How to Justify Your Marketing Budget to Management

Even in the best of times, getting approval for your marketing budget can be a difficult task, particularly if yours is a complex sale and tracking direct attribution is fuzzy.

Even in the best of times, getting approval for your marketing budget can be a difficult task, particularly if yours is a complex sale and tracking direct attribution is fuzzy.

You’ll likely find the path easier if you lay out your plans to include a set of key metrics and parameters that define success.

What Is the Opportunity?

Begin the conversation by outlining the opportunity you see available to your organization and identifying what happens when you win that opportunity. Do you increase market share? Improve profitability? Bump up customer satisfaction?

The opportunity better be based on a business metric improvement. You’re not likely to get far with a discussion of improved process metrics: more subscribers, likes, followers, etc. That said, it is worth tracking these things so that in the future you can point to them and draw a connection between improved engagement and increases in hard-dollar metrics.

You may also consider a defensive positioning — “if we don’t do this, our competitors will.” Or, “our competitors are already doing this, and we’re falling behind.” I’d be careful with this route, though, as it often leads to defensive thinking. And that leads to marketing resources spent to maintain the status quo. Sometimes that’s the smart path, but it’s not necessarily a popular one.

What Are the Opportunity Costs?

Corporate budgets are generally a zero-sum game. If you spend the money here, that money isn’t being spent somewhere else. You need to demonstrate an awareness of that and be prepared to discuss how and why the investment you are requesting will outproduce the one it is replacing.

How Long Will It Take?

Not all marketing activities are created equal. They have different payoff expectations. (Writing a blog post today won’t likely get you a new customer tomorrow. Launching a new PPC campaign just might.)

Be ready to discuss whether your marketing budget proposal is a short-, medium-, or long-term play and why anything that will take longer than this quarter to realize goals is worth the time risk involved. (Your organization’s culture will influence how important this question is, and perhaps even if recommending a long-term plan is an option.)

What Will It Cost?

This might be the first question out of a manager’s mouth regarding the marketing spend on a specific project, but I wouldn’t address it first if I could avoid it. Better to establish value and expected (positive) outcomes first. Then get into what the total cost will be, whether costs are front-end loaded or more evenly spread out, and whether some portion of your costs are accrued only when progress is being made. The more detail you can provide — particularly details that mitigate risk — the better.

How Can It Be Tweaked?

If it’s not working, what can you change? If it’s working, can it be improved upon? These are critical questions not only to be able to answer, but to get your management team to think about. Why? Because the condition on day one of your new initiative are not going to change, perhaps radically, by day 90.

If you can show that you’re prepared to make the adjustments necessary to keep your efforts pointed toward a profitable outcome, you’ll find greater success in funding your marketing ideas.

 

 

Email to Repair Broken Customer Relationships—What J.C. Penney Got Wrong

Email is one of the more personal forms of electronic communication. Notes from friends and family are co-mingled with marketing messages. This makes it an excellent vehicle for repairing broken relationships. When done well, email apology letters drive sales in addition to mending relationships, but can they save a company from a death spiral? The management team at J.C. Penney is hoping that the recent note from CEO Ron Johnson will reverse (or at least slow down) the sales free fall for the last two quarters.

Email is one of the more personal forms of electronic communication. Notes from friends and family are co-mingled with marketing messages. This makes it an excellent vehicle for repairing broken relationships.

When done well, an email apology letter drives sales in addition to mending relationships. A few years ago, a client had a system failure that resulted in delayed shipments of holiday orders. An email was sent to every customer who had placed an order that season (even the ones who had already received their orders.) The message explained what caused the problem, apologized for any inconvenience, promised to expedite shipments of remaining orders, and offered a gift certificate for future orders.

The immediate response was so positive, the President quipped, “We should plan a problem once a quarter so we can apologize!” The revenue from the apology letter more than covered the expedited shipping. Furthermore, the relationship between customer and company became stronger. The people who received the letter consistently outperformed their counterparts who didn’t get one in both sales and lifespan.

Personal letters help salvage relationships but can they save a company from a death spiral? The management team at J.C. Penney is hoping that the recent note from CEO Ron Johnson will reverse (or at least slow down) the sales free fall for the last two quarters. In May, the first quarter results revealed a 20.1 percent drop in revenue because shoppers didn’t like the new pricing and marketing strategy. Second quarter was worse with another revenue drop of almost 23 percent. Traffic was down 12 percent.

When things are going south at this rate, quick action is required. Johnson admitted to pricing and marketing mistakes when speaking with investors, but his letter to customers is more like an introduction than an “Oops! We goofed.” The letter reads:

Dear valued customer,

You’ve probably heard about recent changes at jcpenney. I’m honored to
say that I’m one of them.

I’m Ron Johnson, and I came here because I have a lifelong passion for
retailing—and jcpenney has been one of America’s favorite stores for
over a hundred years. My goal is to make jcpenney your favorite place
to shop.

I’ve asked our team to innovate in many ways—to help you look and live
better—and to make shopping more enjoyable.

While you will see many changes, you can rest assured that we’ll never
lose sight of our founder’s values. When James Cash Penney built his
first retail stores over a century ago, he called them “The Golden
Rule,” because treating customers with respect was his highest
priority.

One of Mr. Penney’s guiding principles was offering low prices every
day—instead of running a series of “special sales.” We’re honoring Mr.
Penney by returning to his pricing policy, so you’ll find great prices
every time you visit.

We’ve also made it easier to return items, we’re bringing in more
great brands, adding excitement to our presentation, offering free
back-to-school haircuts for kids, and much more.

Basically, we’re putting you and your family first, trying to give you
new reasons to smile every time you visit a jcpenney store.

You’ll see many innovations in the coming months, and I’ll keep you
informed in a series of letters like this. I hope you’ll let me know
how we’re doing, and share any ideas that could help us do better.
Just click the link below to send me a note.

On behalf of the jcpenney team, thank you for shopping with us.

Ron

I’d like to hear from you.
View email with images.

*Please be advised that any information disclosed or submitted will
become jcp property and may be used in public communications.”

The timing of this letter is off. It should have been sent prior to the pricing changes. Now is the time for J.C. Penney to be open about the issues and invite people to share thoughts without the threat that they “may be used in public communications.”

Email messages designed to repair relationships are different from marketing emails. They have to be simple and personal. The J.C. Penney email is designed to look like a letter from the CEO, as you can see in the first picture in the media player at right.

Unfortunately, it looks like the second picture in the media player when it lands in the inbox. The letter is an image instead of text. It isn’t very inviting to a loyal customer much less an unhappy one.

Do’s and don’ts for creating personal relationship mending messages:

  • Do personalize the name. “Dear valued customer” says “I don’t know who you are.” The individual who shared this email with me has been a loyal catalog shopper and had a J. C. Penney credit card. They should be on a first name basis.
  • Don’t use a ho-hum subject. You have to catch people’s attention in a flash. “A letter from our CEO” doesn’t do it. Wouldn’t “Our CEO wants your advice” be better?
  • Do identify the problem and take responsibility for it. “Oops! We goofed!” followed with an explanation and sincere apology is the first step to mending the relationship. If the recipient doesn’t feel your sincerity, additional damage is done.
  • Don’t limit responses by qualifying. Mr. Johnson asks for feedback and then states that the information shared may be used in public communications. Some apology emails offer a discount based on a specific order size. Relationship mending emails have to do two things: Take responsibility and offer some form of restitution. A discount is a promotion. Basing it on a dollar amount is adding insult to injury.
  • Do use text-only emails. A picture paints a thousand words and most of them send marketing signals and awaken spaminators. The purpose of relationship building emails is to restore the relationship. This won’t happen if the email goes to spam or looks like a bunch of boxes with red X’s.
  • Don’t ever forget that relationships with customers are a privilege not a right. When you are truly grateful for the opportunity to serve your customers, it resonates in your messages. Make sure that your marketing team (including the copywriter) has the right perspective when creating messages.