Digital Transformation: More Money or Less Cost?

If you had the choice of making more money vs being more efficient with the family budget, which would you pick?

Ever since the newly formed digital world started back in the mid 90’s, there has been a constant connection between digital and automation. The story goes that since digital is really technology and technology has always been about automation, then digital and cost reduction must be tethered together.

But is the story of digital really about Amazon and the incredible efficiencies that have now been created to reduce the costs of getting goods? Or is it the story about how all these companies with new ideas and products now have access to a new audience that they never dreamed of having?

You can see the same message in the current Account Based Marketing buzz. The increase in digital marketing reach is too broad and now marketing is stuck inefficiently filtering and qualifying instead of trying to engage the right customer and get them to purchase. Better to just do a better job of targeting the prospects that we know we want. Which is the direct opposite message of the ability to acquire unknown new customers in new geographies who decide for themselves that they are interested in your goods.

So more revenue or less cost?

The answer of course is both, but which side of that equation resonates with the needs of your company? Are you trying to be Amazon or one of the product or services companies? If you’re not trying to be Amazon, maybe you should think about digital within the context of creating revenue and not seeing it as just one more way to reduce costs.

The beauty of digital is the fact that for an unbelievably historically low cost of entry, you can test and learn your way through a series of new markets to not only guess (aka make inferences based on past product history and competitor penetration in the market) where your success will be, but actually try it out and see what your prospective customers think. I’m advocating for investing in increasing revenue, but not against being thoughtful about spending money. Targeting is critical.

The current way that most companies split their marketing and sales budgets, it seems that companies are giving these two different mandates to what should be the same function – Sales make us more money and Marketing make it so that more money costs less to make.

Is it so surprising then that most Sales and Marketing organizations are misaligned? I can’t tell you the number of conversations that I’ve had with sales teams that have scoffed at the wasted spending on marketing automation and other marketing toys and can’t understand why that money couldn’t have gone to one or two more revenue generating resources that would actually help the company grow.

First step in the relationship rehab process seems to be to acknowledge the problem. If marketing is determining the market that you are targeting, they should be working hand in hand with sales to actually grow the business – not save money on growing the business. I’m not saying that margins don’t matter, but the cost side of the equation should be a joint activity with sales along with pricing to make sure that growth will actually benefit the company.

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