I often get email questions from my confident readers (i.e. those willing to take the risk of asking) about issues they are facing. The most recent was a great inquiry from Shari, a talented a six-sigma process designer who was asked to get involved in assessing a Marketing team in the financial services industry. She asked:
Do you have any ratios that show how many Marketing strategists per product team a firm ideally needs?
We are working on our org. design and trying to assess if we’re too ‘heavy.’ Have you had any luck judging that by $$ spend? # products supported? # product partners etc. Feels very arbitrary…so looking for anything slightly more concrete…a gearing ratio of sorts. We have strategists and they work with a shared services group that does EM, DM etc.
Here is my response:
At least you asked an easy question. 😉
I assume when you say “strategist” that you mean a marketer who orchestrates marketing planning and execution for a product. Correct? If so, I’m going to give you a consultant answer.
Finding a single ratio for “strategist” bodies is hard because you can end up comparing apples to oranges because each product differs by market position, channel, brand power, market size, maturity, product/market complexity, competitive landscape, salesforce sophistication, sales cycle length/complexity (B2B or B2C), etc.
Having said that, I think a very easy ratio to look at is Revenue per Employee or Marketing Qualified Leads per Employee. These are a quick way to assess marketing efficiency. You can look at it by role function, product, market segment, etc. to compare internal performance product to product. The flip side would be to look at Cost per Marketing or Sales Qualified Lead.
Here are a few more thoughts on identifying the correct ratio:
1. Be sure to start by defining Marketing’s purpose in the business (i.e. Make sure the Business agrees on Marketing’s role.)
This is the point I make with the Productivity School vs. Growth School of Marketing Thought in the Optimal Marketing Organization article. Is the expectation for Marketing to control costs and make things pretty or deliver strategic impact and drive revenue?
2. Determine the key success measure for Marketing and the “Strategist’s” contribution to it (e.g. revenue, brand awareness, client loyalty, MQLs, etc.).
Marketing can 1. Generate Demand, 2. Produce Leads, 3. Provide Sales Support or 4. Develop New Products and Services. Some these marketing areas/priorities require no “strategists,” others a few. If it’s No. 1. or 4., you need more strategists; if it’s No. 2. or 3. perhaps none; if all of the above, then lots because they are different strategic disciplines. The answer for “Is the function ‘heavy’?” depends on the business’ expectations for the marketing function and what it takes to deliver it. See attached metrics map for measures of “Production” or “Impact.”
3. Define the problem you are solving
Clearly, there is a perceived gap in Marketing’s performance. If Marketing is being asked to deliver X but is delivering Y, ask what is actually causing the gap? I see many firms wreak havoc attacking the wrong “Marketing” problem. A ratio cannot measure misaligned expectations or cultural dysfunction.
Ask questions like these to get to the right problem definition:
- Why do we think we have too many thinkers and not enough doers?
- Are business expectations misaligned between leadership, marketing, and sales? How and Why?
- Are there conflicting performance measures creating dysfunctional behavior?
- Is the firm confusing people, process, and technology issues?
- Is marketing compensating for shortcomings downstream in Sales or upstream in Product?
- Do we have the wrong people in the role or the wrong role for what we are trying to accomplish?
I have attached a few other benchmark reports to explore from Gartner, Salesforce, and ITSMA.
Take what you like and leave the rest!
High-performance marketing teams think in terms of performance ratios for two important reasons.
First, ratios reflect the powerful relationship between inputs and outputs (i.e. for any input of time, money, or bodies what output did I get in return?). A singular number like leads generated is useless if you don’t understand what it costs to generate them or how much revenue if any, those leads ultimately produced. Every strategic metric must be seen through this lens.
Second, ratios are the simplest and most direct way to measure what matters most to the firm. If the firm is asking Marketing for strategic impact, then revenue, market share, NPS or brand power will be in their key performance indicator’s numerator. Budget dollars, advertising spend, event costs, collateral printing, etc. in the numerator indicate a Productivity School mindset. A marketer need only look at the numerator of their chosen ratio to understand what Marketing’s real objective is.
Shari and her firm’s marketing team are heading in the right direction. Is yours?