To be successful, a company must have an effective marketing department in addition to an excellent finance department. Although marketers were once able to focus solely on the image of the company and determine how to promote products or services effectively, they now must have a comprehensive understanding of how finances affect the company and incorporate that information into their marketing strategy. Here are four key things marketers must understand about the financial aspect of business to be effective.
Marketing Should Be Viewed and Treated as a Small Business Unit
Successful marketers must be able to view the company as a whole and understand that marketing is just one small piece of the puzzle. If you can create a campaign that highlights company values while promoting products and services, you only accomplish one aspect of a bigger goal. When you understand how the campaign fits into the company as a whole and can explain how it affects the revenue and cash flow of the business, you see the bigger picture and can accurately relay that information to other departments. This is similar to how a small business unit functions in that each owner must be able to justify expenses and articulate why each project benefits the company.
When you approach the leadership team of a company to pitch a campaign idea and ask for money, it is essential to treat the opportunity as any other SBU owner would. If you are unable to articulate the specifics of your idea, company leaders will not fully understand how the project could be beneficial and therefore will likely turn down the idea. Learn from successful marketers like Chipotle’s Mark Crumpacker and develop unique, emotion-provoking campaigns and then have a solid presentation in mind so you can answer the following nine question.
- How does the campaign provide the business with an opportunity to reach more customers?
- What happens is the company passes on the opportunity?
- Who is the target audience?
- What is the estimated profit?
- What is the time of revenue?
- How is this strategy valuable to the business?
- How will this strategy impact sales?
- What are the risks for the campaign?
- What other opportunities will this strategy affect?
Cash Flow Is Key
The financial department is focused on the bottom line and increasing company profit so the business can stay successful. While the marketing department often has big plans for promotional campaigns and advertisements, it has the same goal: to increase profit. Because both departments have the same goal, they must work together to be successful. This is most easily accomplished when both departments speak in terms of cash flow.
Successful marketers secure the funding they need for their campaigns by pitching their ideas to the financing department. If the focus of the pitch is based on the approval of the target audience and customer base rather than how the campaign will generate more cash, the finance department is less likely to approve it. Instead, focus on the following four aspects in terms of how the campaign will affect the company’s finances.
- Shareholder value: You must prove that the campaign will have a positive effect on the value each shareholder has. If the campaign will increase revenue and enable the business to purchase and use additional assets, it has the potential to receive the funding you need.
- Revenue: Focus on how much money you project the company will make during the time period of your campaign. If the total amount is impressive and generates sufficient profits, the financial department will most likely give you the funding you need for the project.
- Expenses: If you expect to receive a significant amount of money to fund your marketing campaign, you must justify your expenses. By breaking down how much cash you intend to spend on each element of the campaign, you can highlight how the money will be used so the financial department has a comprehensive understanding.
- Profit: This aspect will most likely have the greatest impact on how your pitch is received. If you project the campaign will yield a significant profit after subtracting expenses, the numbers will likely sway the financial department to fund it.
Statistics and Data Are Equally as Effective as Creative Thinking
Marketers must have creative skills to create unique, effective campaigns that appeal to target audiences. When it comes to developing these campaigns, however, utilizing data and statistics is equally as important. A successful marketing executive must be able to analyze financial statements and information to create a cost-effective campaign that targets the proper audience but should also be able to think outside of the box to create unique advertisements.
Financing and marketing are two different departments that ultimately have the same goal. Because of this, marketers must have a thorough knowledge of how finances affect the marketing department to create and pitch a successful campaign.