Why Every Marketer Should Run a P&L

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A profit and loss center (P&L) is the heart of business. Based on many online comments from communicators and marketers about the way businesses should work, it is clear they have never run a P&L. And until you run one, you really don’t comprehend the totality of a business.

Let’s not confuse a P&L with a consultancy, either. Single person consultancies do not have employees’ families relying on them for wages week after week, month after month. Running a P&L is a serious responsibility that causes greater accountability in decision making. Here are four reasons why a marketer could benefit from this experience:

1) Better Respect for Measurement Statistics

Rather than saying all relationships online matter and that statistics are irrelevant, online marketers would realize they need their social media efforts to produce tangible ROI and outcomes. That’s not to devalue relationships. That means invest more in the relationships that work in social media and abroad, and STOP investing in communities that aren’t populated by core stakeholders.

If two social networks yield better results than one, a company may determine to invest in the relationships that are working, rather than spread themselves thin or burn resources in areas where their natural community is not strong. Whatever the ultimate decision, to not consider measurement statistics is inexcusable in any serious concern. They demonstrate how your P&L is performing.

2) Getting Beyond Attention Into Real Action

Similarly, marketers like to claim attention as a success. Earned media impressions online and in traditional media helps build grassroots momentum and trust. However, these metrics and efforts alone rarely achieve anything more than attention itself. Integrated into a veritable marketing and sales program, attention can help create actions, which in turn produces sales. Running a P&L teaches you to look at the whole marketing picture, not just the hype.

3) Appreciation for Your Whole Team

Marketers love stars. Managers love teams. When you manage a P&L you learn to appreciate how an entire team contributes to your success. For every public star, there are often multiples of role players who actually do the work, keep the lights on, close leads, and generally comprise the business. Great teams make for sustainable businesses, not individual performers.

Stars can play well within teams, but in a P&L you also learn that many of them are ultimately replaceable. Losing many members of your team in a short period can cripple your business. Running a P&L teaches you that talent management nurtures the whole team.

4) Valuing Great Products & Services

When you have a bad product or service, it is hard to promote it. But many companies do, and marketers like to complain about it.

What’s hard to actually do is build a great product or service. Until you actually have a product or service that beats the daylights out of the competing services, you cannot understand how difficult this is. Running a P&L teaches you to appreciate what it really takes to be great. And it goes well beyond marketing advice.

Conclusion

They say executives should spend a week or two a year in front line jobs to understand the full nature of their business. Similarly, marketers should spend at least a year of their life running a P&L so they understand how their brand strategy fits within the larger context of sales, marketing, recruitment, operations and yes, overall corporate strategy.

P.S. Gini Dietrich and I discussed this blog post topic in New York City last May.

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  • Juan Barnett

    Well said. KPIs, ROIs, etc have their place. In the world of social media, those terms are blasphemy. There is a difference between measuring where to spend social media resources vs if to spend them.

    • Anonymous

      I love getting berated by social media experts for insisting on measurement. It makes my day!

  • http://www.b2bbloggers.com Jeremy Victor

    This is a super valuable exercise for anyone — great recommendation Geoff. I wonder how many marketers could actually do it. I don’t mean that in a demeaning way, just in a right brain/left brain kinda way. Lots of marketers are marketers because they don’t have an affinity for numbers.

    • Anonymous

      Marketers don’t have an affinity for much accountability in any aspect. LOL. OK< that was harsh.

      Really, I think even failing in this regard is an eye opener. You don't have to be great, you just need comprehension of the whole picture.  Thanks for the comment, Jeremy.

  • http://twitter.com/kamichat Kami Huyse

    Amen

  • http://spinsucks.com Gini Dietrich

    Note to self: Delete the blog post draft about social media “experts” not having P&L experience.

    • Anonymous

      Crapola. I fgured after we had talked this post topic about in May that it had died given the time. Please forgive me. I should have checked first. Amended with link. :/

      • http://spinsucks.com Gini Dietrich

        I was just teasing you! I’ve been playing with it a little bit in some of my posts, but hadn’t written a full on post about it yet. You didn’t need to amend the post at all, you goof! I’ll just plagiarize this for Spin Sucks. 

        • Anonymous

          Figures, you hack :P

        • Anonymous

          Figures, you hack :P

        • Anonymous

          Figures, you hack :P

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  • http://twitter.com/megmroberts Meg Roberts

    Thanks for sharing this post, Geoff.  I’m a little ashamed to admit I was not familiar with P&L before seeing it pop up on Gini’s blog a couple of times this week.  Since I am still relatively new to the communications industry and work at a large agency, I’m not sure when I’ll be able to run a P&L report on my own.  Do you have any recommendations or advice on how someone in my position could learn more about this process? I certainly think it’s valuable and would like to understand it better.

    • Anonymous

      The best way is to tie your metrics to leads or actual sales.  So when the agency is brought on to do a job, see if you can tie it to a financial outcome.  The other way to do this is to ask your manager to map your billable hours to your total cost of output so you can start seeing how you pay for yourself, your bennies, your office space, etc.

    • Anonymous

      The best way is to tie your metrics to leads or actual sales.  So when the agency is brought on to do a job, see if you can tie it to a financial outcome.  The other way to do this is to ask your manager to map your billable hours to your total cost of output so you can start seeing how you pay for yourself, your bennies, your office space, etc.

    • Anonymous

      The best way is to tie your metrics to leads or actual sales.  So when the agency is brought on to do a job, see if you can tie it to a financial outcome.  The other way to do this is to ask your manager to map your billable hours to your total cost of output so you can start seeing how you pay for yourself, your bennies, your office space, etc.

  • http://termpaperwriter.org/ custom paper

    Very interesting read indeed.

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  • http://www.m4bmarketing.com Susan Oakes

    Hi Geoff,

    I saw this just being tweeted so I thought I would come over and read the article. I agree with what you are saying. I can only talk from experience in my days as a corporate marketer. We always had responsibility for the P&L and I still remember having to explain at one time to head office why the net profit of a particular product went down by .07% and what I was going to do to fix it. 

    I know in consumer companies marketers have responsibility and I am not sure why it doesn’t occur in other companies. 

  • http://fastessays.co.uk/dissertation dissertation help

    Dear Geoff!
    I agree with you in most main points of view but when you wrigt about P&L the best its not always true!

  • http://twitter.com/skypulsemedia Howie at Sky Pulse Media

    So I was wrong. Based on @ginidietrich:disqus and your comments on  Danny Brown’s post I thought I would be bringing up Quora. Damn!

    I bring this up all the freaking time. My background is not marketing. I have a Finance Degree. I spent 14 years in B2B sales mostly Industrial. I have worked in every Industrial Industry except mining. I have worked in almost every part of a company except HR and Accounting. I even spent 2 years on the North American Standards Committee that determines performance and safety requirements for Hydrogen and Natural Gas Fuel Systems for Vehicles. I know Operations, Warehousing, Procurement, Customer Service, Shipping, Quality Assurance, Manufacturing, Sales, Business Development, Project Management, R&D, Engineering blah blah blah….. All of this is measurable! Every single one is measurable. So when the CEO and CFO meet with all the VP’s and discuss budgets and investment they automatically will allocate resources to the places they can see concrete ROI for increasing sales, profits, or reducing costs.

    And when marketers can not show ROI they get left with the crumbs. Simple as that. And then they cry. And they wonder why CMO’s have the shortest tenure of any C-Suite position. All because they can not understand P&L. Even if they are rocking it and helping the business they can not figure out how to present this to the CFO and CEO.

    If I am the VP of Sales ate Pepsi and want to hire more direct sales people to attack the fast food and restaurant industry to flip accounts from coke to pepsi, and I say to the CEO and CFO here is the cost per hire. Here is how much we currently get per sales rep in return. Why do you spend $1.1 billion on Marketing for TV, Out of Home etc etc. What if we just spent $1bil and give me that $100mil? And the CMO says but our sales will slump. And I say Really? Prove it. And they say ‘Well I can’t just trust me it will happen’. I get my $100m

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