Why you shouldn’t put marketing at the top of your list

Just because you can draw a neat funnel, does not mean that there is one. Back in the real world, the buying decision, and the marketing and sales process a business has in place to support it, is much more irregular. And, the way to build long-term profits is actually to put this type of marketing at the bottom of the list.

Sales funnels don’t exist
If you pour water into the top of a funnel, every drop will come out at the bottom. If only that were true in translation to your profit and loss account. In reality, interest in your business comes from many and varied sources, and a person’s path to your door is often more of a zigzag than a straight line. And, unfortunately, not everyone who becomes a customer stays a customer.

Every time you see, or refer to, a sales funnel or sales pipeline, I want you to re-imagine it as:

Your Taps: Ways of generating interest in your offer.
Your Funnels: The tools and techniques you use to channel that interest and move people through to trying you out.
Your Bucket: Those things that come together to keep your customers your customers.

Many businesses think that what they need in this picture is more Taps. Seems reasonable. But, in the vast majority of cases, that’s the last thing to address.

There’s a hole in your Bucket, dear business…

In fact, there’s a pretty clear order of play to increase your profits. And, that’s bottom up – opposite to the way most businesses approach it. The seemingly obvious way to increase profits is to pour more into the top, but it can actually be much more effective to tweak up through the process, so that every penny you spend on those expensive Taps has an increased chance of turning into profitable long-term customers.

Let’s imagine a company with two regional offices is currently securing an average of 2 new customers per month on an ongoing contract. They’ve set a target of increasing this to 3 per month. The conversion rates across the buying process are currently the same in both regions. Both regional managers achieve the target. However, one increases marketing costs by £500 per month, whilst the other makes a one-off investment of £500 upfront and adds less ongoing cost. The difference? Their starting point.

The manager in Region One simply expands their monthly direct mail campaign to go to an additional 500 people. This is a top down approach that runs the marketing Taps harder. Meanwhile the manager in Region Two takes a bottom up approach where a single investment in a triggered set of emails across their two-week Welcome Window stems a hole in their Bucket and means that 25% more of their Trialists go on to sign-up for the ongoing contract.

Region One’s approach is logical, but the gain is in volume without an improvement in margin and therefore has less impact on ongoing profits. Region Two is the far smarter way forward. The improvement in margin means that the effect will be compounded month on month. What Region Two has achieved is a real improvement in long-term sales results.

gallery-bottom-up-chart-006A compound benefit for long-term profits
The other major benefit to addressing it this way around, is that you’re able to reinvest the early returns in higher quality tools and techniques upstream. This should then further improve your results. In the scenario above, if the profit from the extra customer each month in Region Two was then reinvested to extend the monthly direct mail to reach 1500 people, they would see a leap to four new customers per month. The impact would be even greater still if they worked up incrementally improving the conversion rates at each step from the bottom to the top. This becomes a virtuous circle, because the effect is compounded as you move up.

This assumes, of course, that I agree that marketing is the about lead generation… which I don’t. I actually see marketing, and specifically watertight marketing, as the whole process of taking your goods and services to market. In that context, I’d say that marketing shouldn’t be on any list at all… it should be a way of life!

This article is an adapted from Bryony’s book Watertight Marketing (Panoma Press £14.99) – an entrepreneur’s step-by-step guide to putting a marketing operation in place that delivers long-term sales results. www.watertightmarketing.com

Illustrations by Lizzie Everard Cartoon by Simon Ellinas