We are seeing a strategic loosening of law firm purse-strings. "Strategic loosening" means that projects and initiatives that impact the law firm's strategic goals are ear-marked for funding in 2011. This is good news for many marketing and business development department leaders, as they've been wanting to push their initiatives and investments up-market. It's good news for any marketer who saw budgets remain flat or decline the last two years.
There remains, however, a natural tension between the CFO in the law firm and the CMO or CBDO about ROI and the ultimate, measureable value of "marketing." This article by Pat LaPointe sums it up better than I've read in years - and certainly more succinctly than I have described it myself. Pat is the managing partner of MarketingNPV. The article appeared in today's Mediapost Online Metric's Insider.
The article is called: Send this to your CFO (Anonymously)
Attention, all finance executives seeking to understand the ROI on marketing investments...
Over the years I've learned that if I come home to find something in the house broken or missing, I'm much more likely to get the truth if I ask my kids "does anyone know anything about [fill in the blank]" than if I ask "Who broke this?" or "Who took my [whatever]?" The latter approach immediately sends everyone into damage control mode, while the former gives them a bit more latitude to respond in a responsible way. They sense somehow that I am more interested in addressing the problem than finding someone to blame for it. Even the kids who know they never touched the object of my immediate interest learn from my approach and become more proactive in disclosing their borrowing or breaking events in the future.
There are similarities where finance and marketing interact. Finance is often perceived to have parental-like authority in its control of the budget and its audit/oversight responsibility. So it is an unfortunate truth that too often the journey toward better insight into marketing payback gets derailed right at the start, when finance asks what they believe to be a logical and simple question, but which marketing interprets in the form of a challenge - For example,
"Is our marketing generating any value for shareholders?" or
"How do we know that marketing is working?"
These questions have the immediate and profound effect of putting marketing into "justification" mode and encouraging them to respond defensively. And since marketers are pretty creative and articulate people, they usually answer with a long stream of ad-hoc evidence, anecdotes, and metaphors that individually may not be so convincing, but in the aggregate create enough uncertainty within the executive committee to neutralize the question and deflect the discussion. The result is a stalemate, where the inherent subtleties of marketing are explained with superior powers of persuasion to cast doubt on the wisdom of cutting marketing spend.
Of course this doesn't help the organization get any smarter. In fact, it actually has a significant "insight opportunity cost," since all the resources that could have been directed towards the pursuit of true insight get diverted to "proving" that marketing works.
Read more on the Law Firm 4.0 Blog.