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How To Justify Hiring New Marketing Staff

One of the questions I always hear is:

“How many marketers should my firm have?”

That’s a very good question. And there are different rules of thumb used to answer that (like one marketer for every 20 people). I’m not sure if any of them are valid.

I think the real question is, “How do I justify hiring new marketing staff?”

So, today I’m going to show you exactly how to justify hiring new marketing staff in a manner that would be difficult to argue against.

But first, we have to answer a question that may have been in the back of your head for years…

“Is my own employment justified?”

Is Your Employment Justified?

This is an interesting question that I want you to consider. Is your firm losing or making money from your efforts? Or are they at least breaking even.

This topic was touched on at one of the Build Business sessions I attended. Some of the “insights” in that session were great. But one, in particular, seemed incorrect.

The Fallacy of Salary

Many years ago, I heard an engineer state that as long as he billed an amount that equaled his salary, he had justified his employment.

Wrong.

It’s the exact opposite. He just justified himself as a financial liability.

You see, what you cost a business is far beyond your salary. They have to lease the place you sit, give you the tools you need, match at least a portion of your healthcare, pay taxes on you…

…they pay people like administrators, human resources professionals, etc., to support you…

…they spend money to acquire and retain clients their staff can bill…

… They may even match your retirement contributions.

Believe it or not, those extra costs could easily amount to 150% of your salary. How much ranges from firm to firm.

At the very least, you better be billing 250% of your salary. I say, “very least” because if the firm isn’t making a profit off you, you are not fulfilling your function (which is to help your firm realize profits).

How That Relates To Marketers

In the Build Business presentation, they spoke about how marketers can justify themselves. They used a metric known as Total Payroll Multiplier (which you can learn more about here). They suggested marketers just multiply their salary by the total payroll multiplier to calculate the total return a firm should expect from their investment in you (i.e. The cost of having you around).

how to justify hiring new marketing staff

The problem is that calculation ignores several factors:

  • Non-Reimbursable direct expenses
  • All indirect expenses
  • The point, which is firms need to make a profit off you (or at least someone)

So What’s The Right Equation?

The short, but challenging, answer is:

All the costs associated with employing you + 10% of those costs (i.e., a reasonable profit).

The best approximation of that would probably be:

Your salary + (firm’s audited overhead rate x your salary) + (your salary x .10)

Because a lot goes into (and is left out of) the firm’s audited overhead rate, this will just be an approximation. But it will probably be closer than using the total payroll multiplier.

Let’s say you make $50,000. Your firm’s audited overhead rate is 1.5 (150%). Then the calculation would be:

$50,000 + (50,000 x 1.5) + (50,000 x .10)

$50,000 + $75,000 + $5,000

= $130,000

Revenue vs. Savings

$130,000 sounds like a lot, but there is another factor to consider. That is savings.

For marketers, it’s not always simply about bringing in revenue.

If having you around saves your firm $130,000, then you’ve just justified yourself.

And that brings us to the useful insight from that same presentation.

Justifying New Marketing Hires

One of the speakers talked about how he justified a new marketing hire at his firm. And he illustrated it with the chart below.

justify hiring marketing staff 2

The argument he was making is, since the cost of technical staff is higher than marketing staff, there would be significant monetary savings by bringing on a new marketing person (who could do that work).

He could have even done the math to show the difference between the current costs and a scenario where a marketing coordinator was doing the work (and the technical staff was billing).

Because of opportunity costs, there would be a stark contrast.

His pitch wasn’t that a new marketing coordinator would make the firm more money. It was that the savings would far outweigh the costs.

That’s a smart way to justify a new marketing hire. Do the math and answer this question:

How much more money would the firm save or generate by hiring this new person?

Do you think this is the right approach? What do you think is the best way to justify new marketing hires? Let us hear your thoughts in the comments.

Is Marketing Professional Gambling?

Marketing is gambling

Remember how you felt the last time one of your marketing initiatives worked? We’ve all experienced that. It feels tremendous. It feels like you are in command of destiny.

But they don’t all work, do they? Every marketer has experienced the feeling of failure when one of his or her campaigns or pet projects underperforms. It feels like you drove the family car into a tree and you are slowly shuffling home to face mom and dad.

I have failed a lot. I’ve run advertisements that didn’t drive one single lead. I developed a video podcast that was downloaded hundreds of thousands of times, but didn’t generate any interest from clients. I’ve sent email campaigns that have underperformed. I’ve made go/no go decisions that have cost my firm thousands of dollars.

And I’d do it all again…

Everything I do, every decision I make, is a gamble. And it’s not just OK. Frankly, it’s pretty cool.

Marketing Is Professional Gambling

Let’s be honest. Let’s make no bones about it. We are gambling every dollar we spend on marketing.

Like every professional gambler, we’re not fools. We try to play smart. We try to bet when we think we’ll win and walk away when we know we’ll lose.

But the higher the stakes, the more our brains try to trip us up.

Our Minds On Gambling

How our minds deal with money is a strange thing. When we are dealing with small amounts of money, we’re very careful not to spend our money foolishly.

For example, let’s say you are playing a $200 game of blackjack. The goal is to get closer to 21 than the dealer without going over.

And let’s say, you’re dealt two cards worth a total of 20. Would you say, “hit me” and ask for another card? No way.

But how do we act when we deal with much larger amounts of money?

Let’s take our 401Ks as an example. Many of us have money that goes from every paycheck into our 401K funds. They are typically mutual funds. For most people, a good portion of all the money we earn go into these funds.

…and, make no mistake, it is gambling on a much grander scale. But what we’re trying to do is “beat the market.”

Think about this, when you take into account the fees they charge us, less than 3% percent of all mutual funds actually beat the market.

So, if you were at the blackjack table and are looking at 20 and somehow your inner idiot says, “hit me.”

…you actually have a better chance of winning that blackjack hand than you do beating the market with mutual funds.

So, when $200 is on the line we are careful to make good choices. But when tens or hundreds of thousands are on the line, it’s almost like we spend that money without even thinking. It’s almost like that money is not real.

None Of The Above

People dealing with large amounts of money they can’t see or touch seem to fall into Brewster’s Millions Syndrome.

In the movie Brewster’s Millions, a man is given 30 days to spend $30M or lose his inheritance. He quickly figures out that’s not an easy thing to do. So, he spends it on ridiculous things, like running a mayoral campaign for “none of the above.”

Of course, that’s fantasy. Nobody would go to great lengths to spend a budget because if they don’t their budget will be reduced…

…right?!?

I’m sure THAT has never happened.

Yeah, right.

And what about already sunk costs, like salaries? Hey, we’re going to pay Bob anyway so why not have him work on a proposal we have absolutely no chance of winning. It’s not like we are losing money…

…yes, you are. You are blowing massive amounts of money. You just can’t see it.

How about getting Bob to spend his time on something that might actually generate revenue?

Even what the marketing staff spends their time on is a bet you are placing. You are even gambling with your own time.

Know When To Hold Them

When you think about it, we get to gamble for a living. That’s actually really cool.

We’re gambling every dollar we spend on marketing. And let’s treat it like that. Let’s think like professional gamblers when we’re betting.

If the bet is small, the chances fair, and the reward large…let’s not overthink that bet.

But let’s also recognize the big bets and give them the careful thought and attention they deserve. Let’s not bet foolishly just because that money can’t fit into our pocket.

Now is your turn. Leave a comment and tell us about a bet you made, in business or life, which paid off.

P.S. There is still time to register for the Help Everybody Every Day LA Meet up this Wednesday.

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