3 Commandments From My “Marketing Internship”
For almost 25 years, I have been either been DIY’ing my own marketing brochures, newsletters, websites, etc... or I bought these services from professionals.
When I bought marketing like you do, my purchasing decisions were based mostly on their recommendations (sales pitches) and I trusted them to deliver. Some did, some didn’t - but I never really, truly knew what was working or why. The professionals didn't seem 100% sure either.
So in 2015, I left the executive suite in search of a greater understanding of marketing, especially digital methods like Pay Per Click and content marketing, to really understand the impact these tools have on how I’d build and run a sales team in this new era.
I wanted to fully understand what it takes to make the phones ring and the inbox ding with qualified, red hot leads who needed very little selling to close. They would be ready to buy thanks to the work we have done on the web or in our emails and ads.
So I jumped into this world with both feet by joining a small web marketing agency as a billable consultant and NBD rep. And boy did I learn! My view of the business world will NEVER BE SAME.
From our clients’ success (and some failure) as well as a ton of exposure I had to other agencies’ work, I have 3 Commandments for you.
#1 - THOU SHALL KNOW THY ROI.
All too often, we invest our Marketing dollars based on hunches, perceived trends and most of all, hope. Regardless of who is managing your ad spend – an agency, an employee, or yourself - you need to know (not think you know) the ROI of your company’s marketing efforts. These four steps will get you to that number.
Step 1: Add up every cent that is associated with your marketing efforts, including:
- Payroll including benefit costs, office space, vacation days, etc…
- Consulting fees for websites and other marketing programs
- “Click costs” paid to Google, Bing YouTube, Twiiter, Facebook etc…
- Cost for Leads from a 3rd Party
- Monthly fees to platforms like Yelp or YP
- Membership dues and sponsorship fees for networking
- Tradeshows, conference and convention costs
- Printing costs (if you still print anything)
[PRO TIP: Don’t forget to allocate the proper portion of your time spend on Marketing. If you are brave, use the opportunity cost of you closing new business, billing out your time or being useful doing something else.]
Step 2: Identify how much of your NEW BUSINESS was generated in whole or in part (most likely) during that same period by your marketing.
[PRO TIP: Don’t let revenue from past clients sneak in and bloat your numbers. You are keeping them happy with other resources.]
Step 3: Attribute a lifetime value (LTV) to each new relationship and add it up. Lifetime value is a critical number and may require some tinkering. Be sure you recognize your version of how many pizzas each family is going to buy per month and for how long.
Step 4: Divide the LTV by the Costs and you’ve got yourself an ROI. The strictest version of this math would use the Gross Profit dollars, not the Revenue, as you are spending gross profit dollars to grow your business.
No matter the number, marketing is always about constant improvement, so pick the lowest hanging fruit and get to work.
#2 - THOU SHALL HIRE EXPERTS, NOT BUY FROM THEM.
If you expect unbiased, trustworthy assistance, you should plan on paying tor their time like any other professional, not buying someone’s software, platforms, ads or even leads. The real pros you engage may use tools or recommend buying ads, but they should not be making money off that recommendation.
In far too many businesses today, decision makers are swayed by marketers who are far better at selling themselves than their product or service is at generating income for their clients. A pro’s pro is able to look at their results impartially and let you know what is and isn’t working without hesitation. Testing, which generates winners and losers alike, is the foundation of the process.
[PRO TIP: The Don Draper era tradition of charging a percentage of your ad spend no longer makes any sense whatsoever. You are bound to be on the losing end of that deal if it’s still part of your vendor relationships.]
#3 - THOU SHALL RE-EVALUATE THY SALES EXPENSE.
With all this data and expertise at your disposal, you have one last step. It’s time to get uncomfortable and question the way you have always done things and seen the world. You can now point your microscope at the last piece of this puzzle – your sales expense, the big game animal on your payroll and most likely, a huge portion of your managerial headaches.
This is where my real awakening occurred. We have all been hiring reps for decades to grow our businesses, and been paying big commissions when they win. In the last ten to fifteen years, due to short supply of “good” reps, most of us even began paying base salaries and bonuses tied to programs designed to motivate these fickle creatures just to try.
BUT NOW - as we invest in marketing to make attract and educate buyers to make the phone ring or the inbox ding, why are still employing traditional sales people and paying them the same old way. As studies show that buyers are going through up to 90% of the “sales process” on their own today, it is time to reflect this transfer of control in our org charts.
[YOUR TAKE AWAY] If you have a great, even good, lead generation “machine” in place, consider placing a people-oriented, product or service expert in the path of an incoming lead to answer their questions and get the work on the schedule or the product shipped out the door. This rep likely will do a great job without much if any commission.
The buyers have spoken – they prefer to buy without the “aid” of a sales person. They are running the show and if they have to speak to anyone, it had better be an expert with the answer to their question.
So almost two years later, what have I learned in a nutshell?
The way we have staffed our companies to sell products and services historically is no longer the best way to grow your business. Those companies that have remodeled, or re-imagined, their businesses to reflect this are winning BIG and disrupting industries and market share in some amazing ways.