3 Steps To Getting Your Marketing Budget Approved

Approved..001“The purpose of marketing is to contribute to maximising shareholder value and marketing strategies must be evaluated in terms of how much value they create for investors.”

-Peter Doyle (2008)

Recently the new CEO of a well-established but small company showed me his marketing budget and asked if he would get it approved. His background is finance and ICT, and his sales and marketing manager, also new, was a successful elsewhere salesperson with no formal training but some tactical experience in marketing. What they presented was a list of proposed activities and a request for approval of “a sum certain in money,” to finance these activities. There wasn’t even a hint of marketing strategy or a return on investment. It was never going to be approved as presented, I thought, but they did have some good tactical ideas.

Marketing and Value Creation

As Hooley et al (2012) put it, “Marketing is a process of value creation and delivery to customers that transcends traditional departmental boundaries .” Shrewd marketers know that their first constituency is the internal customer, so here are the three things that they do to get their budgets approved on time, every time:

1. Start with the CEO. What is his/her dream?

  • What business do we want to be in 3-5 years from now?
  • What should the brand footprint be in 3-5 years time?
  • What would make our shareholders happy?

2. Your next discussion is with the CFO. What would make him/her look good?

  • What would you like our Balance Sheet look like 3-5 years from now?
  • What would you like our projected Income Statement to be 3-5 years from now
  • What ratios would put us way above industry average?

3. Armed with the above, the next step is to create a marketing plan that is a roadmap for giving the CEO and CFO what they want, and your target customers more than they had expected.

The Marketer’s Secret

  • What’s in it for the marketer, you may ask. I’ll share the marketer’s secret with you; but be sure to keep it strictly confidential: We work for more than achieving the quantitative and qualitative objectives. The journey is our real reward! And so our fun comes from the marketing thinking, followed by the planning process, constructing the strategic and tactical plans, presenting them as an investment that the CEO and CFO will find attractive, and then executing the plans to the benefit of all.
  • Slick? Not really, for it is much easier said than done. Indeed, as McDonald (2007) speaking of marketing planning reminds, “The problem is that, while as a process it is intellectually simple to understand, in practice it is the most difficult of all marketing tasks.”
  • So back to the case of my young friends. Obviously what’s needed here is not about bunting, banners, advertisements, social media and the related expenses. These are all important elements in the communications mix; but they are not the strategy to take the business where it needs to go, and so his Board is unlikely give the stamp of approval.

Good luck, my young friends. You were smart enough to seek advice early in the process. Now, how would you advise them: should they attempt to create their marketing plan on their own, with no additional expenditure; or should they seek professional assistance which comes at a cost?

Herman D. Alvaranga is president of the Caribbean School of Sales Management. Shrewd managers call him (876-527-3001) instead of looking outside the region for world-class sales and marketing consulting and sales force transformation.

Are celebrity brand ambassadors too risky for your business?

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Older consumers are not as likely to be influenced by celebrity endorsements.
Clow and Baack, (2007)

Celebrity endorsers, popularly known as brand ambassadors, have become, well…popular, in so many, many places. And why not? Nuff hype, big ups, media attention and usually a very big party to top it all off. But is it really a gamble by marketers who have blindsided the rest of the company as some people claim?

A Current Jamaican Example

Let’s look at a current example here in my native Jamaica. Last week ATL Automotive, dealers for VW, Audi and Honda motor cars announced that singer and media personality Denyque, was its new brand ambassador.

“We’re very happy to have Denyque on board as our Volkswagen ambassador. She exhibits so much synergy with the VW brand: effervescence, spunk and major cool factor. We thought it was match made in heaven,” said ATL Automotive’s group general manager.

This marketer has had 6 Hondas, thinks the VW brand is perhaps the best motor car value anywhere, and as a youngster was fascinated by DKW (derived from Dampf-Kraft-Wagen) and NSU, two of the forbears of the present Audi brand. Fond, but fading memories of the NSU Spider from the 1960s linger; but never mind for the Audi TT would fit nicely into my garage!

Why engage brand ambassadors?

But back to our brand ambassador story. Why do marketers engage them? Let’s hear what Clow and Baack, (2007) have to say. “A celebrity endorser is used because his or her stamp of approval on a product can enhance the product’s brand equity. Celebrities also help create emotional bonds with the products. This bond transfer often is more profound for younger consumers. Older consumers are not as likely to be influenced by celebrity endorsements.” So who is VW/Audi targeting? And how many young Jamaicans have money to spend on these premium/luxury brands in this time of extreme austerity? But why ask? For I’m sure they’ve got that all sorted out.

Potential Dangers

Shrewd marketers, however, never forget that there are several potential dangers in using celebrity endorsers. Among them are inappropriate conduct. Who can forget Tiger Woods and how many global brands dropped him in an instant, almost? And here in Jamaica some of our best-known advertisers have dumped their brand ambassadors drawn from the popular culture very quickly for the same reason. Further, the matter of credibility remains an issue, for we all know that brand ambassadors are paid to promote the brand.

But perhaps the biggest potential danger may be self-inflicted; for too often marketers engage brand ambassadors without carefully developing financial and marketing objectives, measures of success and the requisite internal marketing. Bottom line? Brand awareness is never the objective of a campaign/promotion when your brand is already well-known. Neither is the excuse that you can’t measure the effect of marketing campaigns/activities acceptable. Worse, the buying cycle for such a major purchase as a motor car may be very long, with little immediate financial impact. Sales may be dismayed by the resulting numbers, and Finance may well ask, “Did we waste our money on that brand ambassador?”

Good luck ATL Automotive! This marketer is always wary about the real value created by brand ambassadors, but that little Audi… now where is the car fairy when I need you?

Herman D. Alvaranga is president of the Caribbean School of Sales Management. Shrewd managers call him instead of looking outside the region for world-class sales and marketing consulting and sales force transformation.

What do your sales effectiveness drivers say about your sales organisation?

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I was busy and skipped my usual Sunday post; but in response to those special people who contacted me today I’m submitting this, my final in the five-part series on the dimensions and drivers of a winning sales organisation. Today’s discussion is on the subject of sales effectiveness drivers-a subject of much debate.

As Zoltners et al put it, sales effectiveness drivers are about the decisions, processes, systems and programmes that sales leaders are responsible for.

Popular sales effectiveness drivers

So what are perceived to be the main drivers of sales effectiveness? Here’s their list of the most common. Did you think of all of them, or do have something to add to the following?

  • Sales strategy (market segmentation, value proposition and selling process)
  • Sales force size
  • Sales force structure and roles
  • Sales territory design
  • Recruiting
  • Learning and development
  • Culture
  • The sales management team
  • Leveraging information
  • Compensation and incentives
  • Goal setting and forecasting
  • Performance management

Theory X and Theory Y

One size fits one, and we can never be sure exactly what’s on the minds of our salespeople. Do we really know what precisely what they want, and what will motivate them? Should we even consider McGregor’s motivational Theory X which essentially assumes that people work only for money and security? Or how about his Theory Y which, if implemented, could result in a high level of motivation as employees work to satisfy their higher-level personal needs through their jobs. Or is it a combination of both? And are these models still useful nearly 60 years later?

Culture, motivation, and productivity in two competing firms

While I have no scientific basis for making definitive conclusions, in my travels I have noticed that too many managers have taken the position that the key to sales force productivity is compensation. If they pay their sales teams high rates of commissions that’s it. They can now demand blood! Which brings to mind two direct competitors that supply a range of edible products to hotels, restaurants and the retail trade. Both are very aggressive. But one has a Market culture-a focus on competition, achievement and “getting the job done.” And they have one strict rule for their salespeople. Your week-ends are for you and your family. They work hard and play hard, and while not earning top dollar, morale is relatively high.

The other has a rigid hierarchical culture. They are highly structured and controlled. Fear of making an error is never too far away. Nobody breaks the rules. Further, the sales force is required to work six days per week to ensure that their customers are never out of product. As for the delivery crew! They all hate it; but the money is good.

But there’s another side to the story. Although they employ different sales effectiveness drivers they are the leaders in their industry, but one by a wide margin. Now, can you guess which of the two sales forces has higher productivity and which company has higher profitability? And can you guess which has the better corporate image?

Herman D. Alvaranga is president of the Caribbean School of Sales Management. Shrewd managers call him instead of looking outside the region for world-class sales and marketing consulting and sales force transformation.

Your salespeople: What do they say about your sales organisation?

 

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Today we will look at “salespeople,” the fourth of five dimensions of a successful sales organisation.

Is this what your ideal sales force looks like?

Based on the research conducted by Zoltners et al, most sales managers claim the following about successful salespeople:

  • Ultimately it our salespeople who make us successful
  • Our salespeople know our products, customers and competitors really well
  • Our people have the right values, attitudes and capabilities
  • They are constantly learning and developing new skills
  • They adapt as new selling processes emerge
  • The turnover of high performers is very low

Success culture

Successful sales organisations are always seeking to employ competent, motivated salespeople and to cultivate a “success” culture. But what is a success culture? And success in whose eyes?

Early in my career as a business development consultant I worked with a firm in the fast moving consumer goods industry where their sales force was characterised by its diversity. Few were college graduates, most had completed high school and others came up through the ranks from the level of store (visual) merchandisers. Naturally their measures of success were vastly different. Income was mostly commissioned-based, and while some Reps needed to drive high priced SUVs and live in up-scale homes, some had only modest desires and were motivated to produce far less. While they all considered themselves successful, in the eyes of some merchants, Reps with lower desires were seen as lazy, unambitious and presenting a poor image of their company.

The new sales manager

Not happy with financial out-turn, the company decided to change its brand footprint with higher quality products, premium pricing and personnel differentiation. Not surprisingly the company hired a new sales manager whose mandate was to create a world-class sales force that would portray the new brand strategy. Can you imagine what was his strategy for getting his entire salesforce singing from the same hymnbook, the same song, and all in tune?

Herman D. Alvaranga is president of the Caribbean School of Sales Management. Shrewd managers call him instead of looking outside the region for world-class sales and marketing consulting and sales force transformation.

Your Sales Activities: What Do They Say About Your Sales Organisation?

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The five dimensions of a successful sales organisation

So far we have discussed two of the five dimension of sales organisation success as defined by Zoltners et al. As a reminder, their five are: company results, customer results, activities, salespeople and sales effectiveness drivers. Today we will quickly look at “activities.”

CEOs and Sales Managers alike are always concerned about what their salespeople are doing. And why not? For as Bearden, Ingram, LaForge (2001, p445) remind, “Because salespeople are often the most direct link between a firm and its customers, they can heavily influence whether or not the firm succeeds.”

Ideal sales activities?

Returning to Zoltners et al, they claim that a successful sales organisation allocates its time effectively and ensures that every activity delivers high value including:

  • Products that have strategic importance get appropriate attention
  • The sales force serves our best customers well
  • We participate in new business activities, balancing hunting and farming
  • We spend a lot of time with our customers and keep administrative work to a minimum
  • The quality of our activity is as important as the quantity

My own experience is that this impressive set of activities is too often only a wish list, for this is rarely what happens in real world.

What actually happens

We all know salespeople that are wayward. Doing their own thing. Not caring much about what their managers (or customers) want as long as they are meeting overall revenue targets. And they’ve got the excuses to prove it. The consequences can be dangerous for their firm, for the purpose of salespeople can no longer be so narrowly defined. And I won’t mention activities like knocking on the wrong doors, wasting time, etc., etc. for your list may well be longer than mine. And can you imagine what some customers think of their sales organisation?

Would you encourage this activity?

But how about the sales manager I met recently who insists that his reps report to office every morning before getting in the hunt, well knowing that some of them will never see some customers until late evening. Is that a sales activity that you would encourage? And what does it say about their sales organisation?

Herman D. Alvaranga is president of the Caribbean School of Sales Management. Shrewd managers call us instead of looking outside the region for world-class sales and marketing consulting and sales force transformation.

Your Customers: Is Your Sales Organisation Really Helping Them?

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Five Dimensions of a Sales Organisation

Last week we looked at the first of the five dimensions of a sales organisation-company results. Today we will look at a critical dimension which often does not get enough attention-customer results.

Customer Results

Why are your customer results important? Because their results can affect your results! May I tell you a very short story that I recall from a previous life?

Over two decades ago, before I became a business development consultant, a salesman I knew bragged over lunch with a colleague how skilful he was at closing sales. He had just tricked a businessman (from another city) into buying three years’ supply of a product all at once and he got full payment in cash! His only concern was that he could never face him again. Can you image what that purchase by an unsuspecting customer may have done to his small business?

Demonstrating values rather than products

That was then. We would love to believe that today’s sales people, especially those in B2B, have moved on and now focus on showing the economic value to the customer (EVC). Indeed, we expect that they, as part of a successful sales organisation have:

  • Deep customer relations and customer trust.
  • High customer retentions and low defection.
  • A loyal customer base.

The risk in controlling reseller mark-ups

My own experience is that far too often sales organisations claim that they have excellent relations with their customers, but it is only superficial because their pricing policy shouts a different message. As Doyle and Stern (2006) remind, “A business is likely to be concerned to influence the mark-up taken by its resellers. After all, a business has four ways it can increase its total profit:

  • Increasing its sales volume.
  • Cutting its costs.
  • Raising the price its products and services can command in the market.
  • Raising its price to its resellers without them in turn raising the price to customers.”

But Doyle did not tell us that you may be controlling reseller prices at your own peril. I once knew a sales organisation that raised their price but their customers could not do likewise. Their biggest customer, faced with reduced margins and an unlikely reduction in sales if they carried a competing product in the same category, promptly split the business with a competitor. The supplier was perceived as not caring enough about the results of their customers and took a long time to regain trust and lost market share.

Trust is the key to relationships. It can’t be bought. It must be earned. And in the long run, helping your customers to achieve their desired result while you pursue yours may be your best competitive advantage.

Finally, I would like to thank my readers who have been contacting me to discuss the Dimensions of a Successful Sales Organisation. Can we look at Sales Activities next week as we continue this series of five articles?

Herman D. Alvaranga is president of the Caribbean School of Sales Management. Shrewd managers call us instead of looking outside the region for world-class sales and marketing consulting and sales force transformation.

Your Company Results: What Do They Say About Your Sales Organisation?

cash.019Five Dimensions of a Sales Organisation

Last week I spoke of five dimensions of a sales organisation: company results, customer results, activities, sales people, and sales effectiveness drivers. Today we will look at the first, and probably most important of them-company results.

Company Results

Company results are about our sales, market share, and profitability targets. Are we growing faster than the competition? Our sales are growing, but are our costs in line with industry average? These are typical questions.

As a point of reference I looked at the 2014 annual report for one of my favourite Jamaican public companies, GraceKennedy. Their Consolidated Income Statement showed an increase in revenues of 15.9%. But a closer look (Note 23) showed that the sale of products (not including financial and other services) was up by 20.2%. Some sales managers within the Group may have good reason to smile: for how many can boast that level of growth in our tight economic space?

As Zoltners et al (2012) remind, “Sales leaders are interested in results. After all, they are evaluated on, and rewarded for goal achievement, and results are the most visible and objective indicator of achievement.” They continue, “Company results are the organisation’s financial outcomes, in which the efforts of the sales force play a major role. Such results can be measured using sales, profits, market share, return on investment, or some other metric, and they can be expressed as absolute levels, percentage of goal achievement, or growth over last year. It is useful to evaluate results from both the short term and long term perspectives for the performance of the sales force affect both.”

Questioning Sales Success

So we know that the efforts of the sales force play a major role in company results in this era of product parity and oversupply in almost every category of product or service offering. Well, you may ask, “My company experienced triple digit growth over the past month. Shouldn’t we rejoice?” Not so fast. For looking at short-term sales growth alone can be fatal. Indeed, shrewd sales managers have long known that in the face of apparent sales success they must always ask:

“Where did this recent growth come from?”
“Did we merely borrow some customers through a short-term sales promotion, or a difficulty being experienced by a competitor? Or is our target market responding to a better value proposition communicated by our marketing and sales people?”
“Is this growth sustainable? Does my organisation have a powerful sales force that will consistently deliver above average profitable growth for the long term?”

Indeed, shrewd managers take it one step further, for recognising the value of their key accounts and the need for interdependency, they ask another critical question, “I’m achieving my desired company results: but what about my customers? Are they better off from doing business with me: and will they still love me tomorrow?”

Can we discuss how our sales organisation might affect our customers’ results next week?

Herman D. Alvaranga is president of the Caribbean School of Sales Management. Shrewd managers call us instead of looking outside the region for world-class sales and marketing education, consulting and training.