2 Reasons why IT Resellers should consider Outsourcing their Marketing
Written by Jonathan Calver, CEO, StrategyMix
This blog has been written for the directors of IT resellers with between 10 and 200 employees.
It outlines 2 very compelling reasons why you should outsource your marketing, which is to a) adopt new marketing techniques and b) improve your marketing ROI.
Typically, one of the following 2 scenarios will apply to you:
#1: You have no marketing manager (part-time or full-time) – so you are not doing enough marketing and what marketing you do, is taking up too much management time.
#2: You have a marketing manager (part-time or full-time), but your marketing doesn’t seem to be generating much business.
New Marketing Techniques
The type of marketing that you are running, assuming you are doing at least some marketing, will be dependent on the level of the marketing expertise within your company.
There are broadly 2 types of IT marketing:
- Traditional “mass marketing”, where the primary objective is lead generation
- New “micro marketing”, where the primary objective is relationship building
You can easily self-asses your marketing to determine which type of marketing you are currently doing.
You are doing traditional marketing, if you are mostly emailing your database with relatively generic content to generate leads which you then pass on to sales for lead qualification. You will be finding that this type of marketing is not working very well for you.
You are doing micro marketing, if on the other hand, you are running a series of targeted round-table events where your sales people sit next to and engage with high value prospects. The difficulty lies in being able to attract the high-quality prospects, which requires new marketing techniques and expertise.
It is very difficult to find employees who have expertise in new marketing techniques, such as Account-Based Marketing, because these techniques have very rarely been applied in the channel.
In this scenario, it makes sense to contract an outsourced solution provider, who has highly sophisticated processes, glowing testimonials and a proven track record.
There are 2 ways to improve your marketing ROI.
The first is to do more effective marketing, by adopting new marketing techniques, which in turn requires superior marketing expertise and capabilities, as explained.
The second is to reduce your marketing activity costs, so you get “more bang for your buck”.
Outsourced marketing is more cost efficient than employing a marketing manager. This is for 2 reasons:
#1: Employment Benefits
Employees have associated employment costs, such as pensions, benefits and office equipment. These additional costs create a multiplier, which is generally equivalent to about 20% of the salary.
#2: Management Time
Employees need to be managed, which takes management time. Management time is very expensive, particularly if you include the opportunity costs which result from being taken away from more strategic tasks.
#3: Fixed Cost Marketing Activities
With outsourced marketing, you can benefit from fixed cost marketing activities. This contrasts with an employee where you get a fixed cost (ie: their salary) but there is less certainty as to the quantity or the quality of the marketing activities that you will get for your investment.
Economics of Outsourcing
It is the economics of outsourcing that is driving the company restructures within so many industries, as financial managers take advantage of fixed cost contracts, made possible by operational efficiency.
Outsourced IT is an obvious example which will be familiar to IT Resellers. What will be less familiar is the idea that they can also benefit from the economics of outsourcing by outsourcing their marketing.
In the end, it comes down to the simple question.
Do you want to increase your employment costs? Or would you rather pay for more and better marketing?
As a very simple comparison, a typical marketer in say Australia, might require a salary of A$50,000 pa. To this you need to add a multiplier of approx. 20% to cover employments costs, such as employee benefits and equipment, which brings the total cost to about A$60,000.
For a similar investment, you could:
- Allocate 20% of the costs (so A$12,000) to strategy development, vendor negotiations and internal discussions
- Spend the remaining A$48,000 on 12 ABM-style Round Table Marketing Campaigns (at A$8k each, assuming 50:50 funding with a vendor).
Obviously, this is a relatively simple example and could easily implement a different mix of marketing activities, but it brings into sharp perspective how the economics of employment compares with the economics of fixed price outsourcing.
And while this example was for Australia, the numbers and ratios are similar in most “western economies”.
There are 2 main reasons why an IT resellers might consider outsourcing their marketing
- Improve the quality of their marketing, by adopting new ABM-style marketing techniques
- Benefit from the economics of outsourcing, driven by operational efficiency and fixed cost marketing activities
I hope you have found this blog to be useful and thought provoking. Let me know if you have any questions or if you would like to set up a 30-minute call to discuss how outsourcing your marketing can help build your business.