Strategy: Rethinking Resource Allocation
Money is an imperative marketing ingredient—you need it to drive sales. At the same time, money cannot guarantee success on its own. It is not only about how deep your marketing pockets are, but how you are going to invest that money.
For example, the excitement about the vast number of media channels available today can cause even seasoned marketers to commit their marketing budgets to specific media channels before forming a solid strategy. This happens when marketers try to attribute sales (success) to single, specific channels to determine which ones are the best. This is like trying to identify what single customer visit drove a sale within a long sales cycle the sales rep executed. It is not just the individual channels that make marketing successful, but the strategy behind them.
Allocating marketing budget to channels without a clear strategy is fundamentally wrong—it's putting the cart before the horse. All media channels can be great enablers, but they cannot sell your products and services without the right strategy behind them.
Without a proper strategy, media channel criteria are often based on pure cost, instead of return on marketing investment; speed, instead of sales productivity; and quantity of contacts, instead of quality. Some media channels cost less than others, but that doesn't necessarily mean they are cheaper. Some channels are faster to implement than others, but that doesn't guarantee they will bring you more sales. Some channels hit very large quantities of people, but that doesn't mean they are your prospects or that you are contacting them in the most effective way.
The right strategy drives the right activities and the right media channel selections, helping you distribute your marketing budget in the most effective way.
How to Invest Wisely
A marketing strategy is built on what you sell and where you sell it. What are your value proposition and unique selling points (USPs)? Who will appreciate buying what you sell, and what do you need to know from them to be relevant and helpful? How are you going to impress your targets so they want to do business with you?
Accurately answering these questions will help you build a clear path towards what to say, to whom, where, when and how:
1. Define Your Target Market: Marketers need to make sure they don't waste time contacting "suspects," as opposed to "prospects." Finding potential buyers costs money.
- Do you know who your real target is today?
- Do you have to invest some money on data and analytics to make sure?
- What else do you need to do to identify potential buyers?
- How much of your marketing budget will be allocated toward all these?
- Do you know where your target hangs out?
- How much will it cost you to be there?
2. Learn More About Them: Once you find your targets, you need information from them to be able to be relevant and helpful. Information costs money.
- What do you need to know from your target, and how much will that cost?
- Is anyone selling what you need to know?
- Will you have to incentivize your target directly to provide the information?
- Will you need to invest time (and, therefore, money) in social media to get to know your prospects better?
- How much of your budget needs to be allocated here?
3. Get Their Attention: Now that you know your targets and where they are, you need to capture their attention. Capturing people's attention costs money.
- Do you have to invest on a bulky and slick direct mailer, or will an inexpensive email do?
- What will be your design and copy, and how much will that cost?
4. Follow Up and Nurture: After capturing a target's attention, many marketers need to follow up in order to successfully show the value of what they sell:
- What channels will you use to make those contacts and how much will that cost?
- How much do you have to invest to be able to be helpful to your target so they want to buy from you?
- Do you need to build special relationships to do business with them?
- How would you do that and how much does it cost?
5. Make It Easy to Buy: Now that potential buyers are interested, marketers need to make it easy for them to buy:
- Do you have to offer incentives to close the deal?
- How much investment does the purchasing process require to make it a good experience for your customers?
What If You Can't Afford It?
What if your marketing budget is not large enough to implement your strategy?
Some marketers don't think they can afford to start with a wider strategy from scratch. But the reality is, you can't afford to start any other way. A proper direct marketing strategy drives effectiveness and, therefore, it is the right thing for marketers to do.
In the past, marketing success was often more about the quantity of individuals or companies that marketers could contact. The more contacts, the better the response and, therefore, sales. Marketers had a clear process to decide how to invest their marketing budgets. They looked at their budgets and tried to figure out how they could contact as many people as possible—the larger the target lists, the better. In the case of direct marketing, they had to divide their marketing budgets by their huge target lists, and that provided them with how much they could afford to invest per prospect. This number, even though very low, worked in some cases because they were sent to less saturated and competitive markets with customers who had more time to listen.
Today, quality of contacts is the most important consideration. Therefore, the way your budget is set requires a different process. You have to first estimate how much you need to invest per prospect to have a chance at capturing their attention with helpful and relevant messages and offers. This estimate should be based on the strategic methodology previously discussed.
This approach is strategy-driven, so you can get better results out of your marketing budget. To successfully implement this type of approach, you need to divide your budget by the prospect investment estimation. That will give you the number of potential buyers you can afford to contact.
It is always better to make an impression on a few who are likely to act than to be ignored by many. And what happens when you impress customers or prospects? They will tell others, which is the most effective way to reach many more potential buyers through powerful word of mouth.
A well-planned and well-executed marketing strategy with a limited budget is much better than wasting money by blasting communications through pre-determined channels.
German Sacristan is a return on marketing investment—direct and digital marketing—consultant with Rochester, NY-based printing technology company Kodak. He also is the author of "The Digital & Direct Marketing Goose." Reach him at email@example.com.