Marketing as a Revenue Generating Activity

June 8, 2011 by

In speaking with small and medium sized companies, I get the sense they view their marketing efforts purely as an expense. Sales Vice Presidents I speak with allude to the same belief. An article I recently read made the same reference – marketing as an expense. Why is it companies don’t see that their marketing efforts can generate quantifiable revenue?

One of two things occurs. Either:

  1. The company never considered measuring their marketing efforts or,
  2. The company doesn’t know how to measure their marketing efforts (and has not made it a priority to figure it out).

Creating quantifiable measures and identifying revenue directly generated from marketing spend means a company can determine the strategies and tactics that are performing well. Equally important, the company can identify strategies and tactics that are not working.

There are numerous methods that can be utilized to determine successful marketing strategies. The method of measurement really depends on the marketing activity. Here are a few straight-forward examples. Website visits that turn into a sale can be tracked to determine effectiveness. The number of coupons sent versus those used can give the rate of redemption, cost of expenses and revenue generated. New business generated through a trade show or event marketing presence offers another measuring yardstick.

Determining the desired outcome allows a company to structure the marketing tactics and develop a plan for measurement. Using a simplistic formula, the amount of measurable revenue generated minus the total expenses gives a company an indication of their success (or failure).

Companies that are successful in measuring their marketing efforts show increased revenue by focusing on media/market segments/campaigns that are profitable…..and avoiding those that are not.

There are ways to identify and quantify revenue generating marketing efforts. Only most companies are not doing it.