Executive marketing education on what?

Q:  Your two-part MRx column of the preceding two Fridays resonated not only well but deeply with those of us who were your former MBA students and are now marketing practitioners.  Those of us who are also teaching part-time in MBA night-classes as well as in public marketing and sales seminars identify with the concern and trend you raised about continuing marketing education and the MBA.

We believe all that you’re predicting will sooner or later happen.  So we have a different and more specific question that assumes continuing executive education will overpower the MBA.  When talking about continuing executive marketing education, please tell us and explain to us in what current marketing issues is there the most need for training and mentoring?

A: When asking where the most need for training is in marketing, let us first agree on the direction of that need.  Let’s agree that it’s about the need to be effective and efficient.  It’s about doing the “right thing” (being effective), and about “doing the thing right” (being efficient).

So where can marketers continue to do the right thing and do that thing right?  From what we’ve seen and what we look forward to, we believe that the needed marketing training and mentoring should be directed at many issues.  But we’d like to focus on one.  This is on more and better financial training or what we’ve referred to in several precious Friday MRx columns as training in “Accountable Marketing.”

There are two related sides to more and better  “Accountable Marketing” training.  The first is how to enable marketers to make a good case out of the formulation and presentation of their marketing budget.  The second is about explaining what happened to the budget and how marketing delivered or did not deliver on its promises.

In Accountable Marketing, we tell marketers to regard themselves as “Income Statement Managers.”  So look at the Income Statement or P&L as a good summary of the promises you’re making in your marketing budget.

Start at the top line.  In terms of ratio, that’s the “sales response ratio.”  In the late ’80s, when the Junior MRx-er started in the practice of Direct Marketing, it came as a real and incredible shock to the Senior MRx-er to learn that the industry regarded as acceptable a 1 percent to 2 percent sales response rate.

Why incredible?  A 2 percent sales response rate means exactly 98 percent no-sales record or that 98 percent ( = 100 – 2 percent) of buyers did not buy!  How can that near-zero sales response be acceptable to any sensible and sane marketer?

And yet we were told that a 1.5 percent sales response rate was the then direct marketing industry “norm.”  If by “norm” is taken to refer to “an average,” then you really can’t say anything that bad against such a small 1 percent or 2 percent figure.  But a norm usually has connotations of some level of “high standard” or even “respected level of achievement.”  So to call a 1.5 percent  sales response rate as a standard of achievement is nothing but a contradiction in terms.

That’s in the ’80s.  We are aware that several good changes in direct marketing practice have been initiated and better accountability methods installed.  But even after more than three decades, we still hear a good number of companies getting into direct marketing or its variants claiming with some sense of pride the 1.5 percent sales response rate.  Some training must have taken place but it’s doubtful there had been more.

As you go down the next lines of the Income Statement, you immediately meet COG or Cost of Goods.  When  deducted from Revenue or Sales, COG brings you to everyone’s dream figure, the Gross Profit or Margin.  For most industries, a company’s COG is its largest expense item going up to 50 percent  to 70 percent or even 80 percent.

For such a giant budget expense item, you’d expect its “manager” would be one of the most powerful (if not the most powerful) manager in the organization.  What is the advertising manager with a 5 percent expense budget, or the sales manager and his 8 percent budget,  or the promo or PR manager with a 3 percent expense budget compared to the “COG Manager” responsible for the 50 percent to 70 percent budget expense item of the COG?  And yet in our Accountable Marketing seminar, when we ask company after company who is their COG Manager, none is named.  There is no such manager.

But shouldn’t there be one?  We’re not saying that this should be a marketing manager’s job.  Typically, in our Accountable Marketing seminar discussion and debate, it’s a team of managers identified as collectively “in charge” with the supply chain manager as the usual team captain.  However this may be, isn’t it time to have a more explicit policy and “better” (on the way to “best”) practice on this issue?

Getting marketers more and better trained in Accountable Marketing usually will strike many as nothing but beneficial.  As in anything good, nothing comes as 100 percent pure.  Many of our MBA marketing graduates particularly those who completed a master’s in entrepreneurship find that afterwards, their way of doing marketing has gotten less daring, less adventurous, and even (as one said) “much less entrepreneurial.”

Learning more and better finance can make this happen.  This will be more true if training in finance is more about uses than about sourcing of funds.  Uses of funds are much more about financial controls while sourcing of funds is more about growing the business.  Mastering financial control tends to make the marketer more risk averse.  Risk aversion in turn, dilutes the marketer’s innovative skills and erodes his entrepreneurial instincts.

Keep your questions coming.  Send them to us at [email protected] or [email protected]. God bless!