Do you gamble with your marketing dollar? Do you invest it wisely and expect a return?These simple questions still throw people off and many feel the need to justify and explain why they can’t. The usual excuses are “you don’t understand what we do,” “it can’t be measured,” it’s all about long-term branding,” etc., such answer could easily constitute a book of excuses in itself. The situation is simple, you must expect positive returns from your marketing, it’s not a gamble. Hope has nothing to do with it. Marketing is a risk Every marketing strategy or tactic you implement has the potential to bring in returns or help you close shop. Either, way it’s your choice. Risk, in a nutshell, can be explained as follows: “You size up the odds, weigh the costs and benefits, and attempt to avoid negative outcomes” (Ben Warwick, Handbook of Risks.) This simple definition of risk should become the modus operandi for marketers who are focused on helping their business grow. The evolution of marketing Marketing is a fairly old (but not often respectable) discipline having evolved through many stages from the mum-&-pop shops of old to the gigantic marketing budget many FMCG companies exhibit today. And in no time in its history as it been more important to define its true value than today. It’s interesting that in the days of risk analysis, marketing has largely remained unscathed, untouched. The past few years have seen a revival of Marketing ROI but not an advent, as it existed before. Measuring marketing risk however is fairly new and is still evolving as a discipline. There are many ways to calculate risk and the formulas are often as complex as the person behind them wants them to be. For the purpose of tightening marketing, we can look at three basic economic principles to ensure that our investment in marketing is near risk-free as we possibly can. These elements are people, time and money. People What could you do without people? Where could you go? The problem today is extremely acute: We can find good marcom people but not business-focused, true marketers. In the past ten years, the quality of marketing people has increased tremendously and it is now fairly easy to find good public relations managers, direct marketers, event managers and even strategists. It is however difficult to find people with enough business acumen to turn their skills into true business weapons for your arsenal. There are two missing elements to this equation: - Few of them have ever sold anything directly - Most of them have never run a business The good news if you are a marketer is that both skills are easier to get than ever before. It is now easy to set-up a small business and if you are early in your career, you should consider it, it will make you a better, more rounded business person and your contribution to any future business will increase proportionally. As for selling, it would be useful for all marketers to either start in sales or do a few years stint there before moving to marketing. Once you understand the hunger and fear that comes with missing your quarter, as well as the elation when you meet it, the better you’ll be at setting-up strategies and tactics that matters to the business, not to the award committees. On that note, if you are looking for marketing people today, add these two points to your recruitment list, it will increase your chances to succeed. Time If there is one element that we’re all in short supply of, it’s time. The funny thing is that we are also all given the same amount every day. Time squandered will never come back, we don’t have the time to do it right but always find the time to do it again, etc., etc. Time is both infinite and in short-supply and in the heat of action moves at the speed of light but when business is not coming in, it moves at the speed of a snail. We could go on. You understand the metaphors. Time is your second big risk factor. You need to use it in the best you can as it moves without fail towards a result (one that you might not even like.) Don’t get me wrong, it’s not about controlling time, it’s about controlling your use of it. There are mainly two ways to control it better: reach and frequency (one just doesn’t go without the other.) Reach is simple, do you have access to the people that matter in your sales cycle? If the answer is no, then you need to redesign your database strategy as no great database, no great business’. It is the life blood of your marketing operations and now includes analytics where you develop more and more relevant segments based on statistical behaviour. This level of segmentation allows you to develop the right campaigns which, coupled with sending them at the right time, can turn your marketing into a powerful business force. So implementing a campaign at the right time is the first aspect of leveraging time to the fullest. The second is sending it frequently enough so that each campaign has an impact (but not too often so that it doesn’t become a nuisance.) That balance is crucial in an opt-in world where customers have more opportunities to complain, or walk-away, than ever before. Money Where would business without money? It’s best not to answer that question, the rhetoric would take too long. If you are like most businesses your marketing budget (and others) will be finite. So what can you do to maximize (or optimise) it? Answer: Treat your budget just like any other financial investment and conduct a risk analysis. A typical risk analysis will comprise both a qualitative and quantitative aspect forcing you to look at each element and ask what would happened if we didn’t invest it? What are the internal and external factors influencing this investment? What are the threats? Etc. One of the most important question is what would happen if we invested this amount in another project? The last question is crucial as we all take for granted that investing in marketing is necessary. It’s not. If you do it badly, you’re better-off investing that money into a more secure project where the returns outweigh the costs. This is a crucial issue and no marketer should expect to have his or her budget simply because the department exist. Fundamentally, marketing is a necessity in today’s environment but not matter how big the investment is, it should be subject to scrutiny just like any other business investment. The funny thing is, it is not and often marketers expect their budget to grow from year to year without really questioning its relationship to other parts of the business. There you have it. Marketing is a risk and you can’t go on happily thinking that whatever you’re doing is working for the best of the organisation. By the time you do so, the market will have shifted from under your feet. One last point, when doing a risk analysis remember that marketing is often an opinion. An opinion tainted by the marketer’s worldview, or his boss’s, an opinion based on campaigns that worked and are expected to work again. Let’s face it, marketing evolves even though some of its fundamental precepts are eternal. So the risk here is not just people, time and money, but to be closed minded, not be open to testing, not trying new things, that is the biggest risk of all.
Author: Frederic Moraillon Marketing Risk