Shifting Perspectives: Treating Marketing as an Expense
Introduction
In the business world, we have been made to consider marketing as an investment. We are usually bombarded with marketers emphasizing the concept of return on investment (ROI) to justify their activities even when your business is down the drain. Unfortunately, it’s the marketers who dominate every social media platform :). It is time to challenge this conventional wisdom and explore the idea that marketing is another expense.
Embrace the Fly Wheel
You would have come across the Marketing and Sales Funnel. A large audience is targeted by marketing at the top of the funnel, and trickle down through several stages, they come out as a paying customer. This liner view fails to acknowledge the impact of people coming out of the bottom of the funnel significantly impacting those at the top. Hubspot, the pioneers of Inbound Marketing, took this often overlooked detail and developed the flywheel concept. Rather than aiming for a wider mouth at the top of the funnel, the aim is to make the flywheel spin faster by removing any friction from your business strategy to make your customer successful.
Acknowledge your constraints.
No business had unlimited resources, time or money. Each operates under unique constraints, even if they sell the same product. This reality mandates that the marketing budget is allocated only based on the maturity of the product.
Consider this scenario: You offer a product with solid customer retention and satisfaction. A lacklustre marketing strategy may only result in slow sales growth. On the other hand, if your product or service struggles with high churn rates, even the best marketing efforts won’t compensate for its inherent flaws. Considering the flywheel model, you can imagine the impact of disgruntled customer feedback on the ever-so-connected world. In this second scenario, investing in making the product better is wise than spending on marketing.
Experimentation leads to learning.
Failure is an inherent part of any business journey. When marketing is viewed as an expense, it becomes easier to embrace the notion that sometimes, failure is necessary for growth and improvement. Businesses can gather valuable data and insights by investing in marketing efforts and testing strategies, even if they don’t yield immediate positive results. Failure can be an opportunity to learn, iterate, and make the necessary adjustments to propel the business forward. As the authors of Lean Startup propose, one needs to move faster and fail more to build a great product. Viewing marketing as an investment only leads to delays as we spend more time searching for the highest ROI.
Have a Holistic View of your Business
Marketing does not exist in isolation but instead influences and gets influenced by other aspects such as product development, customer service, and operations. By embracing this holistic view, businesses can foster collaboration, improve communication, and ensure that all departments work synergistically to achieve overall success. Agility is crucial to surviving in today’s highly competitive world.
Conclusion
While marketers have traditionally championed the concept of ROI, businesses must challenge this perspective and consider marketing an expense. By shifting our mindset, we can better appreciate the ongoing nature of marketing, the impact of customer experiences, and the need to allocate resources strategically. Embracing marketing as an expense allows for realistic expectations, continuous improvement, and a holistic approach to business growth.
