Author: Asif Khan
“Every year billions and billions of people are bombarded with sales calls, advertising etc., and every day billions and billions of pounds are wasted in failed sales and marketing costs in order to win a new customer” (Martin Kelly, CEO of INNOVO)
Each year, Marketing Departments across their respective industries receive some form of push back on their budgeting plans from their CEOs and CFOs. They dissect each section of the marketing’s construct and render the Marketing Department to justify every penny put towards their budget is money well worth spent or money down the drain.
Now, I am no Marketing Guru nor a marketer for that matter but I do know that just because you spend a “bucket load of money” does not always guarantee that an organization will make more money. Yes! effective marketing will give your company the edge but then again I am sure everyone will have an ‘effective’ Marketing Plan.
A study carried out by Lenskold Group, emedia on Lead Generation Marketing ROI posed the following question to marketers “How much they could increase incremental profits in company with a 10% increase in budget? 6 in 10 expect a profit increase of greater than 10%. However, almost half (44%) of the B2B lead generation marketers surveyed lack the insight to estimate the profit potential, responding “don’t know”.
To answer the fundamental question of whether Sales & Marketing Costs are worth their weight in gold, I did a search on what Sales and Marketing Costs actually comprise? How are these and Marketing Costs paid for? But, more importantly is there an alternative way?
What do Sales and Marketing Costs comprise?
• Cost of Contact Per Lead: Cost of generating a lead whether by phone, email, exhibition expos, business development and sales team, marketing literature-magazines, billboards and other forms of advertising.
• Cost per Contact Made: Once you have a customer/client ‘hooked’ there may also be an additional cost just to get that ball rolling (e.g. if customer is interested and would like some more information (more literature more costs), a follow up call etc.
• Cost Per Action Required: There is also a possibility of an additional cost at a final meeting or sales pitch (It did cost you to travel to that final meeting?). Even when you get to that final sales meeting there is no guarantee you will close that sale. In an article published by Harvard Business Review they found that 91% of sales meetings will fail to yield a sale.
Who pays for these wasted Sales and Marketing Costs?
Well the only answer I found to this question is that “You” the customer pays for this. Some may ask how? And the answer to that “Inside the cost of the product/service” you are purchasing. It’s not a secret that you as a customer are not aware of this but it is such a ‘normality’ that many buyers have come to accept this (implicitly speaking!). Buyers pay for these Sales and Marketing costs not just for themselves but the supplier to win other new customers and ultimately you as buyer are paying more for the product/service.
Is there an alternative?
The answer to that question is a big fat ‘YES!’ How? One word……' collaboration'. Through buyers and suppliers working together a buyer can reduce its procurement costs and in return a supplier’s bill for its Sales and Marketing can be reduced. This allows suppliers to maintain their profitability but also to win new customers in the process.
One such Platform that has come into fruition is INNOVO. INNOVO is a free online B2B market platform sharing the value of unlocked potential with both sides of a commercial transaction, and with good causes. It is a new way for companies of all sizes to do business. Because it is based on collaboration rather than opposition, INNOVO allows companies to deal with each other more efficiently and cuts out waste at every phase of a transaction. Efficiency is the key to INNOVO: suppliers are presented with customers who are ready to buy, and buyers benefit both from the suppliers’ resulting reduction in marketing costs, and from economies of scale that are otherwise out of reach. It is free to use the network and the efficiency savings are shared among the buyers, the suppliers, nominated good causes and INNOVO. Everybody wins because the savings are derived from prevented waste.
Image courtesy of Chris Sharp at FreeDigitalPhotos.net