Marketing the internal audit department can have an important impact on the department’s success by delivering the message that internal audit is a partner with the business and a source of great value to all its clients. While some audit departments think marketing is nothing more than handing out brochures at the opening meetings, others have taken a more robust approach, embedding the concepts of marketing in many aspects of their interactions with clients. But the one thing missing in most marketing approaches is a definitive statement of why customers should turn to internal audit. The development of a value proposition will fill that gap, provide a foundation for articulating that value, and ensure everyone in the department delivers a consistent message in all situations.
What is a Value Proposition?
Value propositions are statements of how the goods or services delivered by an organization or function will resonate with target customers. They are created after analyzing the goods or services being sold, the customers who are being served, and the competitive marketplace, resulting in a clear statement about why an individual or organization would benefit from buying or using a product, service, or solution.
Many audit departments have considered the value they provide, but few have taken the steps necessary to craft a message for their stakeholders that can be consistently delivered by everyone in the department. Accordingly, the message, when it is actually delivered, is often unfocused and disjointed.
The internal audit department can better articulate that value through the development of a value proposition. In addition, the process enables the department to learn more about the services it provides and the clients it serves.
1. Know Your Customers
It all begins by identifying internal audit’s potential clients. Executives, the board, the audit committee, and organizational management quickly come to mind, but the department also needs to recognize the many other people from within the organization who rely on or use internal audit’s work — departments such as compliance, risk management, quality assurance, and legal. In addition, potential external clients — such as regulators, external auditors, and even the organization’s customers — also should be included.
Next, determine what these clients need, what problems they are trying to solve, and what improvements they are looking for. This approach helps internal audit better understand the business’ perspective, and begins the aligning of internal audit services with the client’s needs.
When doing this analysis, remember that internal audit’s clients do not work with the department because of the service provided, but rather because of the outcome of that service. Internal audit often thinks in terms of the assurance its clients need. However, executives and board members might say they are looking to ensure the organization’s strategic objectives are being achieved, assurance providers might say they are looking for mitigation of risks in their area of specialization, and regulators might say they are looking to protect the public. Couching client needs in the clients’ terms helps align internal audit’s services with the clients’ actual needs.
These are just some ideas of what internal audit’s clients may perceive as value. The real answers will only be discovered by holding discussions with as many of internal audit’s clients as possible — discussions about what they value and what they need. Internal audit may face the challenge of getting clients to think beyond their preconceived notions about internal audit. To understand those clients’ needs, internal audit must get clients thinking beyond the restrictions they may be placing on the department.
As this analysis is completed, internal audit should identify its target clients — those that will receive the primary benefits of internal audit’s services. For example, while important to the work internal audit does, the organization’s customers are seldom a target client for the department. Nonetheless, all work ultimately affects them, so the organization’s customers cannot be forgotten. Similarly, no potential client should ever be entirely dismissed.
2. Know What You Deliver
The evaluation of clients may also provide internal audit its first recognition of the broad range of services that it delivers. Good internal audit departments do more than just complete audits. They have a wide range of options available that add value to their clients. An approach used by one group was to focus on how the audit department would respond to various identified risks. Its selection of responses included conducting an assurance review, performing process analysis, completing a consulting project, providing training, and conducting data research. The auditors also recognized that, for some risks, they would rely on assurance provided by others, ignore the risk, or work together with others in an integrated assurance approach. By identifying the various responses, they better understood the services they provided and could tailor their response to match client needs.
Once the internal audit department has identified the various services it offers, it should evaluate how well these match what the client needs, which should include these questions:
- Is the result of the service what clients want and, if not, how might the service need to change?
- Do the clients understand what they need?
- Do clients understand the value received when unrecognized needs are met?
- Overall, does the service provide the client value identified in the previous step?
- Is additional education necessary?
- What are the benefits to the client of engaging internal audit?
From this analysis, the department can begin ensuring alignment between client needs and existing services, and further identify areas where provided services may need to change. It also will lay the foundation for the message to be delivered to the clients.
3. Know Your Competitors
Internal audit departments seldom think in terms of “competitors.” However, auditors need to recognize that others — inside and outside the organization — provide similar services and are, effectively, competitors. Internal audit should identify those competitors to understand what differentiates internal audit’s services and articulate if and why internal audit is a better solution.
None of this is meant to suggest that internal audit does not also partner with these people, working closely toward mutual goals. But, in analyzing how to better meet client needs, internal audit has to understand where others might provide similar services, and determine whether and how internal audit can excel in providing those services.
As noted, there are two sources of competitors: those that are internal to the organization and those that are external. Internally, almost everyone within the organization might be considered a potential competitor because every department can provide some type of consulting service. Assurance providers in particular — such as compliance, risk management, and quality assurance — are potential competitors because their responsibilities include providing assurance to the board, executive management, and other leaders within the organization — a role similar to internal audit’s.
From the external perspective, internal audit faces competition from several sources — the most impactful being external auditors and outside consultants. These groups have their expertise and are instrumental to the success of the organization. But internal audit must recognize where the value provided by external competitors ends and internal audit’s value might begin.
As each competitor is identified, its strengths and weaknesses should be analyzed. This will help internal audit identify areas it needs to strengthen, as well as recognize services it no longer should be supplying. It will also allow internal audit to identify areas where unsuspected value might be provided.
The purpose of the internal audit profession is not to be all things to everyone; it is to provide those services that deliver the most value. But internal audit also should want to ensure all niches of expertise have been identified. And this is where the department will begin to understand what differentiates it from its competitors.
4. Know Why You Are the Solution
The value proposition is based on the intersection of what internal audit’s clients need (resonance) and what the department provides better than its competitors (differentiation). Without resonance, the client will not see the services as important enough to be considered. Without differentiation, the client believes it can do without the service or find a cheaper solution.
Resonance and differentiation define why internal audit is the best solution for those clients. For most internal auditors, clients are looking for ways they can better achieve their objectives and assurance that the processes in place help achieve those objectives. Internal audit’s assurance and consulting work is a solution for this need — resonance. Differentiation for internal audit includes independence and objectivity; the department’s understanding of the business; the relationships internal audit has developed with key stakeholders; and the understanding of risk, risk assessment, and the balancing of risks through appropriate mitigation. These differentiators allow internal audit to stand out from the competition.
Recognition of resonance and differentiation begins in earlier steps, and the process of bringing it all together may not take much time — the information and the understanding are already there. However, this portion of the value proposition should not be ignored. It is the bridge between understanding and articulating.
5. Know How to Express Your Value
The trickiest part is developing the actual value proposition and how it will be marketed to clients. The process involves taking all the information that has been gathered — the clients, the services, the competitors, the resonances, the differentiators — and pulling it together into a format that allows all to understand why internal audit is the correct solution.
Several approaches can be used. One audit department had success by holding brainstorming sessions with the entire audit department. This included walking through the process described earlier, and then developing potential value propositions. This information was then brought together, and internal audit leadership used it to develop the final value proposition.
Another way to kick-start the discussion is to use a fill-in-the-blank approach. “For [target clients] who are dissatisfied with [current alternatives] our service is a [service] that provides [key problem-solving capability] unlike [the alternative].” This might result in the rough statement, “For executives who are dissatisfied with internal reviews that provide information but no solutions, our product is a comprehensive analysis of processes completed in conjunction with the process-owner that provides impact-focused solutions built in conjunction with the process owner unlike external reviews that just point out the flaws.” This is far from a finished product, but it provides a solid starting point based on information gathered in previous steps.
There are also many formats for the final value proposition. A generally used approach is to start with a heading-like statement — one short, easy-to-remember sentence — that focuses on the end benefit of the service. This is followed with subheadings — two to four sentences explaining what is offered, which clients will benefit, and why the service is useful. The final section is composed of two or more paragraphs that provide additional detail that fleshes out the previous headings.
Throughout the process, it may be evident that marketing is not an expertise that resides within the internal audit department. However, most departments work within organizations that have a marketing department they can turn to for help — specifically in developing the value proposition, but often in the entire process itself. In addition, it is an opportunity to build a stronger relationship with a department that is often not a part of internal audit’s scope.
Development of the value proposition is not the final chapter of the story. Everyone within the department must understand what the statement says, what it means, and how he or she can deliver it. Best practice is to have a marketing strategy — an approach to how everyone within internal audit should use the value proposition in every aspect of his or her work. This should include how it will be incorporated in audits, meetings, conversations, social activities, and every touch point internal auditors have with their clients. It is not about spouting the statement at every opportunity; it is about understanding and believing the statement to the point where it is naturally infused throughout the audit process.
Today, with the increased focus on governance, risk, and compliance, many internal audit departments find the services they provided now being handled by other departments within the organization. In many situations, these may be the appropriate responses. However, for internal audit departments that want to maintain their status within the organization, they must understand their value and be able to articulate that value to all potential clients.
A proactive approach, including the development of a value proposition, will not only stave off these problems, but will also instill pride in the members of the internal audit function, reinforcing that they are valued members of the organization’s leadership team.