Marketing Risk
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.
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Frederic leads marketing for Business Objects in
Asia-Pacific & Japan where, with his team, he develops and
implements profitable marketing strategies aimed at helping
customers and prospects develop their business through the
awareness, use and development of performance management
solutions. Frederic brings with him 15 years of diversified
industry and functional experience enhancing revenues,
profits and market share of multinational businesses
operating in Asia Pacific. He has managed hundreds of
regional business and consumer marketing campaigns
delivering solid financial results. To that effect,
Frederic has developed and implemented the ‘Simple
Marketing Strategy’ and has published several articles in
regional publications (Marketing ROI: A case of corporate
survival; Do you need Customers?; Is Loyalty Profitable?;
Sales Cycle Marketing, See
http://sound-principles.blogspot.com/ ) He regularly gives
speeches on Marketing ROI and Enterprise Performance
Management (EPM) to further the cause of the strategic role
of marketing in an organisation’s business arsenal.
