How to Explain the Value of B2B Marketing to the CEO

For the B2B Marketer, one of life’s headaches is finding simple ways to explain what we do, so that other Managers can see the value.

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Return on Investment

The CEO and the head of Finance look at the money numbers attached to the marketing budget and ask “what’s the return on investment?” The sub-text is clear. What they really mean is “what can we cut?”

Let’s avoid the standard marketing answers because they are littered with dangerous traps. ‘Brand value’ is intangible and extremely hard to quantify. ‘Trade shows’ swallow the lion’s share of the promotional budget but are only one of many contributing factors in a successful industrial sales cycle. ‘Lead generation’ is another dangerous answer because the real responsibility for any impact on the bottom line lies downstream, with our colleagues in Sales.

Let’s face facts: a direct, causal link between B2B marketing activity and revenue is very hard to prove. One of the few places where it is visible is an eShop – and not every B2B organisation has one.

So, instead of focusing on the ‘return’, let’s explore the idea of ‘investment’ and see where it leads us.

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Infrastructures and operations

All companies invest, to a greater or lesser extent, in an IT infrastructure. They then pay the operational costs: the electricity that powers it; the internal staff and external services that keep it going. Why do companies invest in IT? Speed, accuracy, productivity: the in-house system is a cheaper way to ‘get stuff done’ than doing it all manually.

Manufacturing companies invest in production machinery. Then they pay additional operational costs – power, maintentance, staff - to ensure they keep on producing and delivering a return. And they regularly re-invest to upgrade to the latest technology, too. Why? Because the new machinery delivers a competitive advantage: it permits the creation of products and services that provide a better (because more cost-effective) solution to the customers’ problems.

So how do other departments explain their value? What - for example - is the value of an IT system? Well, you can add up the costs and say, “the price represents the value of the system to the company”. Or divide the total by the number of users and see if it sounds like a reasonable number. Or you can reach for a market comparison by getting a quote from a sub-contractor.

How does the Manufacturing division explain its value? Add up all the costs and divide by the number of products, then compare the result against the sale price? No, that doesn't work - that attributes all the profit margin to Manufacturing. What about the roles of Sales in generating profit? And once you start down that path, what about the contribution of all the other departments ... HR, purchasing, warehousing or even (we must tread carefully here) finance itself? Surely we're all in this as a team?

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Digital Twins

At the intersection of IT systems and production machinery, we have the interesting idea of the ‘Digital Twin’ – a digital model of a real-world physical product. Their value? “Digital twins can help an organization simulate real situations and their outcomes, ultimately allowing it to make better decisions,” says McKinsey.

Digital twins simulate the performance of a component during the design phase. You can iron out the bugs faster and reduce Time-to-Market. Or you can simulate a hugely complex product – like an aeroplane – in its entirety, to ensure all the components interact correctly and safely before taking to the skies.

You can create a Digital Twin for a system or process, too. So you can, for example, model the Just-in-Time delivery of components; or the production process; or the logistics and distribution process.

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Data is a corporate asset

Digital Twins rely on data – which is immensely valuable because it provides the foundations for future learning and growth. Data represents not just the physical characteristics of a component, the behaviour of a product or the throughput of a process. It summarises the accumulated experience of the organisation.

The commercial version of the Digital Twin – a model of the entire company - is the system that the CEO and head of finance use for decision making. It’s a distillation of data taken from the ERP, blended with the accounting system, reality-checked against the sales forecast.

Marketing contributes a wide variety of valuable data to that corporate Digital Twin. By measuring outbound communication, marketing can ‘listen’ to the response and feed the insights into decision-making. The online interactions are an obvious source. Website analysis reveals insights about customer interest in products and services. Interactions with online forms update customer records. Downloads reveal product preferences and the stage in the buying cycle. Integration of data flows into the CRM supports the Sales team.

Analogue communications can also be measured to deliver insights. Quantities of brochures printed; column-centimetres of press coverage; numbers of phone enquiries.

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The value of B2B Marketing

Back to the painful question. Our CEO and head of Finance are still waiting for an answer. Time to look ‘em straight in the eye and be bold:

Marketing designs and builds the infrastructure that promotes the company, its products and services to current and future customers.

Marketing manages operational budget to optimise the cost-effectiveness of ongoing activities that promote sales.

Marketing invests budget and resources in upgrading the infrastructure and staff skills, to gain and maintain a competitve advantage.

Marketing has designed and built the infrastructure so that operations generate data which contributes to the corporate Digital Twin for improved decision-making.

Which bits were you thinking of cutting?

How do you explain the Value of Marketing to colleagues?

... please share your thoughts!