The $64 million budget question
How do you answer the question, “Why are you spending so much money on program X?”
It's budget season, and among the most troublesome questions asked of a brand manager is, “Why are you spending so much on program X?” This is a tricky question that can really put brand managers in a bind if they neglect to answer it properly (been there, done that, and have the scars to show for it!). However, if you break the question down and understand what's behind it, you can not only defuse the question, but you can also leverage it into something useful and positive for you and your brand.
The secret to answering this question is first to reframe it.
Do this by restating the question, substituting the word “investing” for “spending”:
“So, the reason we are investing in program X is because…”
Next, put it into the context of your overall brand goals:
“…we are striving to meet our brand goal of extending length of therapy for patients by one month.”
Then, ground it into your research (in this example, for an adherence program):
“Our research has shown that patients need a better understanding of how to take their medication…”
Provide assurance that your approach will work:
“…and if they have that understanding they will stay on therapy longer.”
Finally, bring it back to your program and close confidently!
“We believe that this program will help change behavior and, ultimately, drive brand growth.”
Let's look now at why reframing the question works.
Senior managers love to ask questions like this—mainly because it's their job, but also because they're laser-focused on the bottom line. While your goal is to keep focused on generating demand for your brand, they are concerned with running a division or an entire company.
They are beholden to a board of directors or to shareholders, and must report earnings monthly, quarterly and annually. Although prescriptions or units are extremely important to them, senior managers also closely monitor things such as discounts, returns, cost of goods and operating expenses.
Companies (especially start-ups) often operate with razor-thin margins, so a few thousand dollars here or there can make the difference between a profitable quarter and a sub-profitable quarter. And given that the compensation of most executives is based on the company's profitability, executives have more than a passing interest in knowing how much is being spent on various programs. Getting the picture?
To reiterate, the key to answering this question, then, is locked in that word “spending.” What often throws brand managers is that they are trying to balance two things simultaneously: the need to stay focused on their budget while spending extra money they've been entrusted with to spend on marketing initiatives that are exciting and worthwhile.
With all of the responsibilities that go along with running a brand, it's easy to lose sight of the big picture.
What you are really trying to do is grow your brand.
Growth requires investment.
Investment requires spending.
Many things are required for effectively running a pharmaceutical or device brand: things such as journal ads, sales aids and a website are considered “cost of entry” for most brands. Executives understand this, and rarely challenge your thinking in these areas.
But what separates the really great brands from the average brands are those innovative, out-of-the-box ideas and programs. And those programs will always require justification.
So, the next time you are asked, “Why are you spending so much money on program X?” reframe the question and be ready with an answer you can deliver with confidence and conviction.
By answering the question in this fashion, you will have accomplished several things. You will have demonstrated that you are on top of your business, fiscally responsible, rooted in brand strategy and completely aligned with organizational goals.
Imagine all of that in one single answer!