No sane person setting out on a long journey of indefinite length would wait until they had arrived before filling up the gas tank. And yet technology companies tell me all the time that they’re going to do exactly that.
“We’ll start marketing as soon as we have some customers,” is a variation of a line I’ve heard often, but still pains me deeply every time I hear it.
I heard it again awhile back from an amazing company I’ve been watching for a while. Like most promising technology companies, this one has developed a new way of doing something that creates massive value for users. Their product costs less money to use than the alternative, saves huge amounts of incredibly expensive time at a critical juncture for its potential customers and avoids the considerable environmental damage wrought by existing approaches.
Like many compelling technological advances, however, the adoption of this company’s product requires significant changes in behavior in a risk-averse industry.
In short, this company needs marketing, and lots of it.
However, like most companies that give me the fill-the-tank-when-we-get-there line, this company quite obviously views marketing as an expense item that can’t be contemplated until revenues start rolling in. Lost on them is the reality that marketing is an investment item that ensures the revenues will roll in.
To contrast, let me talk a little about another company with which I met to work on the first ever proper marketing strategy this company had ever done.
We’ve known this company for several years. It is an important partner of one of our long-standing clients and we’ve had the pleasure of helping it out with some modest media relations requirements. Their new reality is exactly the reason why I’ve chosen to add this strategic marketing practice to what has long been a sharply focused PR practice—many of our B2B PR clients need help with more than just PR.
In this instance, this company had the opportunity to enter a promising new market and turned to us for counsel beyond the straightforward media relations stuff we had been doing. Their first request was for something tactical and, when we told them what it would cost, they had sticker shock. I validated their concern about how much marketing costs—it is expensive. But I also started to turn the conversation around. “If you view marketing as an expense item, you’ll never do it,” I told them. “You need to look at it from the other end of the telescope.”
The exercise we brought this company through starts with the objectives for its new market and then goes on to ask and answer many questions. How big is the opportunity? How many customers are there? How many of those customers could you acquire—or do you need to acquire to meet your business plan objectives—in your first year? How are you going to acquire them? What should it cost to acquire them? What is the lifetime revenue of every new customer you acquire? What’s your profit on that revenue? How much of that profit should you invest in acquiring that customer?
I’m simplifying things here, but what we had at the end of this exercise was a business case supporting an investment in marketing rather than an expenditure on marketing. The difference is subtle but illuminating. The latter creates a mindset of limited opportunity where costs, rather than results, are the key focus, and the impetus is always on constraining those costs as much as possible. The former creates a mindset of expectation where a dollar spent is expected to return a multiple of revenue, where the focus is on results, and where investment decisions are made on the basis of their effectiveness.
With this business case in hand our client was able to put exactly enough gas in its tank to get it to where it needed to go.
[This post first appeared on francis-moran.com and is republished with permission.]