Debit Marketing, Credit Sales
When asked how my career transition from Finance to Marketing is going, I always explain how accounting is much more black & white. While it’s not easy, you generally know what you need to do, and you know when you’re finished. With Marketing, it’s really hard to feel that same sense of accomplishment. You’re never done and there’s always more you could have done. Thoughtful accounting and budgeting paired with an alignment with your Sales team, however, can help with that feeling of accomplishment and lead to a lot more beer sales.
The Chart of Accounts
Accounting entries aren’t like a G-mail message where you can tag multiple categories before archiving it, allowing each e-mail to live in multiple places. Each expense needs to have one specific home in the general ledger, for purposes of the Income Statement (Profit & Loss). When I started at Revolution, we accounted for Marketing like I’d imagine most small to medium-sized businesses do. We had accounts for major marketing expense types like Design, Signage & Printing, Festivals, Ad Spend (ie Facebook Ads), Point-of-Sale (Stickers, buttons, etc.), and on down the list. Holistically this makes sense when looking at results from the top level of the company.
In our case though, we’re covering different territories with different wholesale partners, each with a unique Revolution employee in charge of sales in that geography. Since a key part of selling includes the connection into marketing efforts, we found that the categorization method above provided little visibility to individual members of the Sales Team. They see one giant number that impacts the entire company, but the presentation makes it challenging to police as well as leverage the dollars being budgeted, because each geography is co-mingled together.
Category or Geography
About 6 years ago, I put our leadership team to the question: Which is more important to you when viewing the company financials? Seeing marketing spend organized by category or geography? Given the way we’re organized and the wide number of states we distribute to, geographical visibility was prioritized for any in-market expenses. So as an oversimplified example, instead of:
Account 101 Marketing - Festival Travel
Account 102 Marketing - Point-of-Sale
Account 103 Marketing - Digital Ad Spend
We’d chose to see:
Account 101 Marketing - Minnesota
Account 102 Marketing - Wisconsin
Account 102 Marketing - Iowa
By choosing a geographical approach, not only does our reporting mirror the way our sales team and distribution footprint is organized, it sets up our sales team to have a greater involvement in the company’s budgeting process. Doing so adds increased sight lines, improved connection to the big picture, and greater accountability when ensuring market/marketing spend stays to plan.
Alignment Leads to Accomplishment
By better connecting the accounting for marketing into the sales team, a more structured cross-departmental budget process is forced into place. As a result, a more predetermined understanding of how much marketing is enough marketing is bought into by all the stakeholders. With that budget in place leading into a calendar year, matched up with the company’s Annual Business Plans (ABPs), the colorful efforts of marketing get more focus, better execution, and a much needed dose of black & white.
As a longtime worker in the industry and now 3 years to my own facility , I’m curious on how you would recommend a smaller company transition into having sales staff.