In smaller B2B organisations marketing can seem like a necessary evil. The reality for many is that it seems like a costly exercise with an impact on the bottom line that’s hard to quantify. The priority is often to control the budget so that you spend the minimum amount to generate enough leads to keep going. In effect, there is no marketing strategy, even if there’s a business strategy.
A common scenario is where business leaders decide what the business wants to sell more of. They then task marketing with devising campaigns to generate the required leads.
This seems fine (but actually isn’t) until the business wants to see significant profitable growth. The other risk with the minimalist short-term approach to marketing is that your market could shift before you have time to react.
Better surely, to get things under control and bring marketing and market intelligence into the fold when strategic decisions are made.
Why Marketing and Finance are Natural Allies
The archetypal view of many businesses sees the marketing and finance functions at loggerheads. If that’s the reality, then neither is doing their job properly.
The common depiction sees battle lines drawn between the dour bean counters who just want everyone to stop spending money (unless there’s a guaranteed ROI), and the tortured creatives that can never get enough budget to run the campaigns they want to run. This isn’t healthy.
If we put stereotypes to one side, the two disciplines have many shared objectives.
First, both want to pursue profitable growth. Good FDs and accountants know that this calls for investment.
Second, neither has an emotional or career attachment to particular products or services – they can be impartial about where the company should be trying to grow.
FDs should have the detailed data in their management accounts that shows exactly where the profit comes from. Marketing should have the market intelligence and skills to map out the strategy, tactics and costs to grow the business in the most profitable areas.
With this level of clarity, both find they are on the same side. Marketing has a clearer direction for market segmentation, brand positioning and marketing messages. These will drive more long-term profitable growth than isolated tactical campaigns could ever hope to do.
Why does this matter? Put simply, not all growth is good.
Growth Could Be Killing Your Business
There’s an old business saying that growth hides a multitude of sins. There’s also a common perception that growth is always good. Both of these can be dangerous.
The easiest way to grow your business is to buy customers. This is the route taken by Uber, Dollar Shave, WeWork and countless Direct to Consumer (D2C) mattress brands. Unit costs exceed unit price. No problem if your investors have deep pockets and faith in redemption via flotation or acquisition.
Is your business be doing something similar without you realising it? For example, how much discounting do you do to meet sales targets?
It’s easy to assume that growth equals more profit. A smarter strategy is to be driven by a market perspective. In other words, what does the market want – and want badly enough to pay a premium price?
First, understand which parts of your business generate the most profit. Research what your market really values, and identify how you need to adapt your offer to sell more of what generates the most profit.
You then have a sound basis for a business growth and marketing strategy. You’ll also have an insight into how to position your offer. Above all, you avoid falling into the trap of piling marketing budget into lines with low and declining profitability.
What is Your Business? Why Marketing Strategy Matters
Many years ago I read something that turned my business thinking on its head. It was this insight from the legendary Peter Drucker: ‘marketing and innovation are the only core functions of a business, everything else is an overhead’
At the time I was in operations and business management. I believed that what we produced was the business. Ah, the innocence of youth.
The quote makes sense when you understand the breadth of what marketing should be; rather than the narrow activity-focused promotional function it has been shrunk to in many businesses.
Marketing is about becoming an expert in your chosen market segments: how customers behave, what they value and what unmet demands they have. Master this and you can innovate digital or physical products or your service delivery to add the most value. The promotional part of marketing is then simpler. You no longer have to persuade people to buy something that doesn’t fully meet their needs.
So, a couple of questions: who at a strategic or leadership level truly represents the voice of the market when you plan the future of your business? And, what drives innovation?
What Does Your Business Look Like 3 Years from Now?
Let’s round this up by thinking about the future of your business. Do you have a clear picture in your mind of how you want it to look in 2-3 years’ time?
Recent events have given the foundations of the business world an almighty shake. Markets and ways of serving them are shifting in ways and at a pace we wouldn’t have imagined a few short months ago.
It would be a brave bet to assume that things will return to the way they were – or that tactics that worked in the past will still pay their way. The time is ripe to ask 5 key questions:
- How do you want the future to look?
- What do you have to do to make it happen?
- How much will that cost?
- How will you pay for it?
- What will that do to cash flow?
The first question is rooted in your market. Who will your customers be, what will they buy, how much will they pay? The customers you want tomorrow, may not be the ones you have today.
When you grasp that, your marketing strategy and budgets start to make sense.
When the market was buoyant it might have been possible to generate enough opportunity from short-term digital tactics and see where that takes you. But isn’t it better to be in control? With clarity about your marketing strategy comes the ability to take on larger competitors in your sector.
Now is the time to grab the wheel and steer towards a surer destination.