When Marketing and Money Meet
I have found it interesting and disheartening that many firms have an unspoken wall between the day-to-day functions of accounting and the marketing activities.
These are typically the polar opposites in your company — one is analytical and numbers-oriented; the other is people-oriented, set on promoting the firm, the creative side … and never the two shall meet.
This is an unfortunate reality for many firms because your marketing efforts could be exponentially improved by bringing these two critical functions of your company together to benefit your clients, your marketing prospects and your bottom line. Let’s explore the greatest possibilities:
>> Create an annual marketing budget: Every firm creates, updates and projects an operational budget of expenses and revenue. As such, marketing seems to be a grey line item thrown in there based off of what was spent the year prior — this is not a marketing budget. The marketing professional in your firm should meet with the accounting person to outline all hard-cost marketing activities (sponsorships, advertising, client entertainment, proposal costs, photography, etc.) they are planning to do for the year. These costs need to be clearly detailed in a marketing budget and then reviewed regularly.
This will be one of the most powerful practices marketing and accounting can do together— accounting can see the methodology of the marketing expenses and marketing can take ownership of the “overhead” associated with their spending and be stewards of those financial commitments. As the goals and decisions change year to year, so will the costs associated — this is a goal-based marketing budget and it is much more effective than a percentage of G&A or a historical-based budget.
>> Analyze the work: By bringing the information accounting has at its fingertips to your marketing professional, their marketing and business development activities can be better informed. For example, your marketing decisions should be based off of your actual repeat client percentage — who are your greatest clients? What are they buying from you? What markets is your firm strongest in? Which of your services is most profitable? Where are referrals coming from?
Once this information is analyzed, there is hard evidence and confirmation of what needs to be replicated and consensus is built with the team to spend time and money on marketing efforts based on these reports.
>> Marketing ROI is possible: While much of the activities related to marketing are not tangible and yet still produce an important and effective result, there are opportunities to discover a return on investment (ROI). In commercial real estate, construction, architecture, etc., this is the language the principals and owners speak and as a result, this is the way they measure the marketing effectiveness. Marketing professionals often struggle with this demand because there are many activities that are executed to build awareness, not a tangible, quantifiable result.
Accounting can serve as an excellent tool to bring together the costs of a marketing investment while the marketing professional puts measures in place to record the response. For example, if you are doing online advertising, your ROI is likely not going to be a project that walks in the door from that ad, but you certainly can access the traffic to that site, the click-through rate, the response to a creative call to action, and ultimately the number of impressions made to the targeted audience. This information can be overlaid with your website traffic report and now you are talking numbers and return on investment for that marketing activity.
>> Assess marketing soft costs: The marketing department should be proactive about the activities they are responsible for and what is the most profitable use of the company’s marketing time translated to dollars. For example, if you are “shot gunning” your proposals by responding to every project RFQ that seems viable, the soft cost associated with that is research, time to prepare the response, limited time to execute other, more beneficial marketing activities and production time. Track this cost as an all-inclusive effort and your firm’s decision-making process might change. Perhaps your marketing dollar is better spent pre-selling to specific client prospects, anticipating select proposal requests and preparing your marketing efforts to promote your company specifically for this client.
Marketing and accounting can serve as the company’s two best resources to analyze where marketing money should be allocated, measure the success of the dollars spent and assist in replicating what is working in the way of marketing activities by coming together to develop a streamlined structure that works.