For most companies, there are ways to turn marketing efforts into profit centers. Of course, every situation and every company is different. Creative marketing solutions do not apply across the board.
But in all cases, it pays to think outside the box. I like racking my brain to think of ways to turn marketing efforts into profit centers. And I have found that it is usually possible.
Here are some examples from the days when I owned an industrial equipment manufacturing company, building specialty machinery for the polymer industry. I have since used the same type of thinking in financial services, publishing, and other companies I have owned or consulted with.
The Demonstration Lab
As a cost center: Customers came to our factories to use demonstration equipment to see if it could handle their processing and new product development requirements. The hope was that if they had a successful experience then they would buy our equipment. Every trial session required our staff to be available. As our company’s reputation grew, demand for our lab services grew exponentially. It was a money-spending sinkhole that occasionally led to equipment sales.
As a profit center: We created a new, separate company to provide expanded laboratory facilities to target customers. We relocated it 10 miles away so that the separation was clear. When potential customers called looking for lab/testing/trial services, they were directed to the new company. We charged for testing, but because of the facility’s state-of-the art capabilities, prospects were more than happy to pay. The beefed-up facility became an important new profit center, plus served as our R&D eyes and ears for our own future equipment development efforts. Equipment sales resulting from successful lab experiences boomed.
The Trade Show
As a cost center: We participated in the major industry trade show held in Chicago every couple of years. Buying booth space and display equipment, plus flying, housing, and feeding our staff for the multi-day event, cost a ton of money. Because we were a smaller company in the industry, we felt a need to purchase large, high-traffic booth locations, which only added to our expenses. These shows were a major cost center.
As a profit center: Looking to get greater bang from our trade show exposure we reduced booth space, took a slower traffic location, and sent fewer people for the week. To compensate for this, we organized a 5K race through the streets of Chicago early one morning during the trade show. To participate, runners paid to register and get their t-shirt (with our logo all over it) at our booth in the days leading up to the run. On race day, we had over 5,000 runners wearing our branded t-shirts running along the lake shore. The Chicago papers and the evening news picked upon the story. For one day, our little company was quite prominent in the city. Despite the sharp cutback in our marketing expenses, we had the best sales result from the show we’d ever seen.
Industry Conferences
As a cost center: We used to send our staff members to conferences to learn and to network. The travel expenses and fees increased every year.
As a profit center: Organize our own conferences. Three or four times a year, we’d come up with a theme for a two-day event, usually centered around a technology topic that we wanted to learn about. We charged people to attend—typically $1,500— and of course they paid their own expenses. We attracted industry leaders to speak. Their exposure was significant, plus they marketed the event to their clients. Our team members would give several of the presentations, further strengthening our brand. To top it off, we hosted a wine and cheese reception in our factory the first night of the conference. Attendees were seeing some of the exciting things we were doing. Every conference we did was a profit center. We also sold millions of dollars’ worth of equipment as a result of these events.
Advertising to the Trade
As a cost center: We spent heavily on print advertising in the leading trade journals.
As a profit center: We reduced outside advertising and developed our own quarterly postcard pack mailings, which included several cards advertising our own equipment, lab services, and conferences. We also sold card insertions to complementary companies targeting the same customers. On balance, our annual advertising efforts became a profit center, and with much better equipment sales results.
Raising Our Profile Internationally
As a cost center: We wanted to penetrate the Latin America market. If we had used traditional thinking, this diversification effort could have become a huge cost center and it would have taken a long time to bear fruit.
As a profit center: We tackled the opportunity in two stages: First, we contacted US embassies in various countries and asked for help in organizing and promoting one-day conferences in the various key cities. The embassies did a fabulous job in every country including Mexico, Venezuela, Panama, and Columbia. We quickly established connections and credibility with industry and association leaders in all the countries, which led to a flood of requests for equipment sale proposals.
In phase two, we worked with the country’s industry associations to offer their members opportunities to pay to attend four-day technology work shops that we held in our factories in New Jersey and Florida. To motivate the trade associations, we gave them a piece of the workshop fees collected from their members. When participants returned home, they became our “sales representatives” within their organizations and in future organizations as they changed career paths.
We offset a portion of the costs of hosting these workshops by inviting other, complementary companies to participate as speakers and financial sponsors of the training events. These workshops became a profit center, more than offsetting the relatively small amount of marketing dollars we spent in the various countries.
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Jack Killion is managing partner of the Eagle Rock Diversified Fund, an 11-year-old fund of hedge funds. He is also the co-founder of Bluestone+Killion, a firm dedicated to helping professionals and their organizations sharpen and develop their networking and client development skills. Killion’s 35 years of business experience includes consulting with leaders of Fortune 500 and emerging companies as well as owning and managing successful businesses in venture capital, publishing, manufacturing, and real estate development. He can be reached at jack@bluestonekillion.com.