profit driven digital marketingAccording to a Gartner report, digital marketing budgets now average about 2.5 percent of revenues and are growing 9 percent this year, but as the report concludes, "Increased funding is a double-edged sword. It brings new opportunities but puts more pressure on marketers to deliver and prove a return on the investments." It's probably fair to say most companies still see marketing as a cost center, a necessary evil that needs to be justified in order to survive the line item veto. That's unfortunate, because marketing can do much more than justify itself through ROI analysis. It can become a profit center.

The Big Picture

The role of marketing and the funding it receives need to be defined and planned in order to deliver profitability. There are many moving parts, including:

  • Business Goals - revenue growth, market expansion, market share, company growth (employees, locations, divisions etc.), talent accrual, capital formation, liquidity and profitability
  • Sales Goals - revenue targets, cost of goods sold, cost to acquire a customer (CAC), customer lifetime value (LTV or CLTV), retention rates (churn), sales cycle, close rates, sales productivity (revenues per rep, % of targets achieved), ROI
  • Marketing Goals - revenues attributable to marketing, opportunities delivered to sales (sales accepted leads or SAL), cost per lead (CPL), lifecycle stage conversion rates, campaign conversion rates, channel conversion rates, lifecycle stage timing (velocity), brand awareness and PR (visits, likes, follows, comments, mentions, links, syndication, etc.), thought leadership, retention rates (churn), ROI
  • Customer Service Goals - free trial conversions to sales, retention (churn), LTV/CLTV, support plan sales, upsells and upgrades, brand reputation (sentiment, reviews & ratings, brand advocacy, response time)

We talk a lot about sales and marketing alignment, but really all four of these business segments need to be aligned and measured on a continuous basis in order to achieve primary business goals. If each of these segments is achieving internal goals and working together to achieve company-wide goals, there is a very real possibility your company can become profitable and stay that way despite market fluctuations and unforeseen competitive factors.

How to Achieve This Kind of Alignment?

Well, you could ask the executives from each division to come up with their own plans and then sit down with them and try to mash them into a whole. That's basically how the U.S. Government works, and you know how well that approach has been doing lately... Instead, why not start from a blank slate? Get your leaders and key stakeholders in a room for a kaizen-style conference and ask them to check their egos and agendas at the door. Start with the Business Goals and identify the outcomes you are looking for over the next several quarters and years. Now each leader suggests ways their business unit can contribute to meeting or exceeding those outcomes, the benchmarks they will use and challenges that need to be overcome. The leadership team then needs to develop a working plan and budget for executing it. This won't work if your company is siloed and each leader is primarly motivated to protect and aggrandize his/her own empire. If that's the case, you need to rethink the whole enchilada.

Where Does Digital Marketing Fit In?

Digital marketing has some unique characteristics that can be exploited to drive profitability.

  • Accountable - Every facet of digital marketing can be measured for effectiveness and impact on identified KPIs, like revenue generation, CPL, CAC and conversion rates. Revenue-based measurements and reports are available for the C-Suite.
  • Agile - There isn't a one-size-fits-all approach. Each channel, campaign, content piece and persona can be tested and optimized for success. New strategies and technologies can (and should) be added to the mix as they are developed and tested.
  • Cost-Effective - Marketing leaders can easily identify the most effective strategies, sources and channels that drive KPIs and double down on those while cutting back on less effective ones.
  • Scalable - Once processes have been identified and honed (including human capital needs, training and technology), they can be reproduced and adapted to new markets, products and changing conditions.
  • Customer Centric - Digital marketing is now the natural approach to attracting and retaining customers due to the overwhelming adoption of mobile and social tools and changing customer journey favoring research and conversation prior to buying. 
  • Integrated - Sales and marketing technologies, such as marketing automation and CRM integration, are driving new levels of cooperation and communication between sales and marketing professionals. Fold in the ability to capture and analyze a wide variety of BIG DATA across multiple enterprise platforms, and you are now making it possible to optimize the entire sales funnel and sales process at the same time.

In my next post, I will start to break down some of the primary contributions, or Assets, by digital marketing to the bottom line. We'll look at strategies, tasks, technologies and examples for meeting specific goals and KPIs and ultimately, making your company more profitable.

Photo credit: pheezy


john mctigue blog photoWith over 30 years of business and marketing experience, John loves to blog about ideas and trends that challenge inbound marketers and sales and marketing executives. John has a unique way of blending truth with sarcasm and passion with wit. Connect with John via TwitterLinkedIn or Google Plus.


Topics: digital marketing, john mctigue, marketing kpis, sales and marketing alignment

John McTigue
John McTigue
With over 30 years of business and marketing experience, John loves to blog about ideas and trends that challenge inbound marketers and sales and marketing executives. John has a unique way of blending truth with sarcasm and passion with wit. You can connect with John via LinkedIn, Twitter and Google Plus.
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