ould your CEO, CFO, or other upper-management staff agree with any of the following statements?

Marketing is a line-item expense and can be cut when we need to show short-term profit.

Marketing is about creating customer needs, not fulfilling those needs.

Marketing is all about advertising.

Marketing generates qualitative results, but business results are quantitative. So there is no way to show a connection between marketing activities and business performance.

Marketing has nothing to do with revenues or profits.

All about expense? No connection to revenue or business-performance measures? That’s dangerous ground. And these are only a few of the myths that continue to dog marketing departments.

Yet marketers are at least partly responsible for allowing these misconceptions to flourish. First, in most companies, the role of marketing is not clearly or consistently defined. Is its purpose to produce advertising and promotions? To support salespeople? To conduct customer research?

Second, many marketers ignore their companies’ business models when planning their strategies and tactics. Instead of looking at how their companies capture profits, most marketers in both business-to-business and business-to-consumer environments have been trained to think, “The more we sell, the more money we make.” But that’s a pretty simplistic view of business in general. Businesses have many models for making money, which may not mean simply maximizing sales across the board to all customer groups.

Last, marketers don’t translate their work into the financial terms used by executives and the financial community. Instead, they talk about “brand equity” and “number of impressions” without connecting those metrics to how their company brings money in the door.

In the end, marketers spend too much time whining about how others don’t understand what marketing does, and too little time demonstrating how marketing contributes value to the business.

But not smart marketers. Marketing champions know exactly what their objectives are. They know how to design strategies and programs that align with their company’s business model to achieve that objective. And they know how to report their results in language that any CEO or CFO would love. Here’s how.

go with the flow

Consider this: Every department in your company defines its role in terms of outputs. Sales sells. R&D invents. Finance funds. So what is marketing’s output? Simple: cash flow.

Every marketing activity can — and should — be defined in terms of how it either generates cash or profits for the company now, or how it will generate cash or profits for the company in the future. Finding new sources of cash flow — recognizing sources of new demand, and leading your company to manage those opportunities — can be called upstream marketing. Downstream marketing, or generating cash now by selling your company’s existing products and services, is what marketing and events typically are known for.

Always remember: Cash flow is at the heart of your CEO’s and CFO’s mission, and how analysts assess your company’s future prospects. Make finding or generating cash for your company the heart of your event strategy, which will determine the types of events you hold and how you report their results to management.

know your business model

Start with a deep understanding of how your company generates cash. First, be sure you understand your company’s broad business model: the strategy your company relies on to generate cash and profits. Then, understand the structural approach your company uses within that overall business model: how it structures its offerings and defines its customer base. Events have a distinct — and different — role within each of the business models.

Broadly speaking, there are three primary business models that companies use to drive revenue.

Velocity. Also called “inventory turnover,” companies with a velocity model rely on the ability to quickly and efficiently turn inventory into cash to generate profits. Technology-hardware producer Dell Inc. is an example of a company built on velocity.

Leverage. Leverage is a company’s ability to use someone else’s assets to generate cash for itself. The Walt Disney Co., for example, is not in the business of manufacturing costumes, dishes, or the myriad other products that sport Disney characters. Instead, it licenses the right to use those characters to other companies, then collects royalties on that usage.

Margin. Companies using a margin model generate high profits on sales. For example, IBM Corp.’s greatest profits today come from fast growth in selling business solutions that combine both hardware and consulting or other services — “people-based” activities with no manufacturing expense attached — rather than hardware alone.

More specifically, there are 10 approaches companies use to structure how they capture those profits.

1. Pyramid. These companies provide a hierarchy of products or services to several groups simultaneously, such as American Express Co. with its green, gold, and platinum cards. Marketing’s role in a pyramid-focused firm is to identify needs of current and potential customer segments, and to suggest different levels of products or services that can serve several customer groups simultaneously.

2. Multicomponent. Like The Coca Cola Co., which sells its beverages at different prices in stores, restaurants, and vending machines, multicomponent adherents sell one product in different forms at different times to customers with different price sensitivities. Here, marketing’s opportunity is to clarify and quantify those price sensitivities on different purchasing occasions.

3. Time. Time-driven companies quickly launch new products to exploit buyer interest. Intel Corp., with its regular speed and capacity innovations, is an example. Early adopters, influential buyers who will pay a premium for the newest and best offerings, are a critical customer segment for time-based companies. Marketing can help find and cultivate these important customers.

4. Multiplier. These organizations use one skill in many different forms, products, and contexts. For example, Disney leverages its skill, character development, through many different channels: entertainment, theme parks, and consumer products. Marketing teams in multiplier firms can seek the best ways to apply or package a specific product or service for many different customer needs.

5. Specialist. Specialist firms cater to one target group willing to pay a premium for custom offerings. Technology-systems integrator EDS Corp., for one, specializes by industry. To best serve the needs of their targeted niche, specialist marketing teams can build and convey industry expertise that establishes their company as the one that best understands the customers’ business needs, environment, and issues.

6. Installed base. Hewlett Packard Development Co., in an installed-base model, makes more money selling ink cartridges to those who own its printers than it does selling the printers. Yet marketing’s most-powerful role in this model is to build sales of the base product that ultimately drives repeatable sales of the more-profitable accessory products.

7. Blockbuster. Blockbuster firms build their research-and-development pipeline around projects with the greatest potential. Marketing’s objective is to increase the feasibility and minimize the risk of these new-product investments to ensure success out of the gates. Just think iPod.

8. Brand. IBM, a brand-driven firm, creates consumer loyalty based on a promise of value for which customers are willing to pay a premium, delivering healthy margins. As the company storytellers, marketing has a powerful opportunity to cultivate the relevant emotional connections that are at the heart of premium brand value.

9. New product. New-product-focused companies constantly innovate, introducing new features or adding new technologies. Sony Corp. of America, for example, sold multiple units of its Walkman to the same customer by offering newer technology and versions designed for specific activities or markets. In companies like Sony, marketing’s role is tightly aligned with product development as it works to re-create demand by identifying the right products to make obsolete and determining the new or enhanced functionality that will compel sales of a newer or more-specialized product model.

10. Digitalization. These companies build competitive advantages based on information technology. Dell uses this model, selling direct to consumers and using just-in-time manufacturing to reduce its costs and grow its margins. Marketers in digitalization companies can use their analytical skills to put online-transaction data to work, identifying places to improve productivity, speed to market, and the customer experience.

choose the right events

Just as product marketers would never use discounting strategies in a margin-driven company, an event marketer should not try to find value in an event that does not support his or her company’s business model.

An event strategy within a velocity company should focus on helping your company get more products out the door quickly and efficiently. For example, you can create an at-event purchasing special, or use your events to recruit and support your distribution network.

If you are a company such as Dell, which uses a digitalization approach within a velocity model, events can help you gather information to improve the online experience and to build customer loyalty. Such events might include power-buyer conferences, where long-standing customers are invited to share their ideas about how to improve your services. You might also sponsor speakers or learning opportunities that focus on your customers’ key business issues, equipping them with information they need to do their jobs or manage their departments more effectively.

Events in a leverage-driven firm can help shore up the intangible assets that create the leverage in the first place. These intangibles include attributes such as brand equity, customer equity, and workforce knowledge and productivity. For example, your events can showcase the business power of your brand by featuring creative and inspiring ways your customers have used your assets to build their own businesses.

If your company, like Disney, is leverage-focused and uses a multiplier approach to identifying and developing revenue-generating assets, you may benefit from an event strategy that focuses upstream: identifying emerging channels that offer new opportunities to extend your knowledge and creative resources, and finding partners who are developing products and services within those channels.

For margin-driven companies, loyalty-based events can help solidify customer connections that support healthy profits. Event marketers in margin-driven companies must help their companies develop innovative products, tailored to customers’ individual needs and delivered through high-touch service.

For a margin- and brand-focused company such as IBM, events are an optimal marketing strategy. In this model, you can use events to treat select groups of customers to high-level discussions with key staff from your company, uncovering specific needs and wants that you can address through customized product development. You also can build high-value experiences into the event, which helps to build the emotional connections so critical to long-term brand loyalty.

talk like a cfo

Marketers are really good at going into planning and strategy meetings with long lists of projects. “We did these events last year … Here are the ones we are going to repeat … We’re going to do more, so we need more money,” and so on.

No executive wants to hear that. What they want to hear is how those events have changed your business for the better — and how they will continue to change it.

A good place to start is to speak the language of business. Do you know how much more a loyal customer is worth to your company in terms of lifetime value, profit margin, purchase frequency, or any other financial metric that is important to your business? You should. Then you can connect these metrics to the loyalty your events help inspire.

You can learn what metrics, or “key performance indicators” (KPIs), are important to your company by reading its annual report and other reports issued by analysts that track your firm. If your company is privately held or too small for analyst attention, simply invite your CFO or another financial officer to lunch or coffee, and ask what measurements make or break his or her reports. Ask about standard factors or multipliers your company uses to calculate potential value of its customers, products, and services. Then build your reports around your company’s KPIs.

For example, unless your event has a direct sales component, most top-line growth attributable to that event will come days, weeks, or even months later. In practical terms, this means your marketing activity today — the event — is creating an intermediate marketing outcome, such as generating early adopter awareness of a new product, which ultimately leads to a cash-flow driver for your company — such as accelerating pre-orders. Your event creates the desire that increases the sales velocity with a customer group of known and quantifiable value to your company. Your CFO will be impressed by such analysis that reasonably quantifies your events’ impact on cash flow over time.

Cultivating relationships with sales will also show you the financial metrics that matter to your company. Sales departments live and die by volume and profit numbers and goals every day. To be perceived as a value and cash-flow creator, marketing must align with sales.

I have consulted with a major global firm for which marketing and sales are completely intertwined. For this firm, which operates on a margin- and brand-driven model, one of its key metrics is the percent of time salespeople spend face to face with key customers. What more powerful metric is there for an event marketer? Events are among the best ways to give salespeople face time with customers. When the events team creates these opportunities, resulting deals — and cash flow — are tagged back to the face time the event allowed.

To evaluate your events’ impact on sales, ask yourself these questions:

How do our events currently help sales boost velocity, exploit new markets, or overcome premium-pricing objections? How could we improve these efforts?

Do our events capture the right criteria to define and qualify sales leads?

How do our events help quantify the potential value in the sales pipeline?

How can we use our events to help identify prospects with the strongest profitability potential?

Whatever your own company’s business model, take a cue from politicians and stay “on message” with your event strategies, programs, and reports: It’s all about the cash flow. e