Maximize Marketing/Sales Investments

You can make informed decisions on where to invest in marketing/sales to increase sales without relying on a gut feeling or guesswork. This is important in any economy, but especially in a down economy.

How are you managing your marketing/sales expenses? Are you cutting the expenses you don’t feel are working? Are you increasing the ones you think could make a difference? You are doing something, aren’t you?
You undoubtedly examine your operations, general and administrative and R&D budgets to identify areas that don’t add value. This is especially critical in a down economy. Besides waste, activities that don’t contribute to short-term revenue, and aren’t critical to long-term success, have probably been under scrutiny, if not already cut.

Cutting waste is an easy decision, though you have to wonder how it keeps creeping in; and while no one likes to cut productive effort, if you’re a well managed business, at least operations, R&D and G&A can be assessed to determine what the impact of a cut will be.

Although you may make investments or changes in investments in marketing/sales based on guesswork and gut feel, in tough times, it is imperative to know what to do. If you get it wrong in a down market, you may not be around to see the upturn, or you may be so far out of position that the upturn misses you. No other business process was ever successfully managed this way, though business people tried with all of them at one time or another.

Without a true process understanding and process management of marketing/sales, it is impossible to know what affect a change in the system—a cutback or a shift in resource allocation for example—will have. You want to cut only those areas that will not affect sales volume. But which ones are they? Or perhaps you want to shift resources so as to increase sales in this down market. How do you do that?

Constraint analysis is a practice that has proved its worth on the manufacturing side of the business over the last 20 years. It is a general management principle, one that can be applied to any well-defined process.

If you view marketing and sales activities as a series of work cells (as a manufacturing plant for customers, if you will), each activity with inputs, work performed by the activity (work cell), and outputs to other cells (activities), then you can construct a process understanding of the particular customer manufacturing plant that you are operating. (Your current customer manufacturing plant may not be optimally designed or constructed, but some sort of process is at work to produce output [customers].)

Once you view your marketing/sales function in this way, it becomes obvious that at any given time, one—and usually not more than two—of those activity cells is the constraint to sales. Adding resources to any other cell will not improve sales revenue. Only adding resource to the constrained activity will increase sales. That’s why each time you guess wrong about what to do to increase sales, you are in effect, adding resource to an unconstrained activity. Money gets spent, but no increase in output or throughput is achieved.

Once that constraint is relieved, another cell becomes the system constraint, and it gets resourced next. However, either output or throughput or both are increasing as you relieve constraints. It also follows that if you know what the top constraint to your marketing/sales process is, you also know what it isn’t. These non-constraints can often have resources removed or reallocated to the constrained area or simply cut to improve the bottom line in this tough market (and any time for that matter).

Today, when the issues on the table are where to cut and how to grow sales (simultaneously), those companies without a real process view of
their marketing/sales function will be cutting in the dark.