In today’s globally competitive business environment, strategically sound investments in marketing can catapult a company into strong, sustainable growth.
Great! Let’s dramatically increase our marketing budget and globally dominate our industry!
Companies with available capital often pour additional resources into expanding their marketing channels and teams. Capital and talent are key inputs to a growing global organization. But in my experience consulting to growing B2B software companies, there comes a point where the results do not justify feeding an ever-growing marketing budget. Someone in company leadership realizes that the marketing department is oversized and underperforming.
How Did We Get Here?
Here are some ways that I have seen this happen:
New investors green-lighting rapid marketing expansion without oversight to the spend rate.
Investors want to grow the company in a way that optimizes the company value in the year when they plan to sell. Since marketing results normally require a lag time of months or even years, heavier up-front marketing investments often make sense. But when oversight is lacking, I have seen marketing departments add in large user conferences (which rarely add new customers and require high upsell potential), heavy global travel with unclear objectives, high outside PR costs, and advertising without a clear target audience.
Hiring a marketing leader from a Fortune 500 company background, who wants to create the big team s/he left.
I have actually seen this happen a few times. The new leader is certain that the growing company needs the staffing and structure of a much more mature company. Suddenly the small, growing company needs extra marketing headcount in areas not seen away from the big marketing shops, such as dedicated marketing operations, data analysis, PR, etc.
Measuring the Wrong Marketing Metrics.
Do you have good reason to believe that your social media channels will uncover sizable numbers of qualified leads? If so, then by all means hire a full-time social media marketing professional. I see too many companies tracking impressions, Facebook “likes” and other non-conversion marketing metrics. Marketing needs to measure metrics that lead directly to qualified leads and ultimately revenue growth.
Risks of an Oversized Marketing Operation
There are financial and operational risks from growing the marketing department too quickly. Here are some of the larger risks:
Diminishing Rates of Return
The marketing team is growing, with new areas being added each quarter: marketing communications, digital, content, events, product marketing, etc. The entire team is so busy in their respective areas that we need to further grow out each marketing area. What was just 3 marketing staff last year has ballooned to more than 20. Does this mean that the department is able to help acquire 6-7 times as many leads? Probably not. That does not mean that a growing company shouldn’t also add to marketing staff counts, but the return rate will likely fall with each new employee.
Covering Up a Lack of Project Prioritization
We need to add more staff to handle all of the marketing projects we can’t yet start. Marketing (like the Development Team) has an endless supply of projects that can be implemented within the department. The question that determines which projects to actually assign is to what level that project will directly impact company growth and long-term profitability.
Insulation from Customers and other Departments
The larger the marketing department becomes, the more that projects are contained primarily among department staff. I have seen time and again where marketing employees have never spoken directly to a customer to understand their point of view or interviewed a sales manager about market needs.
Lack of Centralized Control of Global Marketing
When a company grows quickly into global markets, it often relies on local resources to handle local marketing programs. Most of this article focuses on direct-reporting staff, but keep in mind that some oversized marketing involves a variety of disparate resources spread around the world that have grown too quickly to manage the brand and messaging effectively in multiple languages.
How to Fix an Oversized Marketing Team
There are many ways to approach realigning a marketing team that has expanded too quickly. Here are a few suggestions:
- Unless the company’s financial situation is DIRE, do not fire staff you might now deem unnecessary. It kills morale and productivity in the remaining staff for a long time after the layoffs occur.
- Tie every marketing position’s job performance metrics DIRECTLY to real business outcomes results. For instance, digital marketing may produce additional traffic to your company’s website, but is it attracting and capturing the target audience?
- Make increases in marketing headcount dependent on meeting specific results in areas already covered. In other words, make trade show exhibiting and the current digital marketing the most effective it can be before focusing on new areas and channels.
- Global marketing can scale quickly out of control. As your company expands, be sure to retain control over key assets like branding and IP.
- Ensure that marketing projects include validation from customers or internal stakeholders like sales and account management.
In the end, there is no perfect marketing function formula that lets company leaders know exactly how much budget will yield a high-performing team. But there are signs of growing too quickly and smart ways to manage the re-sizing over time.
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