With Local Brand X, we often receive inquiries about the size of a company or with how many local partners it is generally financially worthwhile to use a marketing portal. These questions are understandable, but still not so easy to answer. In every company, processes run in different ways. Ordering and creating new advertising material, for example, involves a different number of feedback loops, which impair the time and cost intensity of the process flow.
Calculation using process cost accounting
In order to determine how much time and money is spent on local marketing in your own company, a process cost calculation can be carried out. This involves dividing a process into all individual process steps and deciding on the basis of experience and surveys how much time must be estimated for these steps. In addition, all possible loops and repetitions are identified in order to work out the differences between an average process and the ideal process (without additional loops). As soon as the time required has been determined, it can be converted into costs based on internal hourly wages.
Process cost accounting checklist:
It is important to work with as realistic and accurate time units as possible. It is therefore particularly important to look at the process down to the last detail at the beginning.
1. Which persons/departments are involved in the process?
2. How much time do people spend on each step?
3. Where must feedback loops be considered?
4. What is the probability that these loops will occur?
5. How many of these loops occur?
6. Are there different hourly wages depending on the department?
If these steps are followed and a precisely defined example process has been worked out, the process costs can be calculated as precisely as possible. However, it is important that you multiply this by the number of local partners at the end. Since the costs of creating advertising material in each individual process are still considered relatively low, these can rise rapidly for a large number of partners.
Process costs as a basis for decision-making
Based on these calculations, it can be decided whether the use of a marketing portal makes sense for the company and is financially positive. The calculation also provides an overview of ongoing processes and the current distribution of resources. This shows potential savings and can be taken into account for future personnel planning.
Finally, to give a specific example, we have carried out an exemplary process cost calculation for a company with 100 local partners. Based on the process of creating an ad and taking into account the ideal process (no loops), significant savings were identified through the marketing portal.
With 100 ads placed, the process costs using the marketing portal were only around 20% of the original costs. The difference in time spent was even more significant, as the marketing portal saved more than 95% of total working time.