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Case study

Transforming Marketing From a Cost Center Into a Profit Center

Return on marketing spend moved from −$2 to +$7.50 per dollar, revenue up 27%, margin up 9 points.

Client
Wireless distribution
$7.50RETURN PERMARKETING DOLLAR+27%REVENUE, YEAR OVER YEAR−$2$7.50BEFOREAFTERClient results

The challenge

Marketing was a cost center returning −$2 per dollar spent, with no model for selling value-added services.

Every dollar in, two dollars lost

The client is a leading value-added supplier of wireless communications products: network infrastructure, site support, fixed and mobile broadband, and mobile accessories, with a heritage running back to the earliest US cellular networks. But marketing was running as a cost center, returning negative $2 for every dollar invested.

EVERY MARKETING DOLLAR, BEFORE$1INVESTED−$2RETURNEDZEROClient results
EVERY MARKETING DOLLAR, BEFORE$1INVESTED−$2RETURNEDZEROClient results

What distributors rarely execute

The opportunity was to do what distributors can do and rarely execute: sell value-added services and make money in the process.

The approach

We built a marketing agency model inside the business: a full range of marketing services sold to the distributor’s own customers.

An agency inside the distributor

The services were designed to deliver incremental revenue and hit lead generation goals at the same time. That gave customers more options, better service, and a reason to consolidate spend, while turning the marketing function itself into a revenue line.

WHO GAINS WHATA MARKETING AGENCYINSIDE THE BUSINESSFOR CUSTOMERSMore optionsBetter serviceA reason to consolidate spendFOR THE DISTRIBUTORIncremental revenueLead generation goals, hitMarketing as a revenue line
WHO GAINS WHATA MARKETING AGENCYINSIDE THE BUSINESSFOR CUSTOMERSMore optionsBetter serviceA reason to consolidate spendFOR THE DISTRIBUTORIncremental revenueLead generation goals, hitMarketing as a revenue line

The results

Return on marketing spend moved from negative $2 to a positive $7.50 for every dollar invested.

From −$2 to +$7.50 on every dollar

Both returns are drawn from one zero line at one scale: the old return below it, the new one above. Marketing is now operating as a profit center rather than an expense to be defended.

RETURN ON EVERY MARKETING DOLLAR−$2BEFORE+$7.50AFTERZEROClient results
RETURN ON EVERY MARKETING DOLLAR−$2BEFORE+$7.50AFTERZEROClient results
TOTAL REVENUE, YEAR OVER YEARBeforeAfter+27%Client results

Revenue up 27%

Total revenue rose 27% year over year.

MARGIN+9 PTSA 9 POINT IMPROVEMENTClient results

Margin up 9 points

Margin improved by 9 points alongside the revenue growth.

WHAT MARKETING IS NOWCOST CENTERAn expense to be defendedPROFIT CENTERA revenue lineClient results

A profit center

Marketing now runs as a profit center rather than an expense to be defended.

RelatedDemand generationTelecommunications

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