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Marketing Returns?

15 September 2007

Does marketing help the FM company? Does the investment into marketing activities and a professional marketing team provide a healthy return on investment for the business? Anna Hutton-North examines the options

IS MARKETING AN ART OR A SCIENCE? It is one of the few business functions that doesn't necessarily have a clear alignment between the action and outcome. Many in the financial community struggle, trying to relate money spent on marketing activities with the work won. Marketing by its very nature is complex and intricate; its definition of "the management process responsible for identifying, anticipating and satisfying customer requirements profitability" illustrates its wide remit covering everything from brand profile, customer identification, work winning and contract retention.

For FMs, along with 75 per cent of the companies in the UK, there is the added complexity of marketing services. It is difficult for clients to visualise what they are buying, and how it is going to fit into the organisation. These challenges can seem particularly daunting for support services companies when their services are seen as 'grudge' purchases by their clients; something needed, but possibly not valued.

So does marketing help the FM company; does the investment into marketing activities and a professional marketing team provide a healthy return on investment for the business? The answer has to be "what value could marketing bring to the company that it doesn't have already".

Marketing can help FM companies at a number of levels. At the highest level, it provides the board with a clear direction; it demonstrates which services to sell to which groups of clients in order to achieve the right levels of profit. At a more operational level it helps to secure and retain work through a marketing mix that combines branding, press relations, advertising, market research, competitor analysis, client relationship management and marketing literature.

Traditionally FM companies have employed marketing teams to focus on the operational activities where there is an often uneasy relationship is required between marketing, business development/sales and operations. By un-coupling marketing from the strategic direction of the company it means that information on clients, opportunities and trends in the market are not encapsulated into the assumptions when building the business plan. This lack of consistent direction can also mean the marketing activities are not tightly focused on the overall objectives, resulting in a lower return on the marketing investment.

So is there a marketing blueprint for those marketing directors striving to make their company a prominent FM market leader? Unfortunately not. One answer is to borrow best practice from another services industry where the top players have similar turnover profiles to the UK major support services companies. The professional services industry is a good example. FM companies and accountancy firms both share the challenges of grudge purchases, legislation, size of market leaders, the need for consistent delivery and the need for a 'sales orientated culture'. It is interesting to see how accountancy firms deal with the challenges when it comes to increasing sales and raising brand profile. There is a common theme throughout which shows how marketing teams and operational teams work closely together throughout the whole life of the client.

....Grudge Purchases: Whether it's cleaning, engineering maintenance or annual accounts, clients view the purchase as a 'grudge' - one which they are compelled to buy. By demonstrating to clients that there is a return on the investment, it generates a value for that service in the mind of the client.

....Legislation: Both FM and accountancy face legislative demands which they need to comply with in order to do business. For FM one of the overriding issues is health and safety an associated legislation; for accountancy firms it is compliance and providing complete objectivity. Accountancy firms have taken this challenge and converted it into a benefit they can provide to clients; there is the same opportunity for FM companies to switch H&S from a challenge to a client benefit.

....Consistent Delivery: Whether it's your catering contract or your financial audit, clients want to know what they are receiving is value for money and that it is consistent with what they were promised. It's so easy to be able to over promise and under-deliver. One way the accountancy firms are trying to eradicate this issue is by ensuring the people who will deliver are actually involved with the tender.

....Everyone Sells: This is a key shift that has been evolving over the past few years. The firms are equipping their partners with sales and marketing skills so that everyone becomes an ambassador for the company, regardless of the job title. By encouraging a sales orientated culture, you increase your sales force without increasing the overhead. It also means the people selling also deliver; removing the chance of over promising and ensuring there is consistency in the client relationship from targeting, bidding through to delivery. It also means the people involved in any rebids are also those who have the operational experience - another huge possibility for FM companies to consider.

Marketing is seen as an intrinsic part of business for the accountancy firms; the glue that interacts with every other function and ensures consistency of message, approach and beliefs. Marketing within FM, on the other hand, is often relegated to people who produce brochures and organise client hospitality. The accountancy firms have recognised the value of investing in teams of professionals who actively help to win and retain clients not only through the tender process, but even before the client relationship has started. The average size of the accountancy sales and marketing team is likely to be hundreds - PricewaterhouseCoopers has 250 sales and marketing professionals in the UK alone. Compare this to the similarly sized FM companies where the teams are likely to be 10s. This goes some way to explaining how the top accountancy firms are enjoying growth rates of circa 15 per cent annum against a slow growing market.

But, it isn't just about employing more people - it is also working more efficiently and effectively. At Ernst & Young, one of the Big Four accountancy firms, they looked for new ways to keep their brand consistent whilst removing duplication of effort. They introduced an interactive tool that ensured the look and feel of the brand guidelines were retained for everything from brochures to exhibition stands, but without stifling the marketing creativity - it was just working smarter.

There is a rule of thumb that says the investment into marketing should be circa 10 per cent of the revenue. To win work you need to invest into the opportunities at every stage, and at every level. For Deloitte they develop their marketing strategy with an outside-in approach. Annually the marketing team works with the firm's partners to understand the key issues that clients are dealing with, and then assesses Deloitte's competencies and services that help clients to address these issues. Marketing campaigns are then developed to demonstrate knowledge and articulate the offerings to ensure the corporate objectives are achieved. By having both the board level and operational level input into marketing, it ensures the firm becomes totally focused on the opportunities to pursue.

The FM sector obviously has a number of differences to accountancy firms. In general these relate to the delivery and people elements of the business. The number of employees (based on similar turnover) is much higher in the FM industries: 40,000 for MITIE Group plc compared to 7,000 for Ernst & Young (UK). The FM employee base is also likely to be made up of 'blue collar' workers, and this provides the additional challenges to the company who wants to communicate internally to a mixed workforce. The type of communications is also limited; not everyone will have access to a PC to read emails, or be able to view the company's intranet. Shift patterns mean that team meetings or corporate roadshows don't necessarily reach all people. In addition English is increasingly often not the first language.

Client expectations are also different. Accountancy is seen as a 'trusted profession' where the client comes into contact with specialists. The interaction with FM is often through the people delivering the hard and soft services and perceptions of the FM provider are based on the workforce's behaviour.

This affects the marketing investment. Accountancy is creating a culture of 'selling' in order to achieve the ambitious growth rates. Envisage if every FM employee was an ambassador for the business focused on delivering hard and soft services effectively and efficiently - think of the power in wining and retaining contracts. Think Disneyland and you start to see the impact it can have on customers in terms of service experience and consistency. Customers know what to expect each time they visit, and Disney works hard to counteract any negative experiences (ie queuing) from the overall experience so that clients leave with positive feelings. This cultural shift would be a major differentiator for the FM company who achieves this.

Would the investment made by the accountancy industry be viable for the FM sector? The response would need to be: what value could marketing bring to the company that it doesn't have already. In order to answer this we need to go back to the three original objectives - can marketing deliver improved performance by increasing sales without reducing profits and becoming number one player in the market. For the FM company it is an easy equation to calculate. By identifying the value of lost contracts annually and adding this to the value of non-profitable contracts (that aren't loss-leaders for other services) provides the company with the lost opportunity cost. Offset this against the investment required to build up a sales and marketing team that can work with the operational board to identify profitable services that should be marketed; the cross selling opportunities (to increase the revenues per client); and the must-retain contracts, and there is a clear demonstration of whether the return on investment is viable for the company.

By using the blueprint of the tried and tested methods in other industries, it is possible for the FM company to achieve above market average growth. Generating a corporate culture of selling from CEO down to front line operatives, the FM company creates a central goal and shared set of beliefs that ensure consistency. By focusing on profitable services when seeking and retaining clients the company performance improves. The investment into a marketing team provides a healthy return that helps the company both achieve its corporate objectives and deliver improved continuous client satisfaction.

In 2001 Deloitte's felt that its brand was ill-defined and poorly communicated, and it limited their ability to work with the large global companies they wished to target. Investment in global brand rationalisation and reinvention of Deloitte has taken it from a mid-tier player to number two in their market.

PricewaterhouseCoopers, the UK's largest accountancy firm, believes in dedicated market spend to ensure it retains the world's foremost professional services brand. It actively seeks to develop a client experience distinct from its competitors, and aligns its marketing spend against the corporate business priorities to focus on the areas of work it wants to win.

....Anna Hutton-North is Head of Internal Communications and Marketing for KPMG, and was formerly Head of Marketing at MITIE Group and at Carillion Business Services

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