Marketing is a waste of money

In upper mid market (defined as companies with more than 250 employees) and up, we generally find established marketing departments. In most cases marketing is relegated to marketing communications:  Public Relations, Advertising, some Direct Mailing and online display advertising. In other cases, it includes B2B or B2C lead demand generation and in very rare occasions we have Marketing being accountable for defining the product strategy based on the target customer and their needs. This is not a secret and almost every CEO I meet with agrees that Marketing does very little other than spending money and create some nice collateral; few can quantify results. “Glorified Marcom managers are killing marketing as a profession” as a respected CMO and author of couple of best-selling business books told me recently. Go ahead and google the term “CMO” and check the many sites devoted to marketing councils, clubs, tools, etc. The vast majority centered on tactical elements like creating great collateral, embracing display ads or creating a social media plan. Few talk about the fundamentals of marketing, starting with product definition, targeting, segmentation and measurement of success.

    A recent study published by Satmetrix indicates that 6 out of 10 companies do not compensate their teams based on customer loyalty or customer satisfaction indicators. Two thirds of the companies do not have a Voice of the Customer (VOTC) program in place as detailed in a very good report published by the CMO council.

   

    Marketing departments should be taking the lead on establishing VOTC practices, but again most CMOs are content with managing a media mix, creating press releases and blaming on engineering or sales for poor performance because after all marketing is an art that cannot be measured.

    The issue gets worse as we move down to SMB. Ask any small business owner you do business with. Ask them how they do marketing. Most will reply that they do not do marketing. They will talk about promoting their business, attending trade shows and local fairs, maybe about direct mailing or even about having a web site and buying some keywords in Google, but they do not call that “marketing”. My favorite quote from a CEO and founder of a local small company: “Marketing is a fancy word to summarize all the stuff one did and that cannot be measured in terms of more sales…”

    When conducting a study on SMB needs and attitudes about marketing one will find that the most common answer is marketing? What for? It is a waste of money! – I agree with them, until after we go back to fundamentals making the “product” a core part of marketing and until we embrace revenue growth and customer’s loyalty growth as core metrics for marketing success. Right now we are facing a rough economy. Better to spend the money on fundamentals like establishing a VOTC practice, doing proper targeting and segmentation or measuring loyalty through NPS to address to core product needs than wasting money on demand generation or marcom that will probably not work if the fundamentals are not in place.