How will your business be earning the most profit – not revenue – in three years’ time?
What products or services will be your biggest income earners and who’ll be buying them?
Not easy questions. Without a crystal ball you can’t know the answers. But you should have working assumptions about relative future profitability – and hard data about current profitability – to drive your marketing strategy.
Time to talk strategy – or not?
Apparently 86% of businesses spend less than one hour each month discussing strategy. If yours is one of those you might be groping about for answers about future profitability, ideal customers and marketing strategy. But maybe it’s not entirely your fault.
These questions go to the heart of the difference between marketing as it should be done and the way that many businesses understand it. It’s largely a question of time horizons, having the right data and being purposeful.
When strategies aren’t strategic
I sympathize. Much of the marketing industry (particularly the part that calls itself digital) thinks that the next couple of months’ content and media plan is a strategy. The focus is on short term metrics, attribution and sales activation. So what’s a business to do?
First off, anything that relates to tactical execution is a plan. It should flow from your strategy but it’s not a strategy in itself.
Fancy a bit of entertainment? The next time somebody talks about your ‘PPC or social media strategy,’ ask them what’s strategic about it and why it isn’t just a plan.
When the link between profitability and marketing strategy goes AWOL
You might wonder why it matters so long as your marketing activities bring in more sales. What’s the problem?
The extreme risk is that without a strategic direction you could end up burning through your marketing budget, only to gain sales that progressively lose you more money.
To a lesser degree, what looks like a good ROI from your budget when you count revenue could mask a horror story of pitiful returns when it comes to profit. ‘I’m making all this money from every campaign but my year end results suck…’
Strategic direction
Let’s come back to the original questions. You can’t answer them without detailed market analysis. Better to do this based on solid research rather than assumptions.
- You need proper management accounts and somebody with the experience to interpret them.
- From the financial data you need to build an ideal customer profile (which doesn’t mean a soppy buyer persona with loads of made up and irrelevant details).
- You have to get inside the daily lives of your target buyers (or, more likely, buying teams).
- You need a clear definition of how you’ll deliver value to those people and identify how to position your brand, products and services to reflect that.
- You need a plan for product and service development to meet known, rather than assumed, needs.
And you need a plan for how you’ll use your branding and marketing tactics to embed your business in the minds of your future customers. To build the right mental connections and memory structures ready for when they become active buyers. Above all, you need to build trust.
Finally, you need the right content. But marketing content unguided by a strategic purpose is just more noise. We already have plenty of that, even before ChatGPT spills dump truck loads of additional low value content into the world of B2B marketing.