How accountable are your Marketing & Sales Plans?

As your near the completion of 2009 budgets, you may want to use this time to pause a moment and ask a single question:   Are there any hidden risks in your marketing and sales plan that could prevent the organization from meeting or exceeding  2009 budget objectives?

Unfortunately, the most creative strategic planning provides no assurance that revenue objectives will be achieved.  However, we can pro-actively assess the degree of risk by asking a few simple questions:

1. Is there a method to clearly identify your lowest performing marketing initiatives vs. your highest performing initiatives?
2. Are human resources and expenses allocated on the products & marketing initiatives that have the greatest revenue impact? 
3. When revenue numbers start falling short of projections, is there a reliable method in place to quickly identify, quantify and “course correct” which initiative performed unfavorably to the original plan with the most cost effective means available to close the gap?
4. During monthly operating review meetings do your marketing and sales teams have the necessary information to provide a mathematically clear reconciliation and variance explanation at the end of each month to identify the favorable or unfavorable revenue drivers?
5. If expense budgets needed to be reduced, is there information readily available to eliminate only those initiatives that have the least amount of revenue impact?

If you have not answered yes to any or all of the above questions your revenue objectives are most likely at risk.  From a marketing and sales perspective, the commonly used question “Are we working smarter?” is really about having the best understanding of “how” we are going to reach our performance goals before a single marketing/advertising dollar is spent.  This information becomes critical knowledge in the event we need to quickly find a method to save an underperforming sales and marketing plan.

So what’s the most efficient solution?  The stripped down answer:  Change the way your marketing and sales departments operate.  However, this article isn’t going to preach the virtues of an expensive software application(s) or complex targeting and segmentation strategy.  What I will focus on is a shift in your operational processes.  A method which will support a quantified reconciliation of any and all changes from the plan vs. the outcome.  It may seem daunting but let’s take a closer look at what really needs to occur:

First, assign upfront accountability: 

1)      Make everyone a stakeholder: Align all business unit objectives by product, sales, marketing, operations and engineering.  This is a hidden trap and it’s not uncommon for an organization to believe “we’re doing this today”, but take a closer look at the departmental and individual objectives and you might find that some business units have juxtaposing objectives which inadvertently work against another business units objectives.  An example of this might be, if geographic expansion is the agreed upon strategy for growth and engineering or operations have an objective to reduce last year’s expenses by 20% the 2 objectives end up as incongruous and the departments are at odds with one another vs. working synergistically.

2)      Adopt minimum ROI standards:  What’s the minimum revenue that needs to be generated for every dollar spent?  Standardizing this expectation upfront will eliminate those initiatives that require resources and expenses that don’t significantly contribute to revenue.  It also provides guidance to our management teams to help them develop the highest impact plan vs. a plan that has many great ideas.

3)      Separate marketing tactics into 3 buckets by product and revenue expectations:  1) Last year’s initiatives which will be repeated in the new year.  By essence of this decision these tactics have become a part of “Business as Usual”.  They’re perceived to be necessary to achieve the prior year’s revenue results. 2) All quarterly or monthly recurring initiatives have become operational and a standardized method of how some Customers are engaged into a sale or loyalty effort.  Most organizations have tactics that have been operationalized but they tend to go unnoticed so there’s no accountability to the expense or manpower used to support the ongoing maintenance.  As a result, these tactics tend to hit a black hole and loose visibility to performance measurements and the ROI that all other tactics must adhere to and 3) Any new initiative assigned to generating incremental or new growth revenue must be incorporated.  All tactics must then be assigned an estimated financial impact and these assumptions should be circulated and validated through the sales channels.

This 3^rd assignment of accountability is one of the most critical steps a marketing department can take to Tephlon coat a marketing plan and sustain an entire year of new and unforeseen variables that challenge the original planning assumptions.  In a challenging year, it ensures that last year’s revenue results are achieved and adds a level of risk control to make sure underperforming tactics are eliminated.  This step also increases corporate wide awareness regarding which initiatives are driving the revenue and which expense dollars are working the hardest towards the overall objective. 

Finally, to add a check and balance to the plans and it’s intended results, tactics and estimated revenue impacts need to be organized to mathematically and clearly demonstrate how each tactic rolls into the primary product revenue objective on a month over month basis.  More importantly, this approach allows management to reconcile the primary revenue changes from last year to this year ensuring the stated goal(s) can be reasonably be achieved or identify areas that appear to be a challenging stretch.

Establishing upfront accountability is the first step in integrating a disciplined financial based marketing approach.  It does not require expensive software applications but it does require a marketing department to operate with stricter guidance; working smarter rather than working harder.  The organizational and departmental payoff is significant; ultimately increasing the strategic value of your marketing teams and reducing some of the hidden risks in your marketing plans.  In the next article I’ll review back-end accountabilities that will “save” a plan from those unforeseen variables that were not in our original planning assumptions.