Constantly under fire to justify your marketing spend?
(5-minute read)
Today’s life science marketer faces a fire drill flurry when it comes to marketing spend. Fueling these fire drills is a belief that marketing budgets are merely a discretionary, line-item cost, ready to be slashed as business worsens. This leaves marketers in a daily struggle, trying to implement long-term plans while cutting to the bone to meet short-term financial expectations. Unfortunately, this approach rarely achieves sustainable profit growth, not to mention it’s simply exhausting for those on the front line.
This myopic stance is curious, especially in a for-profit industry intending to serve the health needs of people. Indeed, if we follow the wisdom of Peter Drucker from over a half-century ago, “the purpose of business is to create and keep a customer,” 1 where marketing serves as the core function that steers the whole business to meet customer need.
Regrettably, that’s not how the life science industry typically treats marketing. Rather, it’s usually relegated to MarCom or sales support, and in many companies, non-marketing departments develop the strategy which is then handed down to marketing teams to make happen. Life science leader pedigree also is a factor. In contrast to most consumer driven industries, most leaders have “grown up” in science or sales—not marketing—so their intuition, expertise, and habits leave them uncertain how to best leverage marketing. Even though the changing landscape has created more openness to marketing’s strategic potential, it can be hard to see the value of marketing when that’s not how it’s always been.
Marketing isn’t helping itself either. Too many life science marketers don’t have the requisite skills to assume their strategic role and influence internal stakeholders’ value of marketing and their projects. Marketers are still frequently hired from the ranks of sales and science, with little foundational training, apprenticeship, or ongoing professional development. Imagine letting a sales representative do their job with no prior experience or training? Yet, we allow it with marketers who are making million-dollar (and million-patient) decisions every day. Marketing needs to be treated as a profession, with investments made in ensuring marketers have the technical, business, and relational attitudes and abilities—and agility—for success.
Can you and your team justify your marketing spend?
- What role does your business play in the company’s overall portfolio (e.g., invest to grow, cash cow, capability expansion, etc.)?
- What is the source of your business that is driving revenue today (e.g., new users, switch, repeat use, etc.)? How do you expect this to change next year?
- What does it cost to generate revenue on your business?
- How might your marketing programs such as label updates, packaging, and promotions be impacting COGS or other line-item expenses?
- Are your marketing expenses being deployed as efficiently as possible? How are you making systematic improvements over previous years?
Surprisingly, life sciences marketers don’t have many places to turn for help. Industry reading, business bestsellers, and social media super stars seem only interested in shiny new objects like AI, MarTech, and the like. This preoccupation neglects making any connection to the marketing fundamentals that set up the shiny new object for success. If strategic essentials like customer segmentation, insight, and value proposition are skipped over—especially in a digital world—marketing efforts turn into a pile of senior leader pet projects and CYA, check-the-box, busy work. Marketers lose sight of why they are doing what they’re doing. Additionally, they’re unable to effectively measure to know if they’re on track to deliver competitively and profitably on customer needs. Conversations about marketing spend churns and business performance ultimately suffers. As marketing thought leader Thomas Barta concludes, “If marketing were a brand, you would fire the CMO.” 2
Create P&L Marketing Leaders
It’s essential for marketers to appreciate this context that fuels the financial fire drill flurry and take steps to ensure their work is being done in consideration of impact on the P&L (profit and loss). Being a P&L-oriented marketer never takes away from the passion for the customer; it actually helps serve them and the company better. While we may not be able to quickly change a company’s cultural stance on marketing, marketers can control their own mindset, skills, and approach in their marketing work. To nurture P&L marketing leaders, there are a few things marketers and the leaders who support and coach them must know:
Know that Marketing Matters Numerous peer-reviewed studies have established the value of marketing asserted by Drucker, including how marketing strengthens the impact of overall company efforts, attracts potential customers, increases customer demand, improves how management makes decisions, and sends important signals to investors.3 A company’s marketing capabilities predict its future customer satisfaction, sales growth, profit, and stock performance and is a much stronger driver of company performance than either R&D or operations capabilities. Marketers can’t always “save” their way to growth. Growth often requires investment; for example, making smart investments in building up omnichannel reduces overall customer acquisition costs while increasing leads. Marketers must own their role as a strategic engine, even if the organizational isn’t there yet.
Know the Lingo Marketing is not just a P&L operating expense. It’s actually intertwined with key financial levers, like company cash, assets, and profit, that go beyond a tactic’s ROI. Marketers shouldn’t get intimidated by financial terms. Instead, they should start learning about the common ones senior leaders and the finance team focus on and grow comfort and confidence from there. Next, marketers should take time to link the Marketing 4 Ps of their work (e.g., projects related to PRODUCT, PLACE, PRICE, and PROMOTION) directly to one or more of the key financial levers and try to expand the conversation beyond a race for the highest ROI. When we translate our marketing-speak into financial language, we gain credibility and support among senior leaders and other decision makers.
Know your Numbers Undoubtedly, no matter the type of job role, marketers have to be the masters of the business they work on, knowing the P&L inside and out and being able to see how their individual projects connect to the bigger financial picture. Marketers should be fluent in navigating data to guide decisions and manage performance. Marketers should ensure they can articulate the specific economic logic in how money is being made on the business, what drives customer demand and loyalty, and which types of strategies and tactics are best suited for ongoing revenue and profit growth in their particular market. Marketers should appreciate both the short and long game and help the organization temper reactive behavior when facing challenges.
Show up as that edgy leader who’s thinking about the intersection with the bottom line while still bringing marketing expertise and unique, personal flair to the work. Let’s stop the fire drills and start treating marketing as the profession it is.
Example of a Lime Treatment Pathway to
Cultivate P&L Marketing Leaders:
1
Assess the current state of marketers’ skills and use the quantitative data to make the case for targeted training and development that all marketers are required to complete
2
Identify current marketing capability strengths and competitive gaps, prioritize investments to improve performance, and use the benchmark report to make the case to senior leaders
3
Partner with Head of Marketing to develop a stakeholder engagement plan with tactics to demonstrate marketing impact and build its credibility and influence
Are you ready to slow the financial fire drills?
Download the Lime Cutting Through Data Clutter Checklist to help your team get started growing their P&L mindset.
If you’d like to brainstorm or learn how we’ve helped other teams become P&L marketing leaders, reach out to schedule a free Let’s Grow! session.
1 Drucker P. The Practice of Management. New York: HarperBusiness; 1954, p. 34.
2 Barta, T. (2018, September 7). If marketing were a brand, you would fire the CMO. Marketing Week. Retrieved September 30, 2018, from https://www.marketingweek.com/thomas-barta-win-war-for-talent/
3 Morgan, N. A. (2019). Researching marketing capabilities: reflections from academia. Academy of Marketing Science Review, 9(3), 381-385.
