Marketing is a profit center

  Written by Louis Gudema

I can’t tell you how many times SMB owners and senior executives have said to me, “We can’t afford to do marketing” as if it were a cost center. Marketing done right returns many times in revenue over what it costs.

Companies aren’t always willing to share their marketing ROI data, but here’s a greenfield example I ran across in the annual report of AFA Protective Systems, a $70 million company that installs fire and burglar alarms and other types of security systems. In their 2014 annual report the CEO wrote:

Last year I reported that we began to embrace the modern age of marketing. During 2013, the company decided to experiment on a limited basis with various forms of marketing to increase our visibility to potential customers and in turn sales. The year end results in this regard were very encouraging. In fact, we traced new booked sales attributable to these efforts and learned that they were produced at a rate of ten to one in comparison to amount spent.

Ten dollars of revenue for every dollar of marketing – that’s a return that should be profitable for any company. They went from 2% annual revenue growth over the previous three years to 6-8% growth over the next two years. If you do a search for marketing ROI case studies you can find many more examples.

Often there is low hanging fruit, especially for companies that have done little marketing in the past, that can show fast results and build confidence to venture forward.

Typically the largest companies in an industry are adept marketers. They didn’t get large and then started marketing; they got large because they marketed.