Parable of three brand managers
Once there was a vice president of marketing to whom three brand managers reported. At the beginning of the year, she allotted each of them $100,000 to promote their brand.
At the end of the year, the vice president called the first brand manager into her office. He sat down in the leather chair in front of her desk. He was cool, almost arrogant. His close-cropped black hair and black shirt accentuated his pallid complexion.
I see that you have spent your entire marketing budget for the year, the vice president said. Please give me an accounting of yourself.
The brand manager replied, I invested in a new look for our brochures, fliers and data sheets. I also created an awareness campaign for the trade magazines and ran it in six issues of two magazines.
What effect did it have on sales? asked the vice president.
Sales are flat, he replied. But I think this campaign has been successful because theres a growing awareness of our brand.
Shaking her head, the vice president said, Clean out your desk and go to the place prepared for those who preach awareness without results.
After the first brand manager left the vice presidents office,
his shoulders sagging visibly, the vice president picked up the
I dont understand, she said. You spent only $25,000 of your budget.
Well, madam, the brand manager replied, I tracked sales of my product each month. As long as they climbed or held even, I figured Id hold off on spending, only allocating what I needed to reprint brochures and data sheets. That allowed me to throw an additional $75,000 to the bottom line.
Shaking her head, the vice president said, Clean out your desk and go to the place prepared for those who believe that not failing is the same thing as succeeding.
The second brand manager glared at the vice president before storming out of the office.The vice president shook her head, glanced at her watch, then looked down at another sheet of paper on her desk. She drummed her fingers on the arms of her chair and looked blankly at the door for a moment. Then she picked up the phone.
Send in the last one, she said.
The third brand manager walked in and took the seat in front of the vice presidents desk. The manager placed the manila folder she had been carrying on her lap.
The vice president picked up another sheet of paper on her desk. After looking at it briefly, she said, Youve spent $50,000 more than you were allotted at the beginning of the year. Can you explain yourself?
Yes, I can, she answered.
She opened the folder, took out a sheet of paper and laid it on the vice presidents desk. She pointed at some figures on the spreadsheet.
During the first quarter, I spent half my budget on a direct-response campaign to a relatively small group of people. By mid-summer, leads from that campaign had already resulted in $1 million in projects. I wanted to invest a small amount of that return to run the campaign again in the fall, but to a wider audience. You approved the additional expenditure yourself.
Now I remember, said the vice president.
The manager continued. If our close rate remains similar to the first campaign, we will have turned that $150,000 into $3 million.
The vice president relaxed into her chair and smiled brightly at the woman. You have learned that awareness by itself has no value; you must have sales to go with it, she said. You have also learned that you cannot grow a business by cutting costs; to do that, you must build revenue. Not only shall you have your own budget to manage next year, but I will add to it the budgets of those who failed to grasp these truths.
Writers note: At Sanda, we shake our heads when we hear marketers talk about awareness campaigns. Few people realize that increased awareness by itself wont result in increased sales. Some messages can even dissuade prospects from buying your brand. We also believe that companies that cut marketing budgets to boost the bottom line are being short-sighted. Cutting $100,000 now adds $100,000 to your bottom line. $100,000 invested in a sales-generating program can generate $1 million to $2 million in sales, adding much more to your bottom line in the future. Do you agree? Do you disagree? Send your comments to firstname.lastname@example.org.