In my last post, I talked about some of the common high-level marketing challenges that many mid-market CEOs experience, and provided some recommendations on how to address them in 2015.
In this post, I’ll address many of the common operational marketing challenges I see, and discuss how I’ve resolved them in my own companies and in client companies.
Challenge 1: Your revenue forecasting is wildly inaccurate, or your revenue forecast targets a static number tied to the end of your fiscal year
Years ago, after I was introduced to the power of rolling forecasting and the use of trailing twelve months, as well as using the combination of the two, I realized how elementary and useless the “old” methods of forecasting were. You remember – establishing your revenue forecast and budget in Q4 and focusing efforts the next year on hitting those forecasts and budgets? (And coming up with continual explanations as to why they were missed at the end of the next year?)
Your business and your markets are constantly changing. Your revenue and expenses fluctuate as you adjust to these changes. Rolling forecasting is powerful because it forces a mindset change to present a more accurate 12-month numerical future for the business at any point in time. In addition, using this approach inherently makes your revenue forecast more accurate; instead of working toward a single estimate made at a point in the distant past, you’re updating your forecast monthly with real-time information.
Challenge 2: Sales and marketing efforts are not able to quickly compensate for potential shortfalls in revenue
Many companies estimate annual revenue using the top-down approach: they take the current year’s number and factor in whether they think that business is growing, staying the same, or contracting, and voila – there’s the number.
That’s a reasonable approach, but a better method is to link your marketing and sales pipelines to monthly revenue forecasting. This is even more valuable if you’re using the rolling forecasting method that I mentioned above. To do this, you’ll need well-defined funnels in your CRM (or other measurement system) with processes for moving prospects through each stage. This allows you to dramatically improve your revenue forecasting, and more importantly, provides you with insight into how well your marketing and sales team is performing at each stage. Optimize well-performing stages, and revamp poor-performing ones.
I use these funnels to break down the revenue I have booked via contract, the estimated revenue coming from the end of the pipeline, the estimated revenue coming from the beginning of the pipeline, and the revenue that we haven’t yet identified. This delivers a clear picture of the revenue that is “at risk” each month, and allows us to be proactive about ramping up marketing and sales efforts when needed.
You can read more about this approach here.
Challenge 3: Your marketing team operates from a budget instead of a plan that includes a budget
I’ve seen statistics showing that 85% of businesses operate from a marketing budget instead of a written marketing plan. And from my experience, that budget is most commonly created by reviewing the current year’s spend, taking a few minutes to decide if any additional dollars should be allocated, and then creating the final number.
The problem with this approach is that it facilitates ad hoc marketing activities, or complacency with doing the same things in the same manner as they’ve always been done. The marketing function has dramatically changed over the last 20 years, especially over the last 7 years. Writing a plan, whether it’s a formal 50-page document or a 5-page synopsis, forces you to think about what you should be doing. Attaching numbers and projected returns to each marketing activity then helps you determine your metrics to make those activities worth doing (i.e. producing a profit).
Operating from a plan instead of a budget helps shift your approach to thinking about marketing as an investment instead of an expense. If you make an investment that doubles your money, won’t you want to invest more as quickly as possible? Operating from a budget doesn’t provoke this thinking – you’re just spending money and when it’s spent, you stop. That’s counterintuitive to sound business thinking.
Write a marketing plan. It’s the process and the thinking that delivers the most value to your company, not the document itself.
Challenge 4: Your marketing activities are chosen because of familiarity, not because of effectiveness
This is also common. I’ve seen companies spend their entire marketing budget on one or two mediums (like print, trade shows or digital), because that’s where their people’s skills lie. And those mediums might be ineffective because that’s not where their customers prefer to engage.
As I mentioned previously, the marketing function is rapidly changing, and mediums and tactics change with it. There are between 15 to 30 different definitions of “marketing channels” (depending on how you want to define them), and tying yourself to 1 or 2 because that’s what your people know isn’t a good business decision. It’s good to focus on 1 or 2 channels if you’ve tested numerous channels and you know that the chosen channels are the best performing channels. By all means double down on those. Just don’t limit yourself when you don’t have some form of certainty.
I recommend obtaining an outside perspective to recommend which types of marketing channels you should be using to communicate with your market. Be proactive and decide what you should be doing, then focus on finding the resources (employees, contractors, consultants or agencies) to handle the work.
Challenge 5: Your sales team isn’t synced with your marketing team
About 10 to 15 years ago, the breakdown in communication between the marketing team and the sales team was a big issue with the Fortune 500. The marketing people did and said one thing; the sales people did and said another. Big companies have now ironed out these bumps and most have all of their customer-facing communications on point. Some mid-market companies haven’t gotten there yet.
To keep your brand message on point, make sure your sales people (as well as all customer-facing departments) are aware of the campaigns and messaging that your marketing team is using. If you’ve created a brand guidelines book, share it with your team so they understand the key elements of your brand:
- What you want to be known for
- Your competitive advantages
- Your purpose
- Your brand personality traits
- The experience your brand should deliver
In most B2B mid-market companies, the brand experience is delivered by your people instead of by the packaging and campaigns, so ensure that they know how to represent what you stand for.
Implementing these solutions is often a straightforward exercise. While not as ground-breaking as mapping out a strategy to dramatically increase market share, most companies will feel the impact of these changes immediately in the form of improved execution – which can make a substantial impact over the long haul.
In my next post, I’ll talk about marketing tactics.