Even in large organisations, head of marketing is often not a board position. In small companies, marketing is frequently not even part of the initial business plan because the emphasis is on sales and ROI and marketing seems unquantifiable. Tight budgets and a lack of understanding of the discipline compound the problem, with the negative result that marketing is marginalised.
It is, however, a commercial imperative if SMEs are to outstrip the competition. In a simple, non-competitive environment, all that is required is that a company sells its products, says chief executive of the Chartered Institute of Marketing Christine Cryne. But when competition creeps in and the scene becomes more complex, that is the time to do more than merely sell. Then you have to market.
Without marketing, there would be no advertising, no market research, no database marketing, no brand management, no customer relationship management, no public relations, no effective new product development, no streamlined supply chain management, no key account management, and so on, she says. A bleak picture.
Cryne continues: Marketing is, above all other things, about staying close to your customers. It helps you identify who they are, what they want and what they don’t want, when they want it and how they want it. Marketing helps you build relationships with your customers and your suppliers to everyone’s benefit.
Companies that merely sell will ultimately be bowled over by the competition, she says.
The arguments for marketing may be unequivocal but the understanding of it at board level in SMEs is still not widespread, with word-of-mouth often viewed as the most effective form. Says national spokesman for the Forum of Private Business Rex Garratt: This is because SMEs often trade in very small marketplaces. However, we believe they should make greater use of the Internet. SMEs should prioritise marketing as an essential tool for business growth.
Our statistics show that 90 per cent of SMEs in our membership are hooked on to broadband, but only 37 per cent use the Internet to market their goods or services, he says. To put this in context, the forum represents businesses ranging from one self-employed person to organisations of up to 300, that together generate in excess of 50 per cent of the GDP of the UK (excluding the public sector).
However, using the Internet and email in particular for marketing has a slight cloud over it in the form of spam. It has had bad press, says e-business consultant to the National Business to Business Centre Matt Charman. We recommend best practice target the right people with the right message and do not break the spam laws.
An email campaign is low-cost and transparent and the returns the number of visitors to a website can be measured easily through pay-per-click and other tracking technology so that companies can work out where respondents have come from, he says. It is a marketer’s dream.
Because marketing is not given priority, the person tasked with it is often junior and inexperienced, so knowledge of what tools and data are available in the marketplace is fragmented. This compounds the problem.
Nigel Bennett, business development director of B2B marketing at Experian, says: Marketing does not get the right level of attention and tends to be delegated to an executive who reports to another function sales, IT, product development and companies end up putting another sales person on the road rather than in marketing.
If a business has been in operation for a number of years and is successful, marketers have a hard time convincing board directors of its worth, he adds. To that end, Bennett recommends testing data, a phase he says is often missed because the individual tasked with it takes a blanket approach to phone, mail, email or database update, rather than taking one element.
If a company takes one sales person’s geographical area, uses an email campaign to generate sales leads and then measures the results appointments attended, number and value of sales generated ROI can be analysed around a smaller sample and it proves the concept, he says.
He gives as an example a small industrial supplies business where the leader had no interest in or understanding of direct marketing. The owner was an older gentleman and he was doing it the way he had done for years, says Bennett. But he brought in a new partner at a senior level, who focused on one geographical area, took the sales person for the area out, undertook a direct mail campaign, put the sales executive back in, and compared the two. As a result, he revolutionised the business from being sales led to marketing catalogues and direct mail with a smaller and more effective sales force.
Direct mail is only one element of marketing and in the minds of some, still has a stigma of junk mail attached to
it but there is also email, telephone and database marketing. With a customer base of 2000, most companies can name their top five customers and even then, do not always know what they look like as businesses. This obviates the possibility of finding more organisations that fit that profile. Once a business has done that successfully in, say, London, it can expand to adjacent metropolitan areas.
If you do not have a significant existing customer database, you do not have the opportunity to sell up or cross sell, says Bennett. It is important to understand what your customers look like and whom to market to. What is a company’s propensity to buy telecoms, office furniture, etc? Once you know that, you can score the prospect. We build most propensity models specifically for clients, he says.
Brand presentation and credibility are also an essential part of a marketing campaign. Getting a mate to cobble together a logo may save money but it undermines brand messages. It is essential a company brand is represented seriously in order for it to have any hope of being taken seriously.
Paul Hewerdine, client services director for B2B at Loewy, says When an SME is targeting another decision maker, if it does not have its brand presented professionally, it stumbles at the first block because it does not look trustworthy. But as soon as you bring a brand to life and it is professional and slick, a company can punch above its weight. An organisation needs to make sure the brand personality reflects what it is going to buy, he says. It is a massive step forward.
Many companies see marketing as simply printing and distributing a brochure and doing a bit of hospitality but mapping out the business objective this is the project, this is what I can expect from it is crucial to seeing a demonstrable return on investment. Promotions are a case in point.
If an organisation is offering an iPod to generate response, it is likely that responses are for the iPod rather than the company’s product, then the sales team wastes time chasing the leads, says Hewerdine. It is important to offer something in line with what the company is offering. So an SME selling mobile phone services to other businesses could produce a guide to reducing mobile tariffs on the mobile fleet and put out a call to action through email, for example.
And how to sell this idea to the board? Hewerdine says: Part of the marketer’s role is helping the business to see the purpose of different techniques. For example, that advertising is more likely to raise brand awareness than generate sales leads. Once they have proved a first project, they can build up trust. It is also about honesty saying that not everything we do will make money but we will learn from what does not work and will be more successful as a result.
Understanding the value of marketing requires the expertise of an experienced practitioner to embrace every angle of marketing, from establishing the compelling benefits of a product or service, to getting the message across to potential customers. The return on investment will be self-evident.
Supplier of protective clothing and safety equipment Protec has traditionally used direct mail to acquire customers it sends out more than 10,000 catalogues daily. In May this year, Experian established clear profiles of Protec’s most profitable customers and applied that information to the National Business Database to score the prospects with greatest propensity to purchase its goods. Protec not only identified industry areas it had not previously considered for new business but has already increased response rates to its existing direct mail campaign by an impressive 220 per cent. The improved DM campaign has helped boost sales across the business by 15.2 per cent. Jonathan Prest, sales director of Protec, says We have already achieved a 220 per cent uplift in the number of businesses opening accounts on the back of receiving our catalogue and we are confident we can generate even more business and achieve a significant return on investment. Experian has unearthed new potential for our business.
