Does the time and effort expended in preparing a marketing strategy really deliver an appropriate return on investment? This post sets out to answer that question for a small business (30-99 employees) involved in B2B markets.
The first step is to estimate the costs involved based on the time taken and the level of people involved. The costs can be relatively easy to determine to a reasonable degree of accuracy but the returns can be more difficult to establish. Generally, the returns can only be estimated based on a percentage increase in sales directly associated with the marketing strategy and planning process.
When considering the costs it is useful to first define the steps in a typical marketing strategy process before allocating time and personnel to each task. A typical process may be:
- Decide on the overall long term company objectives.
- Detailed analysis of the current situation.
- Summarize and consider findings.
- Consider various scenarios and the best way to achieve long term objectives.
- Once a way forward is defined establish a set of defined steps.
- Set objectives.
- Decide on strategies to reach those objectives.
- Set measurement criteria.
- Review, make required changes, sign off and agree.
- Measure and refine.
Steps 1, 4 and 9 require detailed involvement of the business owners or senior managers but all remaining steps can be completed by suitably qualified more junior personnel. Steps 10 and 11 are key parts of the overall process but are not included in the cost analysis.
Assuming one key decision maker or business owner then two days of their time should be sufficient to complete steps 1, 4 and 9. The most time consuming tasks in the entire process are steps 2 & 3. Part of these tasks must be completed with by a suitably qualified marketing person but part can be completed by lower level staff to research, analyse and number crunch data. In the size of business outlined above one week of marketing person time and two weeks of administrative time should be adequate.
The analysis task often extends beyond the marketing team as data is often required from other business departments. Typically each department head may spend half a day on the task with up to a day of work required in each department by more junior staff. Department heads input will, in most cases, also be required during stage 9, taking up to a further half day each.
All other tasks may be completed by the senior marketing person with some lower level support. For the business size outlined above this may take a further two weeks of their time and a week of lower level support. Based on the above and some assumptions on salary costs alone then the total cost of the marketing planning process (excluding steps 10 and 11) will be in excess of GBP 4,700.
The returns on this investment are more difficult to quantify. At a base level it should be possible to determine what level of sales will return a margin to cover the above cost. This will then identify the breakeven point that may then be broken down further into the number of items to be sold to cover the costs.
If, as a minimum, the marketing strategy and planning process identifies the real unique selling points of the business and the promotional plan can be refined to ensure only this message is delivered by the most appropriate channels then the savings on wasted promotional effort alone are likely to more than cover the cost of the strategic process.
If the strategic process identifies a single new opportunity for the business or ensures that the business does not blunder down a strategic blind alley then the costs will be covered many times over. The issue then becomes how to make the time available to the marketing department, senior management and divisional management to complete the marketing strategy process.