I don’t want to be overpaying for marketing leads. How can I manage the resources I plan to hire in order to help us grow new business opportunity?
Thoughts of the Day: Hiring the right vendor is a process. Focus on ROI. You’ll likely be using more than one vendor in marketing, so your job includes coordinating resources as well as measuring results. Think through how you plan to manage each marketing vendor.
As a small-business owner you just want to get things done. Seems faster and easier to make a bunch of phone calls to companies that you find through the web or names you get as referrals from your buddies, right? Wrong! Might save you time upfront, but leads to lots of headaches and misfires as you hire without understanding the fit between what you need and what the vendor you hire can actually do for you.
Establish clear criteria — what it is that you want to get done. What does this vendor or group of vendors have to deliver in order to pay you back for hiring them? Keep total marketing spending around 10 to 20 percent of gross profit, which, depending on your percent of gross profit, could translate to a small percentage of total revenue, usually in the range of 3 to 10 percent of total sales.
Define what you really want to accomplish in terms of total marketing program success. Think about:
• quantity (number of leads delivered to sales);
• quality (close ratio between leads and sales);
• speed (average and median time from receiving a lead to closing a sale);
• exposure (more followers);
• dollar payoff (increased revenue %, gain in gross profit %); and
• changes to growth with current or new target markets — measured in dollars and percent in each target market.
Make sure all potential vendors know what your top success measures are.
Use a request for proposal (RFP) process to gather information from a variety of vendors. With the right questions, you’ll get lots of viewpoints from competing vendors on what to look for and how best to set up and manage a relationship.
Start your RFP with a statement of what you hope to accomplish in marketing — your marketing success goals. Include the following questions in your RFP:
• Vendor’s experience working with each target market that you’ve identified.
• Recommendations for approaching the puzzle of how to achieve your total marketing success goals.
• Vendor’s experience working with companies similar to your company — companies of similar size, target market, experience in marketing.
• Ask for budget recommendations and suggestions on how to spread that budget across multiple initiatives.
• Recommendations on what to expect for results: tangible changes, report examples, timeline.
Pick a list of vendors to send RFPs to. Ask around for names of marketing vendors your peers have had success with. Do some searching for companies on the internet. Once you have a list of people to send RFPs to, you might want to start with a comment period — sending out your RFP as a draft and asking for suggestions. Once you send out the final RFP and get answers back, compare RFP results in spreadsheet, so you can see results side by side. Make a list of questions to ask in face-to-face interviews with each vendor.
You’ll likely be using more than one vendor in marketing, so your job includes coordinating resources as well as measuring results. Once you’ve hired your marketing vendors, get to work on building a team. Explain to each vendor their role on the team and how you expect them to interact with your staff and other marketing vendors.
Using information provided in the RFPs, establish reporting protocols for each vendor. Lay out the reports you expect to see each week or month. Ask the vendors to track their results in a spreadsheet you provide, so you can see how things are trending over time. Be open to suggestions from each vendor on how to best monitor progress, but don’t let anyone off the hook when it comes to regularly reporting on standard metrics.
Looking for a good book? Try “How to Write an RFP and Manage an RFP Project” by E. B. Diamond.
Andi Gray is president of Strategy Leaders Inc., StrategyLeaders.com, a business-consulting firm that teaches companies how to double revenue and triple profits in repetitive growth cycles. Have a question for AskAndi? Wondering how Strategy Leaders can help your business thrive? Call or email for a free consultation and diagnostics: 877-238-3535 or AskAndi@StrategyLeaders.com.