Thomas Barta, the author of 12 Powers of a Marketing Leader, says marketers need to become revenue champions.
No-one wants to sit at the kids’ table. But marketers risk being locked out of the adult decision-making process if they don’t step up and prove their team is a revenue centre.
Recent research by marketing leadership expert Thomas Barta found that less than half of C-suite executives believe their company’s marketing expenditure is significantly contributing to revenue or profitability. “In other words, your CEO may not trust that you’re spending the money well,” says former McKinsey partner Barta, now one of the world’s premier experts on marketing leadership.
Being seen as a cost centre rather than a source of revenue has consequences for a marketing team. Not only are they likely to see skinnier budgets in the future, they may face cuts when times are tough. The mistrust grows when there’s a perception that marketing teams aren’t involved in the heavy machinery of business.
Barta says top executives usually rated pricing, strategy and product development as the most important business functions. But his research found that fewer than one in three senior marketers had any input on pricing, and just 38 per cent on strategy. More than half were involved in product development, but Barta says the overall effect was that the work marketers do is seen as less important by many business decision makers.
“That’s perhaps unfair (and incorrect) but perception is reality,” he says. “If people think your work isn’t important, you won’t be seen as important.”
Proving the financial return of marketing spend worries most marketers, but Barta says there are a few strategies they can use to earn greater sway and trust among senior executives. “Your influence and contribution as a marketing leader go up when you work on the company’s biggest issues, so it’s critical to get involved in what matters,” he says.
“When you spend your money well to attract profitable customers, the business grows.”
Barta recommends marketers concentrate their efforts on the company’s biggest growth levers. If that means a large shift in strategy that is difficult to sell up the chain, start small.
“As a marketing leader, when you engage in a new field, take small steps but have the end in mind: long-term profitable growth,” he says.
Highlighting marketing’s effect on that profit and growth is also vital, but Barta says that many marketers struggle to institute an effective system of measuring returns on investment. He recommends working with experts in your finance department to jointly define how returns should be measured. “You’ll find that most finance professionals understand very well that not everything can (or should) be measured,” Barta says. “But problem-solving this jointly will greatly increase the credibility of your numbers.”
Marketers should also be willing to show their returns to senior leadership regularly, Barta says. “This can feel scary, but sharing your estimated marketing returns with top management is one of your best ways to build credibility as a leader,” he says. “Crucially, sharing returns includes sharing the failures. In our experience, marketing leaders who open the books get more support from the top.”
Another fundamental, Barta says, is opening the bonnet on your marketing model, helping those who matter understand how it works. “It’s your job to ensure people understand what marketing does and how it’s driving the business,” he says. “By showing how, in the eyes of others, marketing concepts like brand preference have a big impact on sales, you’ll significantly increase the leadership’s understanding of your work and how marketing helps drive business performance.”
Barta also recommends tapping expertise from outside the marketing department when building marketing models. Taking input from others, such as those in finance or sales, will give your marketing model more heft.
“When you spend your money well to attract profitable customers, the business grows,” Barta says. “And when you produce visible returns, you’re more likely to get more support and more resources, which in turn creates even more revenue and profit. It’s a pretty simple equation.”
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