Marketing complexity

How to maximise the return on your marketing & sales investment

Generating higher revenue growth and satisfied customers

Since the financial crisis hit, its repercussions are still affecting consumers across Europe, as well as struggling companies. In times when revenue growth comes to a halt and profits plummet, leaders need to know more than ever before exactly where to spend their scarce resources.

How to maximise the return on your marketing & sales investment

Marketing and sales (M&S) budgets are usually amongst the highest in companies – and the first to be cut when times get tough. A lack of traceability and accountability only aggravates the situation. To justify future M&S investment and demonstrate its contribution and value to the overall business, leaders need to know the return on their M&S investments (ROMSI).

The report is based on a European survey with more than 300 European companies. The below text is an extract – you can download the entire report above.

However, M&S can help to steer the whole organisation through times of crisis if they spend wisely and efficiently. When competitors decrease their M&S budgets, smart reallocation of M&S expenditure could lead to important future competitive advantage.

Empowered customers in an increasingly digital world means more complexity for m&s

Volatile market, empowered consumers, adapted customer decision journeys (CDJ), social media and internet technologies have significantly changed the playground for M&S managers. The allocation of scarce resources becomes even more challenging due to this increased complexity and cannot be made based on past budgets and processes anymore.

The starting point for better quantifying the ROI of M&S activities may differ from company to company. In some cases, basic overviews and traceability of M&S spending are missing; in other cases, a strong silo-approach between the marketing and sales departments prevails, despite having sophisticated analytical tools already in place. We have developed a ROMSI Development Model, which works like a map to a journey that your company could follow to capture more value out of your M&S investments.

Key questions and dilemmas…

Key questions

Based on our research and in-depth interviews, the following key questions seem to concern senior management and their respective M&S departments the most:

  • We track a few of our main M&S activities, however which of these are implemented throughout the entire company and what are their related costs?
  • What are our customers influenced by and how can we reach them most efficiently through their CDJ?
  • What is the real impact of our M&S activities on revenue growth and other key performance indicators (KPIs), and how can we improve it?
  • Which metrics (sales leads, customer satisfaction, etc) should be used to measure our ROMSI? Different views exist amongst our leadership teams regarding which KPIs best measure our M&S activities, as well as the company’s overall objectives.
  • Which of our M&S activities are critical to success? Where can cuts realistically be made without jeopardising revenue, profitability and brand awareness?
  • How should we (re)allocate our M&S resources in order to maximise the ROMSI?

… and how to solve them: conclusions from our research

After extensive research, we learnt that companies that perform better than their industry peers have the following characteristics:

M&S budget allocation is based on a systematic approach

A comprehensive and transparent overview of all M&S expenditure across the company and its relative markets, segments, channels and customers is an absolute must. Key cost drivers need to be identified and compared with their respective impact (and if available measured, otherwise discussed and agreed between both M&S departments) applying the 80:20 rule. We found out that those companies that are highly professional or mature in managing their M&S activities always invest in at least a few efficient research tools or approaches (e.g. field tests). Although this is considered an expensive cost, it leads to higher savings within the M&S budget – hence, an investment worth making.

The discussion on measuring the ROMSI should take place across all departments, not only M&S

It is vital to understand and agree which KPIs a company eventually wants to apply to measure their activities. Often, the finance department uses a different set of KPIs to measure success or failure of an investment, hence agreement and alignment across departments is important to identify the right and same set of KPIs, which ultimately leads to achieving the overall company’s ambition and its strategic goals. These KPIs need to be:

  1. Easily available and accessible (otherwise nobody will use them); also their time frame needs to be taken into account (short-term versus long-term objectives).
  2. Smart and operational (revenue as such is too broad a measure, so use those that better measure sales leads, customer satisfaction, customer impressions and so on).

Comparable with in-house historic data, competitors and industry.

Higher M&S performance needs to be reflected in individual and team incentive structures! Our research clearly suggests that a direct link to salary and M&S performance helps to improve the overall ROMSI. It also seems that traditional definitions of M&S roles and responsibilities need to be closer to the outside world where empowered customers, new decision journeys and changed sales funnels ask for a more holistic approach. Furthermore, the much discussed influx of finance-related KPIs needs to be reflected in the expertise of today’s M&S managers.

Increased efficiency in M&S processes – internal and external – creates additional room for cost savings

Most companies are not satisfied with their overall M&S allocation processes and see room for improvement. Only a professional M&S budgeting process justifies subsequent impact analysis or control. Furthermore, some lean thinking would help to identify waste – in other words, free up additional budgets for more effective and direct activities. Think about evaluating and consolidating your suppliers, for example, and the way you manage them internally.

Watch the key steps towards maximising the return on your marketing & sales investment