessary.
1. Be clear on your MARKET POSITION
You can’t “own” every part of your market so be very clear on which segment(s) you compete in and commit 100% of your resources to dominating them. Also be very explicit about the segments you are active in and repeat that message through every action you take – your prospects haven’t got the time or inclination to wade through oceans of wooliness.
2. Define your SALES VALUE PROPOSITION
Not sure that this is? It’s pretty simple – write down
- What you do as a business
- Who you do it for
- What the benefits are
It will take you longer than you think, especially as you shouldn’t hide behind superlatives – you can argue you are the biggest, the best, the fastest, the cheapest and so on in later marketing communications material. Make your SVP very, very visible so that prospective customers don’t have to second guess what you actually do, or hunt high and low to find out if you can satisfy their needs.
3. Identify your BRAND VALUES
These are critical because they should shape everything that your business does. If you find your business doing something which doesn’t fit with the brand values, then stop or set up a different vehicle to enable you to carry on. Your stakeholders (see below) need to rely on these values and they need to be reflected in all your marketing communication. Don’t make brand value claims you can’t substantiate!
4. Understand your STAKEHOLDERS and what they need from you
All shareholders are stakeholders but not all stakeholders are shareholders so don’t confuse the two. The important point here is that you must have a series of specific messages, which are consistent with your brand values, for each of these stakeholder groups. Other important stakeholders include your staff, customers, suppliers and partners but also think about your competitors, the banks, lawyers, government, media, activist/influencers (these people have multiplied with social media – think of the power mumsnet wields over brands and their reputations) and even pressure groups. Back in the bad old days of the 3-day week and nightly power cuts the oil industry steadfastly refused to acknowledge Green Peace as a stakeholder in their industry. This, despite regular newsfeeds showing a tug boat firing powerful water cannon at protesters who were tied to the platform of an oil rig somewhere in the North Sea. Madness! Thankfully, I do not believe this is still the case – Green Peace have a point and it behoves the oil industry to listen. Not all stakeholders will be on your side, but you ignore them at your peril.
So, having gone through these exercises, you can break your tactical marketing plan down into measurable, bite-sized tactics but play the long game and hold your nerve. If you decided that PR, say, is the best channel to market for you, stick with it. I am pretty certain it won’t deliver immediate results, but it is likely to in the medium to long term.
And that is the point of marketing. It delivers results but mainly in the medium and long term and any sensible investor is only interested in the medium and long term; they tend not to do flashes in the pan. Most of the business people I have worked with also know that a sound business is built for the medium and long term and the same is true of your investment in marketing.
So, in summary:
Develop the growth plan; support it with a marketing strategy; identify and write down the positioning statement, the SVP, the brand values and significant stakeholder groups; define the tactics and set the budget; implement it thoroughly and consistently; hold your nerve and maintain product/service innovation.
Hopefully, in the not too distant future you will be celebrating your dreams having come true.
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