The link between your financial strategy and marketing strategy

 

Does your company have an effective marketing strategy?

Successful business owners have financial strategies that guide their decisions but don’t always have an effective marketing strategy. It stands to reason, however, that marketing strategy–as the revenue machine of the business–deserves as much attention as financial strategy.

Fortunately, marketing strategy can be understood in financial strategy terms. So those companies that wish to improve the effectiveness of their marketing strategy can begin by including these financial strategy components and concepts.

profit

Quantitative Financial Objectives

The purpose of marketing strategy is to drive sales, to “make the cash registers ring.” Therefore, marketing strategy always begins with specific financial objectives that contain, at minimum, the sales dollars that marketing is charged with supporting or generating. Other quantitative objectives can include customer growth, web visitors, lead generation, gross margin support (through influencing product mix) and ROI. Start developing marketing strategy by identifying its financial objectives.

Risk/Reward

Investment decisions are made by balancing risk and reward. So, too, with marketing decisions. Different marketing strategies and tactics have different risk and reward expectations. For example, a company that uses largely traditional marketing methods many not feel comfortable with Internet marketing. The lack of experience with Internet marketing leads to uncertainty which increases the perception of risk.  By foregoing investments in Internet marketing, this company selects lower (perceived) risk but may forgo the higher rewards that are increasingly associated with Internet marketing.

Budget Allocation

Most financial strategies allocate funds across a variety of investment options to moderate risk. Marketing has many options by which to generate results (e.g. various media, channels, and platforms), and these are growing daily. Just like investment alternatives, marketing strategy examines its alternatives and makes informed allocation based upon prior experience, risk/reward, and marketplace conditions.

ROI

Like finance, marketing has KPIs (key performance indicators). ROI is always at the top of the list. Increasingly, companies are becoming more data-driven and this will provide more opportunities for quantitative performance measurements. Concepts like closed-loop marketing, for example, are very much data-driven and concerned about improving marketing ROI.

Closed-Loop Marketing

In marketing terms, closed-loop refers to the analytical process of tracking marketing activities from execution through to sales. There are many touch points along the way that allow for analysis and refinement. This becomes an iterative process that leads to constant learning and improvement. The financial analogy is obvious.

Analytics

Analytics abound in finance and the properly managed marketing department (even a department of one) has a wide variety of metrics and tools. Long gone are the days of “black box” marketing (marketing solely on intuition without quantitative rationale), although some areas such as creative concepts and design are less open to analysis than others. However, as techniques like eye-tracking and heat maps are introduced, marketing will become increasingly analysis-based.

Shiny New Objects

Both marketing and finance have their shiny new objects, the latest new alternatives that capture attention. For example, ETFs or exchange traded funds could be compared to Google Plus Business Pages. Web 2.0 and social media are generating shiny new objects daily. Like new investment options, they can be managed by acquiring knowledge, expertise, and will have their unique risk/reward profiles.

Takeaway

If your company doesn’t have a marketing strategy comparable to the sophistication of your financial strategy, you can get a solid foundation by applying the financial concepts and techniques described above.

 


About the author:

As a provider of marketing solutions, Don Metznik (@donmetznik) serves as a hub connecting business owners with the ideas, strategy, resources, and experience they need to compete and prosper in an increasingly digital, Internet-based marketplace. His publishes insights to a variety of marketing topics on his blog including How To Create A 52-Week Marketing Calendar, How To Set Up Your Social Media Team, and A New Strategy For Managing Marketing Resources.

 

Guest

Interested in guest blogging? We'd love to have you! Here are our guidelines.

Speak Your Mind

*