Five Ways to Sense-check Your 2011 Marketing Budget

From our experience in optimizing about €5 billion in media funds around the world, we know that between 2 and 40% of any marketing budget delivers absolutely no value to the business.  If you’d take a (kind) mean of 10%, this would mean that – globally – annually about $50 billion goes down the drain.  Not counting the parts which deliver “little value” and the opportunity cost of lost commercial impact.

But then I’m not telling you anything new.  In fact, I have never met any marketing, finance or CEO refute the numbers.  Instead, I hear the century old lament that “we know half of our marketing budgets are wasted. We just don't know which half”.  While I typically state that all they need to do is find out, this typically evolves into a debate about complex metrics and how so-and-so disappointed them with another marketing ROI silver bullet.

While there are actually pretty nifty ways to optimize your marketing spend, the big wins for 2011 lie in the area of common sense.  These still involve some data and analysis, yet most of what is required is a clear-headed brain and the willingness to do what is right.

So, if you’re interested in making sure your 2011 marketing budget is sound, ask yourself the following questions:

Do your plans match those of finance and sales?

This may have a big “duh” factor to it, but you’d be amazed what happens when you vet every marketing initiative against the way the business makes money.  Bluntly put, do your marketing KPI’s actually contain financial numbers and sales parameters, or do they focus on marketing mumbo jumbo based on awareness and share of noise?  If the latter is the case, sit down with your CFO and the head of sales to connect the dots for 2011.  By aiming at the same goal, you might actually hit it.

Are your efforts focused on your customer’s behavior?  

Too many marketing teams slavishly follow theoretical marketing funnels and AIDA models.  While they have (some) value, it makes more sense to map your customer’s journey and estimate the financial value of every step towards deeper engagement.  By allocating your 2011 marketing funds to where the biggest financial gain can be made, you ensure you hit the points that matter most to your business, not what orthodoxy prescribes.

Are your plans understood/in sync with the business?

We all know the stories of campaign misfires and uninformed employees.  90% of the people in the business have no clue what the strategy of the company is about and which promises are actually being made to customers.  After all, no one really told them.  But in spite of this, they are expected to deliver against these promises.  So provision the 2011 budget that make sure the people in your business are willing, skilled and able to deliver against the promises you make.

Are your agency and channel partners on the bus?

The risk of internal miscommunications get amplified as you move to other stakeholders.  Too many media agencies still plan in isolation from the creative teams, leading to disjointed executions.  Channel partners aren’t fully involved in initiatives, causing piece-meal implementation.  Media partners are insufficiently involved or briefed, so they revert to the orthodoxies that fit the buying system.  All these can be prevented by making sure that your 2011 budget includes allowances for a quality alignment effort between all these external stakeholders. 

Do you actually get what you pay for?

Finally, and I know this is awkward, are you getting what you paid for?  In this I’m not just talking about the creative financial math applied by parties in the business.  But are the spots you bought on TV actually transmitted? Did the mailings actually go out as agreed?  Were the POP materials actually deployed in the stores that you targeted?  Even with the best intentions, a few percent of “budget shrink” can quickly occur.  Establishing a quality control system may not prevent these things from happening in 2011, yet at least it ensures you don’t pay for what you didn’t receive.

Bonus Question: Am I shooting from the hip, or do I really aim?

All of the above are symptoms of not taking enough time to really “aim before shooting”.  Some years ago friends at EMM International did a survey in which they found that senior marketing executives only spend 2% of their time on developing a quality media and communication strategy.  In the old days of the Wild West, this was called shooting from the hip.  While this always looks great in a movie, any marksman can tell you that the chances of hitting what you aim for are pretty slim. 

So overall, taking 5-10% of your budget and your time to aim before you shoot, may be the most valuable thing you can do for 2011.

Disclosure: As Futurelab offers a Budgetscan 2011 along the lines of this article I do have a commercial interest in spreading messages like the above.  But rest assured, even if we didn’t, I’d still be saying exactly the same :-)

This post is one of a series to accompany the launch of the #ChangeMarketing Manifesto.  This is a call to action for marketers world-wide to change the nature of marketing itself. To reconnect the profession to the needs of the customers and the businesses they serve. 

CLICK HERE to download your copy of the #ChangeMarketing Manifesto.

10 Thoughts for Your 2011 Marketing Budget

The coming marketing decade will be about common sense.  Most of the tools we need to develop relevant, engaging and reputable brands exist.  It’s just a matter of using them.  So rather than tell you about the next new thing to use, I encourage you to double-check whether your 2011 marketing plan takes into account the following items.

10 Thoughts for Your 2011 Marketing Strategy

#1 Focus on maximizing returns, not minimizing headaches 

Smart marketing funds get spent by figuring out what makes most money for your business, most sense for your customers and allocating funds accordingly.  This may sound like an obvious statement, but for many marketing investments, decision-making is driven by orthodoxy, past habits and the way media data happens to be structured.  Make sure your 2011 plans challenge this view and focus on doing what is right, no matter how hard it makes life for everyone.   

#2 Introduce customer economics to drive personalised communication

Every customer is a unique individual.  But segmentation myths and economies of scale cause many brands to treat them in largely the same manner.  After all, doing things in a more personalized manner is too expensive and cumbersome.  Still, by introducing customer economics into your 2011 plan, you can put a monetary value on different customers and their behaviour.  This allows you to build a business case to approach customers the way they deserve.

#3 Manage your total customer experience

I have never seen a customer journey in which the brand actively managed more than half the steps that existed from their customer’s point of view.  Leaving 50% of the customer experience up to chance is not only stupid from a customer satisfaction point of view.  It is also a waste of opportunity.  Each step in the customer journey can be monetized.  A failure to do this cheats the business out of valuable profits.  Double-check whether your 2011 plan looks at the whole customer journey.

#4 Engage the customer in a relevant way

Many brands are addicted to telling the world how great they are.  They appropriate the right to interrupt our music, our movies, our life when they feel we should listen to them.  For 2011, I challenge you to root out this narcissistic addiction at your company.  Stop talking in terms of what you want to say, and start talking about what your customers want to hear.  Explore brand utility concepts.  Be useful and enrich their lives, instead of being in the way.

#5 Explore customer centric communication planning

90% of people I ask to come up with a remarkable communication initiative for the man at the bus stop, show me creative ways for the bus stop to manifest itself.  Hardly anyone focuses on the man.  The magazines he may read, the people he may talk to, the games he may play.  Make sure your 2011 plan doesn’t fall into the trap of putting media data availability ahead of the consumption and interest patterns of the people you aim to reach.

#6 Use transmedia storytelling techniques to stop repeating yourself

When brands say they want to be consistent, they usually mean that they want their logo to be the same everywhere.  Their messages to be the same across all channels.  Their visuals to be re-used in every execution.  While this may look nice in a boardroom, from a customer perspective this is boring.  Transmedia storytelling techniques can make sure your audience remains interested in what you have to say.  Make sure your 2011 plan doesn’t repeat itself over and over.  Engage your audience.

#7 Audience inclusion

While this may not be their intention, many brands behave in a prejudiced way.  If you don’t fit the mould of their average customer, you don’t exist.  As a result, they edit out anyone who doesn’t fit the middle-class, healthy, heterosexual, religiously-correct stereotype.  And they definitely don’t set up tailored programmes for them.  Make sure that doesn’t happen in your 2011 plan.  Not for moral reasons, yet purely financial ones.  After all, every customer is worth fighting for.

#8 Real social media

I often get asked how people should improve their online reputation and which social media strategy they should follow.  I usually give them two responses:

·         First, I tell them that they don’t need to worry about a social media strategy.  This is about as useful as having a strategy for a mobile phone.  If it rings, you pick it up.  Simple.

·         Secondly, I tell them that they don’t need to worry about their online reputation either.  This is simply a reflection of the real world.  If customers are treated well, they will say good things about you online.  If they are treated badly, they will hammer you.  Simple as well.

Make sure your 2011 social media efforts don’t get wasted on shiny objects.  Focus on making sure you have many happy customers … the social media bit will follow.

#9 Behaviour focused internal communication

A brand is a sign of trust.  So building a brand is about building that trust.  This is not done by making empty promises.  It’s done by making relevant promises and delivering against them.  In other words, it’s not about the words you speak.  It’s about the behaviours of the people in the organisation.  Check whether your 2011 plans enables other departments to know about the promises that you will make, and that they are empowered to deliver against them. 

#10 Getting business to behave accountably

Finally a word on corporate accountability.  These days, every company wants to save the planet, feed the poor and be morally just.  In my experience the real test of their resolve is to see what happens if you ask the CEO to swap his BMW 7 series for a small hybrid car.  Accountability is less about inflated promises that you don’t keep, and more about transparency, honesty and doing a few things well.  Check your 2011 plan for what you can do and do this well.  Shut up about the rest.

 And if you’re stuck on any of the above, you can also just get in touch.  I’m happy to help ;-)

This post is one of a series to accompany the launch of the #ChangeMarketing Manifesto.  This is a call to action for marketers world-wide to change the nature of marketing itself.  To reconnect the profession to the needs of the customers and the businesses they serve. 

CLICK HERE to download your copy of the #ChangeMarketing Manifesto.

Six Areas Where B2B Marketers Should Up Their Game

In many B2B companies, marketing is still regarded as a secondary, non-essential part of the business.  Whether this opinion is justified, depends on the situation.  But these days, it is an expensive opinion to hold.

B2B commerce isn’t what it used to be, and the competitive rules are changing.  Buyers don’t like to be sold to.  Products all look the same.  Competitive advantages disappear in a matter of months.  I could keep going.

An implication of this changing competitive landscape is that B2B companies should take a fresh look at the way they market themselves.  Having a department for digital brochures and tradeshows isn’t enough anymore.  Even white papers are a dime a dozen.

Implementing quality marketing systems is a first step to make this happen.  But even the best tools are not inherently differentiating.  After all, when everyone has upgraded their CRM system with the latest measurement and lead nurturing modules, that advantage will disappear as well.

On top of this, B2B marketers should focus on developing sustainable differentiators for their business.  Identify methods to capture maximum customer value.  Finding ways to deeper engrain their business into the customer’s organisation. 

So below I have written a few areas which I think merit priority attention.  The list is anything but complete, so if you have additions or thoughts; please use the comment section.

#1 Use customer economics models as the basis for commercial plans

Implementing customer economics as a driver for commercial decision making is probably the single most profitable contribution any B2B marketing department can make.  By using metrics like the Net Promoter Score® to estimate customer growth potential, it can enable customer and finance teams to focus their attention on those customers and actions which will generate most money for the business.

#2 Better engage all stakeholders, not just purchasing

We all know it should be different, but most B2B companies don’t really connect to all the stakeholders that drive their business.  Marketing departments need to remedy this by developing engagement plans for all relevant decision makers, influencers and users.  And then ensure these plans are implemented by aligning them with their colleagues in sales, service, finance, production and logistics.

#3 Come up with innovations that go “beyond the product”

There’s only that much mileage you can get from making products faster, better or cheaper in the traditional sense.  B2B marketing teams need to boost the innovation power of their company by providing product development and research teams with additional customer insights that go beyond the product and drive innovations on business models, customer experiences, etc.

#4 Connect to the irrational side of the customer base

B2B businesses largely use rational argumentations to sell their products.  But business is done by humans who are inherently irrational.  Especially when competitive offers are “close”, emotions come into play.  Marketing needs to help the business understand the customer’s emotional choice drivers and devise commercial dialogues/stories that connect to customers at a deeper, more primal level.

#5 Manage the on/offline reputation of the business

Strong reputations are not built by websites and nice brochures.  They require the whole business to behave in a customer-centric manner.  Be true to the promises it makes.  Avoid bad profits.  As customer advocates and custodians of the corporate reputation, marketing teams need to work with all parts of the business to ensure this happens.  Or confront the business, when it doesn’t.

#6 Introduce customer experience thinking as a formal capability

While already implied in the previous points, business buyers do more than just buy a product.  Even in commodity markets.  Depending on their needs, they may buy expertise, convenience, affordability, or other things.  These are customer experience factors, and they cannot be left to chance.  That is why marketing teams need to map them, and align other parts of the business around them. 

And if marketing is unable to do the above

The CEO should intervene.  Ideally by empowering marketing teams to do what is right or– if needed – by finding other ways to make things happen.  Because if he doesn’t one of his competitors eventually will.

It’s time to #ChangeMarketing.  Let’s get to it.

This post is one of a series to accompany the launch of the #ChangeMarketing Manifesto.  This is a call to action for marketers world-wide to change the nature of marketing itself.  To reconnect the profession to the needs of the customers and the businesses they serve. 

CLICK HERE to download your copy of the #ChangeMarketing Manifesto.

Why Marketing Needs to Change: A CEO’s Perspective

In the coming months C-suites from around the world will be presented with the marketing budget proposals for 2011.  Once again, many will approve them without real conviction.

After all, when it comes to marketing, many financially focused CEOs find themselves in a quandary.  On the one hand they know that the people who work in the marketing department are smart, creative, well-intentioned and hard-working.  On the other, they have difficulty figuring out what these people do all day.  Whether their beautiful initiatives actually make a difference.

The world has changed, and marketing needs to catch up

A few years ago, McKinsey framed this dilemma in a painfully accurate way.  Marketers, they found, were seen by the C-suite as energetic, inspiring and passionate.  But also frivolous, lacking business sense and sometimes being “more akin to a recalcitrant child”.  (source: A credibility gap for marketers).

Half a decade later, not enough has changed.  Not that all is bad in the land of marketing. From the CEO’s perspective, it’s just not good enough.  In spite of all the glitzy PowerPoints and new style agencies, not enough has changed in the actual behaviours and beliefs of those that are in the trade. 

A new corporate reality

In the C-suite, however, something has changed.  Something that will force the marketing community to take notice.  In the coming years, CEOs that want sustainable growth need to make sure their business becomes customer-centric.  Not because of a moral or cuddly customer imperative, yet simply because this is one of the most effective ways to make more money.

As a result, they will expect their organizations to come to grips with concepts like engagement, reputation management, relevance.  They need to communicate to customers as individuals and brand themselves through behaviours rather than words.

A new role for marketing                                    

Even the biggest marketing cynic needs to admit that many of these topics are in the marketing remit, and inevitably this will be where the CEO’s eye will turn.

Marketing leaders that make tangible (financial) contributions will be offered real seats at the executive table.  Equally, structural underperformance or misalignment will be “sorted out”.  In either case, marketing will be expected to empower itself into a bigger role than it holds today.

So rather than wait for this reality to happen, marketing people must take the lead in this corporate transformation:

- If you are already transforming your marketing to be more customer-centric, profit-oriented and aligned with the rest of the company, double your efforts and do more.

- If you feel that you’re lagging and need to do better, pick up the phone and go see your CEO.  He will probably be pleasantly surprised with your initiative.

- And if you have got no clue what I’m talking about, be prepared to get out of the way, because the days of benign tolerance are ending.

It’s time to #ChangeMarketing.  Let’s get to it.

This post is one of a series to accompany the launch of the #ChangeMarketing Manifesto.  This is a call to action for marketers world-wide to change the nature of marketing itself.  To reconnect the profession to the needs of the customers and the businesses they serve. 

CLICK HERE to download your copy of the #ChangeMarketing Manifesto.