Every major industry was once a growth industry. But some that are now riding a wave of growth enthusiasm are very much in the shadow of decline. Others, which are thought of as seasoned growth industries, have actually stopped growing. In every case the reason growth is threatened, slowed, or stopped is not because the market is saturated. It is because there has been a failure of management.
Marketing Audit Review
Audits are being done all the time within many companies across most departments to identify problems, opportunities and in some instances, the irresponsible or 'not accountable' behaviour of management and their staff.
Why not the same for marketing, asks George Schildge, president of a Colorado based marketing firm that works with high-tech businesses to help them grow. Will it not be useful to also look at all marketing activities and marketing investments, as it is the one function whose sole purpose is to increase sales, build customer relationships and brands?
Absolutely - I say! A marketing audit would measure profit and loss just as an accounting audit does. That is, it would measure return on investment (ROI) for every Rand you invested.
George Schildge outlines the benefits a business can derive from measuring the ROI of marketing to see whether this vital activity is being used to its full potential.
The management problem
While many businesses are cutting marketing budgets because management sees it as a wasted expense item, certain informed (and wise) companies has developed marketing budgets into being a critical component of tight budgets in the present economy. In otherwise words - marketing expenses are seen and treated as marketing investments, responsible for the growth of business and ultimately profits.
This development has been driven by several factors. "A key one", says George, "being a new perception of how important marketing is for growth. When a business cuts marketing spending, it cuts the one function whose sole purpose is to increase sales."
Understanding that better marketing is crucial is not enough. The impact of a business's marketing communications programs is often poorly measured - if at all, therefore the full potential is not known or fully realised. Given the current economic climate, it is essential for all businesses to be able to measure their marketing investment - its ROI.
Effects of economic downturn
Over the past two-years, many businesses were blind-sided by the economic downturn and did not know how to react. "When some finally figured it out, it was too late. Jobs were lost, budgets slashed, market share lost and business value diminished. Of all times to stop investing in activities designed to sell more, a recession or period of soft demand or uncertainty would seem the worst; yet businesses do it all the time," says George.
Further, limited internal resources are causing increasing competition between marketing and other departments. Businesses are looking to increase their new prospects while shortening the sales cycle by improving the marketing efforts without increasing the budgets. When budgets are thus limited, it is important to know which tactics are working and which are not, so strategies can be realigned accordingly.
In effect, the push for ROI is intended to justify marketing and demonstrate its effect on the business's bottom line.
The solution - regular audits and the right objectives
Regular audits of sales and marketing programs can help marketing management and investors ensure they are doing the right things to drive growth for their businesses. Information gathered from these audits can align the marketing in businesses and put in place the necessary barometers to keep it on track and to make informed decisions.
George points out that "a marketing audit is a thorough examination and evaluation of marketing practices and results. It offers a baseline for performance measurements and a framework for effective business planning to maximise positive external perception and demand generation."
Many businesses choose to measure the quality of marketing by the quantity of generated leads. However, measurements or an audit, must be based on marketing strategy and programs and pre-established criteria that include factors such as quantity of leads, sales cycle reduction and lower cost-per-sale (cost per customer) and more.
In addition, the audit helps the business understand aspects of strategic importance in sales and marketing. Its results become the blueprint for strategic decisions and for future sales and marketing plans by tying funds for sales and marketing to direct sales and leads generated and building brands.
Marketing measurement programs - audits - which factor in all of these variables, provide a detailed picture of a marketing program's ROI and are critical for a business to stay in business.
There are no permanent "right" answers in marketing. Customers' needs and wants are moving targets and marketing programs require testing and re-testing to find the most profitable formula. A marketing audit can help you achieve success by providing an interim report card. Whatever industry your business serves - and whether or not you work with a marketing agency - your business executives should insist on developing robust measurement practices to assess and effectively demonstrate the value of your marketing efforts.
What should a marketing audit provide?
It provides an objective assessment of your business's marketing operations. Think of it as an annual physical and use the findings to identify where change is needed to impact revenue, improve sales productivity and increase customer retention.
- An objective assessment of current marketing and sales activities for customer development and relationship management.
- A report summarising the strengths and weaknesses of the data and systems required to support customer management and communications.
- Identification of near-term and long-term sales opportunities based on review of available prospect and customer information.
- Identification of key initiatives to improve marketing and sales performance, increases customer retention and maximise revenue.
- A report for senior management that provides findings and recommendations, as well as an action plan to implement the recommendations.
Very valuable advice from George Schildge
For many years now, we have performed Marketing Audit Reviews on several large and smaller companies in South Africa and - for those that used the information - we have seen the difference in their bottom-line. However, then there are those who have felt more comfortable in 'hiding' away from the truths and realities of a marketing audit, and we have seen them swaying and staggering through these economic times. And we are watching closely.
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