Marketing Manager ROI

adventurelife · Aug 17, 2009

I have been out of the corporate world a while know so not up to date.

What % ROI would you expect from a marketing manager appointment to a small business?

Also what does an experienced marketing manager cost these days? Quick search online seems to come up with £35k for leisure and tourism. Is that in the ball park?

If I was paying that salary the true cost is well in excess of £50k so I would be expecting a minimum of £200k plus of business growth. Again does that sound in the right ball park?

BronwynDurand · Aug 17, 2009

I'd certainly commend tying any fixed cost outlay to an ROI, but I don't think that the equation is as straightforward with a marketing manager. If they had ultimate responsibility for all the operational and environmental influences that effect the outcome of their marketing efforts, including your decision making role in the process, perhaps then you could ask for a 4-fold return.
A direct return on investment like this would be better suited to a salesperson who has tangible means of sourcing and quantifying return. A marketer's role is more than what they can do with your budget, and I'd be more inclined to set them an objective of achieving x as a ROI on the budget you allocate to them to spend on your behalf. A proper marketing strategy will define what steps you need to take in order to generate the 200k extra turnover per year you are aiming for. For a small business, often confined by small available marketing budget and awareness, expecting a marketing manager to step in and suddenly generate that may result in disappointment. There are also many different kinds of marketing managers out there - perhaps your needs would be better serviced by a 'sales and marketing manager' who would be more open to a performance-based salary.

Having said that, I see no reason why you shouldn't be able to define the job role as being required to achieve well defined marketing objectives, assuming that a strategy appropriate to your business sector, growth potential and available budget is created.

The salary level is at a good average level, although I suspect that you will discourage many good marketers from applying if you tie the expectation directly to turnover increase, for the reasons I've described. Increasing the salary may attract more senior candidates up for the challenge. You may do better to add more of a carrot - offer a bit less as fixed salary with a generous bonus payable on achieving objectives (these must be achievable and agreed together). They can be tiered to ensure there is still motivation.
You may want to trial freelance marketers to help you define the skillset and objectives in advance of making a commitment to employ full time.

Good luck!
Bronwyn

adventurelife · Aug 17, 2009

BronwynDurand said:
I'd certainly commend tying any fixed cost outlay to an ROI, but I don't think that the equation is as straightforward with a marketing manager. If they had ultimate responsibility for all the operational and environmental influences that effect the outcome of their marketing efforts, including your decision making role in the process, perhaps then you could ask for a 4-fold return.
A direct return on investment like this would be better suited to a salesperson who has tangible means of sourcing and quantifying return. A marketer's role is more than what they can do with your budget, and I'd be more inclined to set them an objective of achieving x as a ROI on the budget you allocate to them to spend on your behalf. A proper marketing strategy will define what steps you need to take in order to generate the 200k extra turnover per year you are aiming for. For a small business, often confined by small available marketing budget and awareness, expecting a marketing manager to step in and suddenly generate that may result in disappointment. There are also many different kinds of marketing managers out there - perhaps your needs would be better serviced by a 'sales and marketing manager' who would be more open to a performance-based salary.

Having said that, I see no reason why you shouldn't be able to define the job role as being required to achieve well defined marketing objectives, assuming that a strategy appropriate to your business sector, growth potential and available budget is created.

The salary level is at a good average level, although I suspect that you will discourage many good marketers from applying if you tie the expectation directly to turnover increase, for the reasons I've described. Increasing the salary may attract more senior candidates up for the challenge. You may do better to add more of a carrot - offer a bit less as fixed salary with a generous bonus payable on achieving objectives (these must be achievable and agreed together). They can be tiered to ensure there is still motivation.
You may want to trial freelance marketers to help you define the skillset and objectives in advance of making a commitment to employ full time.

Good luck!
Bronwyn

Thanks for the input

We are a marketing led business and do not have any sales people at all. When clients contact us it is a very easy job to convert them as they are already sold in principle. Therefore marketing is critical to us. Marketing to me , who currently does it is very easy to measure so I see no reason why not to give a new appointment a £ target to achieve.

I would think any marketing person who was confident in their ability would not have an issue with it? Maybe I am wrong. A return of 3 to 4 times their cost to me seems reasonable. I normally exceed that on my own marketing campaigns and I have no marketing background so I would expect a trained marketer to exceed my efforts

Peter

BronwynDurand · Aug 17, 2009

Hi Peter

Again, my comments are without understanding what sort of campaigns you currently conduct (and work for you), or how much you spend on them. I guess the difference I am trying to illustrate is that you should target the marketer on what return they can give you for the money you are prepared to invest in a marketing budget, rather than how much business they can generate for the cost of their salary.

I'd be horrified if the marketer didn't cover their salary with the business they generate, but I'd be worried if my budget only consisted of the salary I paid the marketer. There may well be marketers out there that would be up for the challenge of 'bring me x amount of business for only the investment of your salary'.

Where it could get tricky is with the stuff that doesn't appear to have a direct tangible ROI - like managing creative providers , hassling to get campaigns on track, writing better copy, defining strategy, dealing with customer complaints, selecting media for campaigns, evaluating effectiveness of campaigns, managing data just as examples - if the person couldn't justify an immediate ROI in better presenting your benefits on your website, they wouldn't do it. There would be little incentive to find the best possible marketing solution, or to experiment, in case it doesn't meet your target - you could potentially be stuck only working with the same, known options. Great marketers take careful risks, but experiment with a portion of the budget in a never ending quest for better return.

Again, I'm a believer in practical marketing - so I don't see why you shouldn't try it. If it were my business, I'd choose a hard worker with a strong track record; that understands ROI and will be incentivized to really drive ROI with an extra bonus pot potential. Thanks, I learned a lot from your perspective.

adventurelife · Aug 17, 2009

BronwynDurand said:
Hi Peter

Again, my comments are without understanding what sort of campaigns you currently conduct (and work for you), or how much you spend on them. I guess the difference I am trying to illustrate is that you should target the marketer on what return they can give you for the money you are prepared to invest in a marketing budget, rather than how much business they can generate for the cost of their salary.

I'd be horrified if the marketer didn't cover their salary with the business they generate, but I'd be worried if my budget only consisted of the salary I paid the marketer. There may well be marketers out there that would be up for the challenge of 'bring me x amount of business for only the investment of your salary'.

Where it could get tricky is with the stuff that doesn't appear to have a direct tangible ROI - like managing creative providers , hassling to get campaigns on track, writing better copy, defining strategy, dealing with customer complaints, selecting media for campaigns, evaluating effectiveness of campaigns, managing data just as examples - if the person couldn't justify an immediate ROI in better presenting your benefits on your website, they wouldn't do it. There would be little incentive to find the best possible marketing solution, or to experiment, in case it doesn't meet your target - you could potentially be stuck only working with the same, known options. Great marketers take careful risks, but experiment with a portion of the budget in a never ending quest for better return.

Again, I'm a believer in practical marketing - so I don't see why you shouldn't try it. If it were my business, I'd choose a hard worker with a strong track record; that understands ROI and will be incentivized to really drive ROI with an extra bonus pot potential. Thanks, I learned a lot from your perspective.

Agree with what you say but I would expect a good marketing person to deliver a fair bit just with their time. We are in a pretty simple market with huge demand we have had 6 straight years of growth with just me running the marketing and I am no expert. The marketing budget would be spent and measured campaign by campaign as we do now

Thanks for input

Regards

Peter

Pete Crane · Aug 17, 2009

Question - would you measure them on costs saved and indirect business achieved?

I think the indirect one has been answered, I've rushed the reading of this thread a bit

povey_sindall · Aug 17, 2009

As a TV advertising agency I deal with many marketing managers on a day to day basis.

If you want some advice the KEY in a good marketing manager is experience. You want somebody who has worked for similar companies before, and knows how to run an effective press/raido/tv/online campaign should you choose to.

What I do come across every once in a while is a situation where a marketing manager is so inexperienced that when running a TV campaign for the company their presence infact slows the process down due to me having to explain every tiny detail to them and I end up bypassing them and dealing with the MD instead.

Experience is key.

adventurelife · Aug 17, 2009

povey_sindall said:
As a TV advertising agency I deal with many marketing managers on a day to day basis.

If you want some advice the KEY in a good marketing manager is experience. You want somebody who has worked for similar companies before, and knows how to run an effective press/raido/tv/online campaign should you choose to.

What I do come across every once in a while is a situation where a marketing manager is so inexperienced that when running a TV campaign for the company their presence infact slows the process down due to me having to explain every tiny detail to them and I end up bypassing them and dealing with the MD instead.

Experience is key.

Agree but for our situation I would lean towards experience in the online and pr areas as we do not use print marketing or radio and unlikely to run TV adverts due to cost.

Difficult to get someone from a similar company as not many companies like us around and they will not have marketing managers. Possible to get one from the travel industry though.

adventurelife · Aug 17, 2009

Pete Crane said:
Question - would you measure them on costs saved and indirect business achieved?

I think the indirect one has been answered, I've rushed the reading of this thread a bit

Costs saved are like extra profit so if they delivered savings yes

websitedesign · Aug 18, 2009

Depends on many business/industry factors such as size, growth potential, market cycle etc.

I'm in internet/marketing/design and expect 100%+ ROI when hiring new employees because it's a growing market (very select and only hire the best)

oldeagleeye · Sep 8, 2009

HI.

I know this thread is a bit old now but just came across it and as I did take a look at your business a while ago and was impressed with what was on offer and the pricing I thought I might add a few hopefully useful comments.

The first is really a question. How does this extra £200K revenue you would expect compare with your total turnover over the last year. Given your pricing it seems to me that amount represents pulling in between 1,000 and 15000 customers a year depending on the average value of a deal.

Now lets look at it another way. Paying a manager £50K a year is going to cost you around 75K with tax and benefits. That is £1,500 a week and you will expect him or her to pull in around 20 customers a week for that.

That is each customer is costing you £75 and this is without any marketing budget. Unless my numbers are wildly out that doesn't seem feasible.

All in all buddy I think that you are in the mind bogling position many small businesses face. Making the decision to grow really big or stay as you are making a reasonable living.

One final bit of advice. If you do decide on growth. Don't waste your time going for the typical middle management breed of sales managers who with think that £50K a year is a cushy little number even if he gets sacked after 6 months for not meeting targets. Go for a high flyer who can target both the private & corporate sector and set targets that represent OTE earnings for the guy by way of salary and bonus of around £100K.

Robert

adventurelife · Sep 8, 2009

oldeagleeye said:
HI.

I know this thread is a bit old now but just came across it and as I did take a look at your business a while ago and was impressed with what was on offer and the pricing I thought I might add a few hopefully useful comments.

The first is really a question. How does this extra £200K revenue you would expect compare with your total turnover over the last year. Given your pricing it seems to me that amount represents pulling in between 1,000 and 15000 customers a year depending on the average value of a deal.

Now lets look at it another way. Paying a manager £50K a year is going to cost you around 75K with tax and benefits. That is £1,500 a week and you will expect him or her to pull in around 20 customers a week for that.

That is each customer is costing you £75 and this is without any marketing budget. Unless my numbers are wildly out that doesn't seem feasible.

All in all buddy I think that you are in the mind bogling position many small businesses face. Making the decision to grow really big or stay as you are making a reasonable living.

One final bit of advice. If you do decide on growth. Don't waste your time going for the typical middle management breed of sales managers who with think that £50K a year is a cushy little number even if he gets sacked after 6 months for not meeting targets. Go for a high flyer who can target both the private & corporate sector and set targets that represent OTE earnings for the guy by way of salary and bonus of around £100K.

Robert

As it happens I ended up recruiting a business development director which was going to be role to be filled after the marketing director had settled in. But when the right people walk through the door I made some changes. Once she is fully up to speed and delivering I will then add in the marketing role. It is essential that we have all the important functions filled with the correct team prior to expanding by purchasing other companies.

£200k for us is on average about 3636 new clients and about 570 deals. The reason I came up with £200k as I can add that into the business myself and have done so this year and I am not the best marketing person by any means so I would expect at least that level from someone who knew what they were doing and was on it full time.

They actually have a a bit of a easy win straight away. I am a hunter and always chase new business, that is what I get a kick out off and I am 100% rubbish at marketing to our existing clients. Not one email or newsletter has been sent to the past client base

Not one attempt to sell other services of products to a very warm and receptive client base. Instead I go and find 15-20000 new clients every year because I like doing it

I reckon we have over £200k a year extra in our exiting client base which will be easy pickings for someone who is good at relationship marketing.

We are exactly at the stage you suggest. Stay as we are with organic growth of around 20% per year and make and excellent living with a lifestyle that is fantastic or go for building a middle market business of around £5m plus and take the pressure that borrowings bring. ( We have been 100% self funded till now and are debt free with clean balance sheets)

The only reason I am actually taking the difficult route is because at some point I will want to sell out and getting a 7 figure deal is much better than a 6 figure deal and I also have a very short attention span and if I am not closing deals and fixing companies I can see me getting bored.

Thanks for input

Peter

Loppy42 · Sep 8, 2009

I am a Marketing Manager and work with many small businesses and I think this question has too many variables in it to answer.

Of course your Marketing Manager should make more than their salary back and if you are just asking them to continue with a proven marketing strategy then they should achieve the same or better than you, but the time for developing new strategies, testing them optimising them will not necessarily bring you a direct return in the short term.

Marketing Managers are used to working to plans and targets, but they are not always quite as defined as £xxx income. It might be to raise awareness of the product, or get x more customers signed up to the mailing list, etc all of which in the long term will increase revenue.

I have also just realised that I had not read all the posts in this thread, and that my comment is a bit late, so sorry about that!

adventurelife · Sep 9, 2009

Loppy42 said:
I am a Marketing Manager and work with many small businesses and I think this question has too many variables in it to answer.

Of course your Marketing Manager should make more than their salary back and if you are just asking them to continue with a proven marketing strategy then they should achieve the same or better than you, but the time for developing new strategies, testing them optimising them will not necessarily bring you a direct return in the short term.

Marketing Managers are used to working to plans and targets, but they are not always quite as defined as £xxx income. It might be to raise awareness of the product, or get x more customers signed up to the mailing list, etc all of which in the long term will increase revenue.

I have also just realised that I had not read all the posts in this thread, and that my comment is a bit late, so sorry about that!

I am a bit more focused than that. We are marketing led so the marketing resource has to make money otherwise it is not contributing. Value to us = more profitable revenue so we judge the revenue earning roles on that basis

Thanks for input

oldeagleeye · Sep 10, 2009

You sure you worked with small businesses Loppy . That sounds like middle managment 2 hrs to order a sarrnie to me then sit around for 3 months only to come up with the idea of an ad in the villiage newspaper.

Small busineses don't work that way. We get on with it.

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