The Five Stages of Death and Marketing

2007-04-03T17:49:00Z

It is budget time for most companies that operate on a fiscal year that begins on July 1st. For finance professionals, that means you once again have to work with your marketing department to review and approve spending plans for the next year.

The same thing seems to happen every year. The marketing team comes in with their PowerPoint presentations listing out all of the events they want to sponsor, the radio advertising they want to do, the direct mail campaigns they want generate, the muscle car calendars they want to print, the research they want to conduct -- all in the name of driving leads and building awareness for the company.

The finance people look at all of this and ask the same question every year --- Why do you want to spend SO much money on all of this stuff, and how can you document that it actually generates a return? The marketing people in turn get all indignant and look at the finance team and say “because it’s … it’s MARKETING! You just don’t understand – we need an image, a brand, we need to generate some buzz in our market.”

The finance people scratch their heads, and ask again. “Why do you need to spend SO much money?” It’s a standoff.

As an ex-finance guy who now works in marketing, I have been involved on both sides of this cycle for twenty years.

I have come up with a model, based on Dr. Elisabeth Kübler-Ross’ book On Death and Dying, to help finance people better understand marketing people during the budget process. Think of it as the financial controller’s field guide for understanding marketing behavior. By using it, you can ask your marketing counterparts the right questions during the budgeting process using language they understand in a nonthreatening way to help reach closure around budgets. Just like the model in Dr. Kübler-Ross’s book, which I first read in high school a long time ago, not all of these stages occur in all marketing people, and they don’t always occur in order. But they all occur.

Stage One: Denial
"I am going to ignore your email asking me to justify the cost of the local golf tournaments we plan to sponsor next year. You obviously sent it by mistake, and if you didn’t then you just don’t get it. Maybe you’ll go away."

This is not a good sign because it shows there is a big disconnect between finance and marketing. Sending more email, or even forcing a meeting around “FY08 Golf Tournament Cost Justification” might help you address this particular budget item, but it will not help you address the root cause.

The solution for this disconnect is pretty straightforward. Communication between the finance and marketing teams needs to be a year-long process, where the finance team keep abreast of the marketing team’s activities all of the time. And not just from a cost control perspective, but from a “I’d like to learn more about how we reach out to our market” perspective. So once this budget cycle is over, ask if you can sit in on the marketing team’s status meetings once a month next year. It will go a long way towards avoiding standoffs next year.

Stage Two: Anger
"How DARE you question the effectiveness of the local radio advertisements we are running featuring Czech hockey stars. WE ARE MARKETING and you are just a bean counter. You don’t get it.”

Even if you are sitting in on the marketing team’s meetings on a monthly basis and have built a good relationship with them, it still won’t necessarily make you a marketing person, at least not in their eyes. So you’ll continue to encounter situations like this, where the marketing team becomes angry if they think you have the temerity to question their “marketing judgment” on things like using Czech hockey players on the radio to sell your products.

The solution here it to agree upon a set of metrics to measure all marketing activities. I am now convinced that everything a marketing team spends money on can be measured using simple, relatively inexpensive techniques. Radio ads should either drive awareness (measured by simple surveys) or leads (measured in your CRM system). Golf tournaments should drive leads or increased spending by existing customers. Even doing things like creating a new logo can be measured by “likability” surveys conducted at a local mall. By moving to a set of agreed upon metrics, you can have a prioritization discussion with your marketing friends that will help you avoid the need to make judgment calls around things like advertising where personal preferences and judgment can get in the way of a business discussion.

Stage Three: Bargaining
"PLEASE let me keep the muscle car calendar we print for our customers every year. We know they love it based on a quick web survey we do, and if you let us keep the calendar we’ll promise to cut back on the hors d’oeuvres we serve at the golf tournament.”

Now you are getting somewhere, because you have moved from a judgment discussion to more of a fact-based discussion of budget priorities based on agreed-upon metrics! The marketing team can begin to negotiate budget items based on their ability to understand the metrics behind different areas of spend. They can even feel good about it.

But this can create a big problem for the company as a whole, because even if you can measure something accurately doesn’t mean you should do it. There needs to be an agreed-upon strategy between finance and marketing on the right priorities for the company that you can use as the basis for prioritizing spend. Time after time I have been involved in extremely well measured, well executed marketing campaigns that were the wrong things to do because they prevented the company from achieving strategic goals like expanding to a new territory or launching a new product. The muscle car calendar might be well-liked by existing customers but it might not be the best choice if the company’s main objective is to generate new business through prospecting events like the golf tournament.

Stage Four: Depression
“I hate marketing. You have taken all of the creative elements out of it and turned it into a numbers game. Why didn’t I listen to my mother and become a doctor?”

This is a bad, bad stage, because your company actually needs creative marketing people who can target the right audience for your company and then create excitement in that audience around your company’s offerings. Just look at what Apple does with marketing. If you create too many measurement tools and justification forms for the marketing team to fill out, they will wind up hating themselves and leave the company or even worse, leave the profession. I have been involved in marketing teams where the marketing managers in branch offices had to spend as many as 4-5 workdays a month filling out status reports and sitting in on “rhythm of the business phone calls”, all in the name of quantifying and tracking marketing activity so the company can know they are being effective.

The answer, of course, is for the marketing and finance teams to agree upon a balance between measurement and execution. The best way to do this is to agree upon a set of strategy priorities measured by a set of agreed-upon metrics that are tracked by automated tools like your CRM system and customer survey tools on the web. Once you have this sort or agreement and system in place at the start of the fiscal year, the marketing team can go do what they do best with minimal intrusion from finance.

Step Five: Acceptance
"It really doesn’t matter what the finance team gives us as a budget. We will be creative and figure out a way to do what we need to do with what we have. Besides, marketing is about ideas and communication, not money."

Wow, is this a great stage to be in. It means your company has a Zen master of marketing in your presence, a Jedi Knight of demand generation and positioning who knows there are many, many different techniques you can use to reach your customers in a unique and special way, and that spending more money does not always increase marketing effectiveness. They know how to create buzz in the press, how to do guerilla marketing to reach customers at low cost, and to even turn your existing customers into a sales force for your company.

The correct thing for the finance team to do on the rare occasions when they encounter this type of marketer is to embrace them and then increase their budget for next year! Because you can do so knowing that they are not spending money for money’s sake but because the marketing team will view the spend as simply another tool they can use to get the job done.

Translation

2007-03-12T15:14:00Z

This blog will cover topics that come up when people in finance work with people in marketing. Do you ever wonder why the marketing team feels they have to spend SO MUCH MONEY on advertising, lead generation, events, and brochures? Would you like some tools and tips to better equip you for the budget converations you have with them? That's the goal of this blog, to help you better evaluate the effectiveness of the things your marketing team wants to spend money on. My current job involves managing many of the markeitng activities for Microsoft Dynamics. In a former life I worked for an accounting firm and as a financial analyst. So I guess you could say I am bilingual with regards to this particular topic.

Deciphering Marketing Speak

The Five Stages of Death and Marketing

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