Ten years of experience will tell you how to spend the marketing department’s money effectively!
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The author of this article is Su Su, a big shot who is the marketing strategy director of a financial listed company in Lujiazui. The following is the text: This article is written for those people who have been working in the marketing field and hope to create more value through their efforts. Historically, in most corporate organizations, the marketing department has not been a direct profit-generating department. As an organizational function in the marketing process of an enterprise, the marketing department is responsible for leveraging sales output through the investment of marketing expenses. However, it is precisely because of the characteristics of indirect leverage that most marketing departments in enterprises find it difficult or even impossible to quantify and evaluate the value they create in the marketing process. How the market plays its role and how the value created is measured seems to be a big problem! I wonder if you, as a marketer, can relate to this? I have been working in the marketing department for more than 10 years, from the grassroots level to the manager of a large department. I deeply love the challenges and unlimited imagination space that this job gives me. At the same time, in the past few days, the question of how to quantify marketing work in performance indicators has always been a headache for me. Therefore, over the past 10 years, I have been constantly learning, thinking and exploring effective solutions. At a company's year-end summary meeting, after I finished reporting on the results of my marketing work, my boss asked me questions about input and output that I will never forget. Indeed, we may have difficulties or doubts about the quantification of the input and output of the marketing team's work, but from the perspective of business decision makers, nothing is more important than quantifiable output data. If you are a boss, you certainly don't want to see only a list of how much money was spent in the year and some meaningless statistics in the year-end report. Next, I will talk about some personal experience on how to quantify the performance of marketing work. You can try to apply these methods to your work, which may help you to more effectively prove to the company the performance results of the marketing department's hard work throughout the year. 1. Convincing your boss to spend money as planned is a very important thing! Generally speaking, every company that has a marketing department will have an assessment of its budget expenditures. If your company doesn’t have one yet, it means that the performance appraisal system is not yet perfect. For companies that have budget expenditure indicator assessments, think about how most of your assessment methods are assessments of savings rates? Or accuracy? When planning the budget at the beginning of the year, most bosses usually say: Be frugal with your budget this year! So, among these two indicators, it is obvious that "saving rate" is the most commonly used. When it comes to the annual marketing budget, leaders always think that the less they spend, the better. Similar situations also occur in many Fortune 500 companies. However, from the perspective of scientific budget management, the company should assess "accuracy". That is to say, during the year-end assessment, the company does not look at how much money you have saved, but how much you deviate from the target value. Let’s take a look at the annual budget. How do most companies allocate it? Generally speaking, a company will multiply its annual target sales by an experience value to calculate the marketing expense budget for the next year. For example, if the company's annual sales target budget is 50 million, based on a comprehensive judgment of factors such as the industry and the company's own situation, if this value is 2%, then the annual market budget is 1 million. Usually, this ratio is fixed within a stage. For the marketing department, what role do the company or business decision makers hope to achieve with these budgets? The answer is to leverage sales growth and bring in exponential revenue and profits through effective use of the budget; of course, another part is used for mid- to long-term brand reputation building. If this is the case, then if the annual market budget execution rate is only below 50%, can we ensure proportional and effective profit and value creation? Unless this budget ratio is set on a whim, you should convince your boss not to worry about how much money you have saved this year. He should pay more attention to whether these expenses are spent accurately and effectively. Only when money is spent effectively can you expect an equal return. Of course, if we encounter a cyclical economic downturn, this will be a different matter. So, at this point, what you need to clarify is: the marketing department is by no means a department that saves money but does not produce any output. The marketing department is a department that spends money effectively and produces efficiently. Using budget leverage to drive exponential sales growth is the biggest difference between the marketing department and the sales department. How can we achieve our goals effectively without leverage or if leverage is not used fully? 2. Let your boss know how you create value? Of course, convincing the boss to spend the money that should be spent is just the beginning of the story. The important part of the story is that we need effective ways to measure how the money we spend actually works. Let’s first take a look at how your performance indicators are set. What percentage of them are quantitative indicators? Are most quantitative indicators quantitative indicators? For example, how many times the event was held and how many times the advertisement was run. Let's try to make the quantitative indicators more convincing. There are some key indicator concepts that you should establish: per capita sales scale in the organization, cost of acquiring a single customer, and number of new customers acquired. Why sales scale rather than profit? Because if you don’t have pricing power in an organization, you can’t control how much profit you make. During the assessment process, if the per capita sales volume increases while the number of sales people remains unchanged, the cost of acquiring a single customer decreases, and the number of new customers acquired increases year by year, then it can be shown to a certain extent that the market function is playing an effective role. The role of these indicators is not only to prove the results, but more importantly, in the process of executing market tasks, you can use indicators to see the effectiveness of your work and adjust your actions purposefully. For example: In a customer marketing campaign that costs 1 million, if the number of new customers acquired decreases compared to the previous similar campaign, and the cost of acquiring a single customer for a single campaign increases, then we should seriously discuss whether there are problems with similar activities at the strategic and tactical levels? How can it be improved? Of course, there are many reasons why an event may succeed or fail. In addition to the assessment of the above two indicators, you may also raise objections: Should we also see the implicit word-of-mouth impact! But please note that we are talking about quantitative standards. If you believe that the original intention of planning this event is to achieve the dual purposes of brand reputation and customer acquisition, then please set a percentage in advance. For example, for an event, the brand reputation purpose accounts for 40% and the customer acquisition goal accounts for 60%. Then, out of the 1 million yuan spent, the figure used to calculate the direct output should be 600,000 yuan. However, in an organization with an imperfect system, it is difficult to accurately calculate these values. But, at least, we can slowly build up these ideas. With the gradual improvement of Internet marketing and big data technology, it will become increasingly easier for us to achieve quantitative assessment. Especially in the case of marketing promotion through the Internet, we can easily find that through the data that can be directly captured, it is easy to see the huge value that the marketing department plays in the organization. At the end of the year, we should try to summarize and review some quantitative indicators. If there are numbers to prove that the company's annual per capita sales have doubled, or the unit customer acquisition cost has been greatly reduced. Well, there is no doubt that this number is a strong proof of the output of the marketing department. 3. How to strengthen the position of marketing function in the organization? As marketers, we have to say that we are often passive regarding the status of marketing functions in organizations. On the one hand, it depends on the business type and industry of the organization; on the other hand, it depends on the decision-makers' understanding of marketing functions and the assignment of corresponding responsibilities. However, years of practice have proven that we are not powerless in this regard. Have you ever considered conducting a value chain analysis of the various parts of your organization? This would be a good way to determine the position of your marketing department in the organization. For example, you can do a simple review of your organization's processes, score the value of each part as you understand it, and then see the proportion of the marketing department. This way, your marketing department’s position in the value chain becomes clear. The next thing you need to do is to consider how to incorporate the relevant parts of the value chain that you think are important into the marketing department for overall consideration. For example, in some organizations, the channel building function is placed under the marketing department. As you think more deeply, you will find that there are many things the marketing department can do, and many of them are about releasing value around important parts of the value chain. At the same time, through importance analysis in the value chain, you can find more ways to set some indicators to present performance results more effectively. The value chain analysis helps us to explain to decision makers through quantified figures the value share of the marketing department's functions in the organization. A marketing department that covers brand building, customer marketing, channel management and even more functions undoubtedly accounts for a very considerable share in the value chain. In short, although the positioning and value judgment of the marketing department often confuses us, even in actual combat, due to unclear goals, it leads to misplaced actions and weakens the recognition of its own value. However, the indisputable fact is that it is an indispensable department in the organization. If we give more thought to it and adopt scientific evaluation methods, it will surely play a greater role. APP Top Promotion (www.opp2.com) is the top mobile APP promotion platform in China, focusing on mobile APP promotion operation methods, experience and skills, channel ASO optimization ranking, and sharing APP marketing information. Welcome to follow the official WeChat public account: appganhuo [Scan the top APP promotion WeChat QR code to get more dry goods and explosive materials] |
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