Outsourcing Marketing Services
Not long after those key hires, you start to ponder – could I get better marketing results if I partnered with a marketing agency? But, how do you know when it’s time to stop doing it yourself (or delegating it to an overworked support person)? Here are eight ways you know it’s time.
Here are eight ways you know it’s time to hire a marketing agency:
- Sales are Stagnant
- It’s Not Getting Done
- You Don’t Enjoy Marketing
- You’ve Realized You Don’t Have the Skills
- The Sales Department is Complaining of “No Good Leads”
- Your Marketing Results are Hit or Miss
- You Wonder What is Working
- You’d Love to Hire a Complete Marketing Team, but Lack the Budget
Read on to learn more about the benefits of employing a marketing agency.
The Benefits of Measuring a Successful Strategy
Do you want to increase sales? Do you want to control your marketing cost?
In today’s unpredictable economy, companies are trying to find new and innovative ways to keep the marketing momentum going and growing, while dealing with budget cutbacks and dramatic fluctuations in the market. Smart companies know that they can’t stop their marketing activities – especially if they plan on establishing long-term value in their business.
So, where do they turn when marketing is necessary, but resources, expertise, focus, and funds are scarce? They find the answer in outsourcing marketing services. Companies can realize the following benefits with outsourcing marketing services:
- 15 – 25% sales revenue gains
- 25 – 35% decrease in salaries plus overhead costs
- 10 – 25% decrease in overall marketing spending
- Access expertise in marketing strategy and implementation, as well as creative design, focused on the specific job or project at hand
- Get an outside perspective on your business
- Minimize the impact of marketing staff reductions
- Draw on outside experience with “what works and doesn’t work” scenarios
- Maintain the momentum with critical projects – they’ll never fall by the wayside, drop down the priority list, or become forgotten
- Hire only whenever and wherever you need resources – “on demand”
- The purpose of this report is to outline the benefits that companies can achieve by applying an outsourced strategy to their marketing needs. Given that the human capital and staffing model has changed and outsourcing is gaining increased acceptance as a standard business strategy, we believe that marketing outsourcing will be adopted by more companies in the upcoming years.
- This document is based on our experience, research in the outsourcing market, and discussions with CEO’s, presidents, owners, board members, and human resource executives.
- Data from SurePayroll small business customers shows the percentage of their employees who are independent contractors has grown 85 percent from May 2007 to May 2012, rising from 3.33% to 6.26%.
- Leading companies at the forefront of outsourcing have been in the technology sector however, this model has shown significant value for broader industries. The spread to other sectors is driven by three main factors: (a) the trend has shifted from the marketing department using outside partners for projects, to the boardroom. It has become a proven business strategy that gives a company a clear competitive advantage; (b) Evidence of the effectiveness of outsourcing will continue to grow, raising the comfort level of top executives in any industry to use this proven, affordable approach; and (c) Organizations are more focused on core activities–that is, things that contribute to the company’s competitive advantage and increase shareholder value. The opposite of core is context–activities that do not contribute to competitive advantage. Context activities should be outsourced.
- This document is based on the best information at the time of creation and is subject to change.
WHAT IS THE STATUS OF OUTSOURCED MARKETING SERVICES?
In today’s business climate, CEOs and executives are cautiously optimistic about the economy and their company’s future growth. They realize they still need to market to drive profitable growth and increase their company’s value, but the financial strings are being tightened.
Most people believe that keeping everything internal will lead to greater efficiency.
There is a clear growing trend, however, for companies, regardless of size or industry, to outsource (which used to be referred to as subcontracting) this is just another element of their business. Outsourcing is not a passing fad, but clearly, a paradigm shift that can change a business model for the better by using resources outside the organization to perform specific tasks.
This increase is largely driven by just how easy it has become to find companies and people with specialized skills. technology and the Internet have made it efficient to search out people to do the tasks you struggle to do yourself. Sharing materials have become almost instantaneous as well as cloud computing and web conferencing.
If you farm out marketing work like graphic design on brochures or signs for your company, you can see proofs as soon as they’re ready. It’s also very easy to pay for these services online with credit cards and PayPal. Harvard Business School professors Gail J. McGovern and John Quelch documented the trend in an article in the March issue of Harvard Business Review.
One reason behind the move? While company marketing departments have plenty of talented right-brain, creative types, they may lack the left-brain analytics needed to better understand their customers in today’s information-rich environment.
Companies often forget to ask the basic question: What business are we in? Too often the need to perform various functions and to keep a business running does not allow management to step back and ask this question. The answer should bring management to the fundamental product or service that generates revenue for the company.
In his book, Living on the Fault Line (HarperCollins, 2000), Geoffrey Moore said, all employees should be focused on core activities—that is, things that contribute to a company’s competitive advantage and increase shareholder value. The opposite of core is context: activities that do not contribute to competitive advantage. Context activities should be outsourced.
For example, your marketing director was hired to develop and coordinate strategies, direct tactics, tactical implementation, and generate more sales leads, all while maximizing the loyalty and profitability of current customers.
That is the head of marketing’s “core” function. However, over time they have developed a talent for public relations and, as a result, have become the firm’s communication manager too. Those responsibilities (PR manager, Web guru) can be described as “context.”
Most companies handle “context” functions with respect to positioning, messaging, and public relations by allowing them to fall to the marketing department. The problem with “context” is that it often takes on a life of its own and begins to obscure what the “core” should be. What management needs to consider is the effect that “context” tasks have on productivity, return-on-sales, ROI and the general operation of the business.
Outsourcing marketing services allow businesses to focus funds and control headcount, allowing a company to hand over responsibility for an outsourced function within clearly defined management guidelines and then monitor future performance. When you break down the costs of a full marketing department internally, versus the cost of outsourcing marketing services with an external partner, the business case becomes clear.
In a real-world example, a company can see a 15 – 25% revenue improvement in the first year and a 25 – 45% cost savings are immediate. Other benefits that make this a compelling case to look at are:
- Lower cost
- Instant Availability
- Talent and experience
- External Objectivity
- Agile Flexibility
The trend in marketing outsourcing does not look like it will slow down anytime soon given the stalled pace of hiring in this soft economy.
WHAT IS THE VALUE OF OUTSOURCING MARKETING?
- Access expertise in marketing strategy and implementation, as well as creative design. An in-house team may not have developed the skills you need. Outsourcing marketing services to an experienced team that integrates seamlessly into your infrastructure will infuse your organization with new energies and ideas. You’ll introduce fresh and innovative marketing and sales approaches to your customers and business partners. And they are focused only on these disciplines.
- Get an outside perspective on your business. Sometimes you can get too close to your business and not see your marketing strategies, programs, or materials from your audience’s perspective. Even though you may know your business inside and out by living and breathing it each day, your perspective is still one-sided. To market successfully to your current audience – and capture new markets – you need to step out of your shoes and into your target markets’ or customers’. Having a group on the “outside” supporting your needs helps to give you the customers’ perspective, not just your company’s.
- Minimize the impact of marketing staff reductions. You need to continue with projects, but your resources are limited. By outsourcing, you can find qualified, experienced resources that can come in and support your marketing needs so that the effort, money, and energy you’ve already invested do not go to waste.
- Use outside experience with “what works and doesn’t work” scenarios. Whether it’s planning, copyrighting, or designing, the right marketing outsource team will have had experience with a variety of different marketing and communication strategies, techniques, and tools. You can rely on their lessons over the years to find the correct solution for your business challenge.
- Maintain the momentum with critical projects – they’ll never fall by the wayside, drop down the priority list, or become forgotten. Today, people change jobs or are hit with layoffs, while in the middle of projects. When those people leave the company, they will most likely take the project assets with them (in the form of tribal knowledge). When you outsource marketing relationships, you have one centralized team as your partner, and your knowledge assets remain protected and archived for future use.
- Hire only whenever and wherever you need resources (on-demand). Hiring full-time staff can be very costly when you add up wages, insurance coverage, office equipment and supply needs, training costs, etc. Don’t forget to add to the calculation the cost of a bad hire. The commonly referenced cost of a bad hire is 2.5 times the annual salary. In most small to mid-sized organizations, marketing can be outsourced while they focus on the core. Finding an outsourcing partner allows you the flexibility to bring on talented, knowledgeable experts exactly when and where you need them. And you don’t have to manage or train the entire team – the outsource marketing firm does that while you focus on the daily needs of running your own business and generating revenue!
- Cost reductions: Not only does outsourcing save money in salaries and overhead, but the outsourcing partner can also save a company money in direct purchases on marketing programs as well (e.g., printing, media buys, advertising, etc.). By leveraging their supplier, a good outsourcing partner can manage to save a company anywhere from 10 – 25% in their overall marketing spending. This is accomplished in the following ways:
- Rigorously manage the “input costs” of marketing through strategic sourcing.
- Focus spending on the largest bottleneck in the sales cycle and leverage the brand’s most distinctive drivers to remove them.
- Maximize returns across the portfolio of marketing investment by adding focused analytics rigor to often-unfocused budget debates.
A company can achieve 25 – 35% decrease in salaries and overhead costs immediately. The base salary paid to employees does not represent the total cost to the company. There is the cost of benefits such as FICA, insurance, workmen’s compensation, pension plans and profit sharing plans. Many marketing employees also enjoy incentive and bonus plans. In addition, employers must also pay employees for holidays, vacation, and sick days.
Typically, there are ten paid holidays each year and a minimum of two weeks of vacation. There are also costs associated with hiring staff, such as job posting and advertising, resume reviews and interviewing expense. When you outsource your marketing functions you pay only for the work performed.
WHAT RESULTS AND BENEFITS CAN BE ACHIEVED?
Outsourcing marketing allows companies to focus their resources and control their headcount. This form of operations allows the company to hand over full responsibility for the outsourced function within clearly defined management guidelines and then monitor the performance.
When you break down the costs of a full marketing department internally, versus the cost of outsourcing with an external partner, the business case begins to tip in favor of not allowing the “Context” to conceal the “Core.” The following elements would be common to build out a high-quality and stable relationship in a typical small organization with gross sales revenues of $20 million.
Annual Salaries & Overhead
|Marketing Web Manager||$86,750||NC|
|Total Approximate Annual Cost:||
$100,000 (avg est.)
SOURCE: TCG 2015 Salary Guide
The table illustrates a realized cost savings of 51.57 percent. Consider the example of a high-performance marketing partner that offers you results, flexibility, and reduction in staff and overhead.
Companies can typically have equal if not better results while maintaining product and service quality for a fraction of the cost by turning to an expert in sales and marketing. And what is the cost of a bad hire?
The commonly referenced cost of a bad hire is 2.5 times the annual salary. In most small to mid-sized organizations, marketing can be outsourced while they focus on the core. Cost is the most popular reason for outsourcing. You get an entire team of experts, a proven system, and regular accountability…all for less than the price of hiring one employee.
However, strategic reasons such as improving company focus on core business and improving quality are next. On the revenue side, with a professional outsourcing company, you can see anywhere from 15 – 25% sales revenue gains.
The partner you choose is important and should have a blend of business acumen, sales and marketing know-how, and creative insights all put together to gain holistic insight that will allow them to coordinate a complete solution to drive profitable growth for you quickly.
By carefully synchronizing strategies and coordinating tactics and their use, you and your outsourcing partner can create high impact campaigns that generate more new customers, while maximizing the loyalty and profitability of existing ones.
Listed below are just some of the key benefits:
- 15 – 25% sales revenue gains
- 25 – 35% reduction in salaries plus overhead costs
- 10 – 25% cost savings in overall marketing spending in programs
- Improve the return on marketing investment
- Increase profitable growth
Step 1 (Internal Assessment): The first step is to determine what exactly you need. Evaluate your current staff for specific skills and experience in marketing and communications.
If there are select staff members who possess such skills, review their current role on the team to determine if they can take on other responsibilities without overwhelming them or placing them on unfamiliar grounds. Here is a list of questions to evaluate your internal team.
- What were their previous jobs and roles in other companies prior to being employed with you? (You may be surprised to find out what hidden skills and passions your associates have that can be used to support your objectives and needs)
- Do they have a formal education in marketing and/or communications?
- Who typically offers innovative ideas for marketing the company and selling your product and/or service offering? Who helps you to think proactively?
- For those that may possess marketing and/or communication skills:
- What is their current role in the company and how much time do they spend on key tasks based on their present responsibilities?
- Do they have ‘extra’ time to dedicate to the marketing efforts?
- Are they even interested in pursuing this opportunity?
- Does their current role relate in any way to marketing and communications activities for the department and/or entire company?
- Do they have any creative or design experience?
- What writing skills do they possess? If they do a lot of writing for the company in the form of collateral, proposals, RFP’s, internal communications, etc., evaluate those pieces to see what quality and communication skills they have.
- Are there good communication and working relationships between marketing and sales?
- Are sales forecasting and marketing potential measurements soundly carried out?
By investigating these areas, you will quickly be able to see what skills you have in-house and what will potentially need to be brought in from an outside partner relationship.
Step 2 (External Assessment): The outcome of this step will result in providing a clear understanding of what key marketing and communication roles need to be outsourced and what the qualifications of such an outsource partner will be most needed in the immediate term. Some basic questions to ask potential partners are:
- How long have you been in business?
- What corporate and agency-specific experience does your team possess?
- Do you have specific experience in my industry? If so, what is it?
- What results have you produced for your clients?
- What is your account management process? How do you ensure quality throughout the process and how do you engage your clients in the project step-by-step?
- How many people will be working on my account and what are their specific roles? What value do you feel they bring to the growth of my business?
- Do you offer strategic planning as well as tactical and implementation services?
- How do you measure the success of your firm?
- How are you different (and similar) to others in your industry? What value can you bring to my company short- and long-term that others cannot?
- What services do you offer and conduct in-house – and – which ones do you outsource to service partners?
- What is your pricing structure – project-based, a monthly retainer, hourly rates by service, and blended fee?
This paper shows how leading organizations use marketing outsourcing as a business strategy, to gain a competitive advantage, and grow profitably. Listed below are just some of the key benefits.
- 15 – 25% sales revenue gains
- 35 – 60 % reduction in salaries plus overhead costs
- 10 – 25% cost savings in overall marketing spending
- Improve the return on marketing investment
- Increase profitable growth
The degree of these results will increase over the next 12 – 18 months as:
- More organizations seek ways to improve sales and reduce costs
- More companies adopt outsource marketing
- Organizations focus on what they do best
Matrix Marketing Group focuses on business results and best practices that are currently taking place today and in the future. We see the following trends occurring in your industry:
- Part or all of the marketing activities being outsourced
- Companies will increase the use of marketing outsourcing as a means for a business strategy to improve business results and manage their cost structures effectively
Matrix Marketing Group provides a marketing outsourced evaluation, specifically designed to help organizations identify specific actions to initiate or improve their sales and marketing efforts. To find out more please call us at (866) 456-7277.