Sunday, January 20, 2019

Both Market and Customer Expertise are Needed to Drive Growth

Marketing has always been associated with revenue generation and growth, but a rising number of marketing leaders now contend that business growth is the raison d'etre of the marketing function. Recent research shows that many marketing leaders believe they have become primarily responsible for driving growth in their organization, and that this belief is shared by CEOs and other senior executives.

Despite this view, however, the recent research also suggests that most marketers have not moved beyond conventional marketing tactics in their efforts to drive growth. For example, in a recent survey of CMOs and other senior marketing leaders by the CMO Council and Deloitte, more than 40% of the respondents said they were working on brand shaping and campaign execution activities, but only 6% said they were actively involved in growing revenue across all business activities.

If both senior marketing leaders and other C-suite executives see the need for marketing to play broader role in growth, why have so few CMOs taken up the challenge? Many CMOs want to be growth leaders, but haven't been given the formal authority to play that role. In these circumstances, they key is to build credibility with the CEO and other members of the senior leadership team and thereby earn the right to exert influence over company-wide growth initiatives.

Some industry commentators have argued that the most effective way to expand the impact of marketing on growth is to focus on customer insights. A recent article in the Deloitte Review urged CMOs to "relentlessly pursue customer expertise" and use that expertise to gain influence with other business functions. The authors contend that marketing leaders should develop expertise about the entire customer journey (including those parts owned by other business functions) and then leverage that expertise to build partnerships with other company leaders to improve customer experiences.

Both Customer and Market Expertise are Necessary

Developing expertise about the customer journey is obviously a critical part of marketing's job, but it's not the whole job. In order to identify and effectively exploit all growth opportunities, marketing leaders need to develop market expertise as well as customer expertise.

Market expertise includes customer insights, but it's broader in several ways. As the term implies, the primary objective of market expertise is to understand the economic and competitive characteristics of the market in which the company operates. Developing market expertise requires marketing leaders to perform an analysis of several factors, some of which are:

  • What is the size of the market?
  • How fast is the overall market growing? Are some segments of the market growing significantly faster than others?
  • Who are the major competitors in the market? Is the market fragmented, or is it dominated by a few large competitors?
  • How profitable is the overall market? Are some market or customer segments significantly more profitable than others?
  • Is the market composed of a large number of small customers or a relatively small number of larger customers?
  • How easy or difficult is it for new competitors to enter the market?
  • Is the market vulnerable to substitute products and/or services?
This list is far from complete, but it provides an indication of the kinds of issues that marketing leaders should be analyzing on a regular basis.
Focus on Critical Buyer Behaviors
Market expertise also requires a clear understanding of the behaviors of potential buyers. The recent emphasis on delivering outstanding customer experiences has elevated the importance of understanding how and where customers and prospects interact with the business and what they are trying to accomplish during those interactions. Customer insights like these can be used to improve customer experiences, which will contribute to growth.
These insights are important, but growth-oriented marketers also need to understand the behaviors of potential buyers who do not become customers. More specifically, marketers need to identify whether potential buyers who become customers engage in different behaviors (or certain behaviors more frequently) than potential buyers who do not become customers. In many cases, these behavioral differences will reveal where marketers can have a major impact on business growth.
In my next post, I'll discuss how identifying and quantifying the behaviors of potential buyers can help marketers identify untapped growth opportunities.

Illustration courtesy of OTA Photos ( via Flickr CC.

Sunday, January 13, 2019

Have Marketers Fully Embraced the Growth Challenge?

The role of marketing was a major topic of conversation last year, and there is a widespread belief that marketing's scope of responsibility has expanded. In the August 2018 edition of The CMO Survey, eight out of ten (79.6%) of the survey respondents said that the role of marketing in their organization had broadened over the past five years.

Marketing's responsibility for orchestrating customer experiences has been widely discussed for several years. More recently, industry commentators and practicing marketers have become focused on the role of marketing in driving business growth.

In a recent survey of over 200 CMOs and senior VPs of marketing by the CMO Council and Deloitte, 27% of respondents said that the CMO is primarily responsible for the growth strategies and revenue generation for their organization. The CEO came in second at 22%.

Marketing leaders also believe that other senior business leaders expect them to play a leading role in growth. When participants in the CMO Council/Deloitte survey were asked what level of expectation there is among senior executives and board members for marketing to be a growth driver, 35% of respondents put the expectation level at high, and 33% said senior company leaders think growth is the primary mandate of marketing.

Some will argue, of course, that this is nothing new. After all, it's fair to say that growth has always been the "prime directive" of marketing. What's new is that marketing and other business leaders now believe that marketing needs to expand the tools it uses to drive revenue growth.

So as we begin a new year, it's appropriate to ask two basic questions about the expanded role of marketing. First, to what extent have marketing leaders embraced the growth challenge and adjusted their activities to play a larger role in growth? And second, what should be the role of marketing in driving growth, and what do marketing leaders need to do to fulfill that role?

Where Do We Stand Today?

The recent research indicates that leading business growth is more of an aspirational goal than a current reality for most marketers. Overall, the studies show that most marketing leaders are still relying on conventional marketing communications tools to drive growth, and they remain much less involved in other business activities that have a significant impact on growth.

For example, in the latest edition of The CMO Survey, senior marketing leaders from B2B and B2C companies were asked to identify the activities or functions that marketing is primarily responsible for in their company. The top four activities identified by survey respondents were:

  • Brand (91.4% of respondents)
  • Digital marketing (82.7%)
  • Social media (82.7%)
  • Advertising (79.6%)
Other activities identified by more than 50% of survey respondents included promotion (71.6%), positioning (71.6%), public relations (69.1%), and marketing analytics (68.5%)
In contrast, only 40.1% of respondents indicated that marketing is primarily responsible for revenue growth, and even fewer respondents indicated that marketing has primary responsibility for market entry strategy (38.9%), new products (34.0%), and market selection (26.8%).
The CMO Council/Deloitte survey referenced earlier paints a similar picture. That research found that many marketing leaders have identified some steps they need to take in order to drive growth, which include developing strategies and plans to improve revenue and gain market share. The research also found, however, that most marketers are falling back into their "brand comfort zone." The survey report states:
When asked what the role of marketing is specific to growth, only 6 percent of respondents say they are driving routes to revenue across all facets of the business globally, only 4 percent are providing sales intelligence and key account insight support, and only 13 percent are working to retain and grow customer relationships through improved customer experiences. Instead, many marketers are defining and shaping the brand (44 percent) and executing campaigns to attract customers and predispose prospects (42 percent). . . Overall, despite the clear intention to drive revenue, brand and campaign win out in action. . ."
These survey findings suggest that most marketing leaders have not moved significantly beyond "conventional" marketing tools and tactics in their efforts to drive business growth. So what is the "right" role of marketing in business growth, and what steps should marketing leaders take first to fulfill that role? I'll address this question in my next post.
Top image courtesy of (Creative Commons License).

Sunday, December 30, 2018

Our Most Popular Posts of 2018

This will be my last post of 2018, and I want to thank everyone who has spent some of his or her valuable time reading this blog. My goal for this blog has always been to provide content that readers will find to be informative, thought-provoking, and useful, and I've been immensely gratified by the attention and engagement this blog has received.

For the past few years, I've used my last post of the year to share which posts have been most widely read. Like last year, I'm only considering posts that were published in 2018. I've ranked the posts based on cumulative total reads, and therefore posts published early in the year have an advantage.

So, in case you missed any of them, here are our five most popular posts for 2018:
  1. Why Brand Building Still Matters in B2B
  2. Six Questions You Must Answer to Create Compelling Value Propositions
  3. How Marketers Can Nurture Buyer Trust, and Why That Matters
  4. Use the 70-20-10 Formula for Better B2B Marketing
  5. New Insights from The CMO Survey on Major Marketing Trends
Happy New Year, everyone!

Image courtesy of Republic of Korea via Flickr CC.

Sunday, December 16, 2018

Research Demonstrates the Financial Impact of Trust

Astute business leaders have long recognized that trust is a vital element of competitive success. But traditionally, trust has been viewed as a "soft" issue - one of those things we know is important, but find difficult to measure. New research by Accenture Strategy quantifies the impact of trust on both revenue and earnings.

So far this year, I've published seven posts here that have addressed some aspect of trust. I've devoted this must attention to trust because it has a significant impact on virtually all aspects of marketing. Trust lies at the heart of all business relationships, and back in January, I argued that widespread buyer skepticism of vendor-provided information was one of those elephant-in-the-room issues for B2B marketers.

Lack of trust produces a major drag on marketing performance. If buyers don't trust what you say, they won't give you credit for understanding their needs, or for providing relevant, personalized, and engaging content and experiences. It's no coincidence that most companies aspire to be seen as a "trusted advisor" by their customers and prospects.

Most business leaders instinctively understand that earning and maintaining the trust of existing and potential customers is essential for success. But because trust is intangible, its economic and financial impacts are difficult to measure and quantify. A recent analysis by Accenture Strategy has now established a clear and measurable link between trust and both revenue and earnings.

The Accenture Strategy "Competitive Agility Index" is a measure of a company's competitiveness that is based on three equally-weighted components:

  • Growth - Year-over-year enterprise value growth and revenue growth
  • Profitability - Multi-year views of return on invested capital, net debt, and EBITDA margin
  • Sustainability and Trust - A quantitative view of environmental, social, and governance factors, including the United Nations Global Compact principles, and a proprietary measure of trust based on publicly available data
In this research, Accenture Strategy used more than four million data points to calculate index scores for over 7,000 companies operating in 127 discrete industries. The index is designed to measure overall competitive agility, not specifically the impact of trust. But Accenture found that trust factors had a disproportionate effect on the overall index score - and on both revenue and earnings (EBITDA).
The Accenture analysis also makes the importance of trust abundantly clear. The authors of the study report wrote:  "Our 2018 analysis revealed that more than half (54 percent) of the companies we examined experienced a material drop in trust at some point during the past two and a half years. . . Across the 54 percent of companies in our sample that experienced a drop in trust, revenues at stake conservatively equate to at least US$180 billion, based on available data."
Based on this analysis, Accenture Strategy argues that companies must make trust a strategic priority. The study report states:  "Your leadership team must embrace trust as a core element of business strategy. All teams - at every level - must walk the talk. The choices they make every day need to support trust as a key element of their corporate business strategy."
The analysis by Accenture provides compelling evidence that trust has a significant impact on corporate financial performance. Therefore, it's important for marketers to make enhancing trustworthiness a key objective for all of their programs.

Illustration courtesy of chuks mbata via Flickr CC.

Sunday, December 9, 2018

The Unfinished Business of Sales-Marketing Alignment

Since launching this blog in 2010, I've written about various aspects of sales-marketing alignment 26 times. And I certainly wasn't the first person to address this topic. For more than a decade, most B2B marketing and sales professionals have recognized the need to forge a more productive relationship between marketing and sales, and many B2B companies have been working on sales-marketing alignment for several years.

Yet, sales-marketing alignment remains a hot topic and an ongoing challenge for marketing and sales leaders. Yesterday, I performed a Google search using the term "sales and marketing alignment." My search produced 320,000 results. When I limited the search to the previous year, Google still returned 22 pages of results.

So, as we near the end of 2018, it seems appropriate to ask how much progress has been made toward achieving effective sales-marketing alignment.

Given the continuing interest, it shouldn't be surprising that several research studies performed in 2018 address the topic of sales-marketing alignment. The research indicates that some companies have made meaningful progress in improving the quality of the marketing-sales relationship.

Earlier this year, for example, InsideView published The State of Sales & Marketing Alignment in 2018, which was based on a survey of more than 500 sales and marketing professionals. In this survey, 75% of marketing respondents, and 68% of sales respondents reported having a good or excellent relationship with their counterparts.

Overall, however, the 2018 research shows that many companies still have work to do to turn their marketing and sales organizations into a cohesive, high-performing demand generation team.

In the InsideView survey discussed above, respondents rated their sales-marketing relationship as weak or very weak on several important demand generation activities, including:

  • Defining and executing field programs;
  • Sharing knowledge about customer buying processes; and
  • Reporting results of joint activity.
In the 2018 State of Pipeline Marketing study by Bizible (and other firms), only 31.2% of survey respondents characterized the sales-marketing relationship in their company as aligned. Another 56.1% of respondents described their sales and marketing teams as being somewhat aligned.
In the 2019 Data-Driven Marketing & Advertising Outlook study conducted by Adweek Branded on behalf of Dun & Bradstreet, only 25% of surveyed B2B marketers said they and their sales counterparts share a full definition of who constitutes a qualified lead. Another 56% of the survey respondents said they and sales have agreed on a limited definition of a qualified lead, but they have no formal documentation of that definition in place.
The growing use of account-based marketing has elevated the importance of - and focused more attention on - building and sustaining a collaborative relationship between sales and marketing. But in the 2018 ABM Benchmark Survey by Demand Gen Report, respondents identified sales and marketing alignment as their second biggest ABM-related challenge (39% of respondents), trailing only proving ROI/attribution (40% of respondents).

Where Do We Stand?

So, where do we really stand with sales-marketing alignment as 2018 draws to a close? Many of the current "best practices" for improving sales-marketing alignment focus on two primary objectives:
  1. Creating a shared understanding among marketing and sales team members regarding the key elements of the company's go-to-market strategy, including the definition of the target market, core value propositions, and customer buying processes; and
  2. Establishing an agreed-upon lead management process (lead stage definitions, lead scoring criteria, etc.).
These objectives are important, but they aren't sufficient to create the level of alignment - or, more accurately, operational integration - that's required for high-performing demand generation in today's business environment.
Over three years ago, Scott Brinker described the situation eloquently when he wrote that the conventional methods for improving sales-marketing alignment weren't "so much a breakthrough in alignment as much as a negotiated peace settlement between two separate countries who share a common border. Trade policy and border control were established, facilitating commerce between them, but they were not one nation under a common flag."

What's Needed in 2019?

To take sales-marketing alignment to the next level in 2019, marketing and sales leaders need to focus on two additional objectives:
Recognized Interdependence - Effective sales-marketing alignment requires a widespread recognition by members of the marketing and sales teams that they need each other, and that an integrated approach to demand generation is essential for success. Therefore, marketing and sales leaders must constantly communicate and reinforce the importance of having marketing and sales work together seamlessly and function as a cohesive team.
Ongoing Collaboration - Effective alignment also requires marketing and sales to work collaboratively on an ongoing basis, and collaboration needs to occur naturally and spontaneously, whenever and wherever it's needed. Therefore, marketing and sales leaders must constantly communicate that informal, self-directed collaboration among marketing and sales team members is not only acceptable, but expected.

Image courtesy of m01229 via Flickr CC.

Sunday, December 2, 2018

The Most Critical Skill for Tomorrow's CMO

A recent article at the Harvard Business Review website argues that many chief marketing officers are at a career crossroads and face four possible futures, some more attractive than others.

The authors contend that customer expectations have risen to exceptionally high levels, and that meeting those expectations requires companies to achieve an unprecedented level of coordination across the business. Many CEOs have responded to this need by creating new C-level roles with responsibilities that span traditional business functions.

These new roles come in several "flavors" with titles such as chief revenue officer, chief growth officer, chief customer officer, or chief digital officer. The growing use of these new senior leadership positions obviously raises questions about the future role of the CMO.

Not surprisingly, the article's authors describe four possible "pathways" for today's chief marketing officers:

  1. Up - The CMO is promoted into a new role and given broader responsibilities for leading growth and customer experience functions.
  2. Over - The CMO keeps the same title, but his or her role is expanded to encompass new growth and customer experience responsibilities.
  3. Down - The CMO's role and responsibilities are downgraded, and the "head of marketing" may no longer be a member of the senior executive team.
  4. Out - The CMO leaves the company, either voluntarily or involuntarily.
If CMOs (or other top marketing executives regardless of title) want to move up or over instead of down or out, they need to demonstrate a new set of skills and capabilities. And there's no shortage of advice regarding what those skills and capabilities should be. Dozens of recent articles have weighed in on the skills and capabilities that the "modern chief marketing officer" should possess.
An article published earlier this year in the Deloitte Review provides an outstanding analysis of how the CMO role needs to change and offers concrete suggestions for how CMOs can earn the trust and confidence of CEOs and other members of the senior management team. The article is based in part on research jointly conducted by Deloitte and the CMO Council.
The Deloitte/CMO Council research revealed that the three most important drivers of CMO success are:
  • Knowing how to use customer data and analytics
  • Having an enterprise-wide business mind-set
  • Being the voice of the customer at the leadership table
In the Deloitte article, the authors recommend that CMOs should begin redefining their role by focusing on three key behaviors.
Relentlessly pursue customer expertise - Marketing is uniquely positioned to be the voice of the customer, and CMOs should constantly strive to improve their understanding of customers and demonstrate their customer expertise to other senior leaders. CMOs need to leverage data-driven insights to understand the whole customer journey, including those parts that don't directly involve the marketing function. They also need to build partnerships with other organizational leaders to deliver better end-to-end customer experiences and support the achievement of other strategic business objectives.
Make marketing make sense - CMOs should "speak the language" of other senior leaders and be ready to translate marketing concepts into terms that align with the objectives of those leaders. In other words, the CMO's goal should be to explain how marketing activities and programs will help other senior leaders achieve their objectives. Obviously, this will often require the CMO to quantitatively connect marketing initiatives with financial outcomes.
Establish a "center-brain" mentality - CMOs must balance the "right-brain" creative aspects of marketing with the "left-brain" analytical/data-driven aspects of marketing. Going forward, successful marketing will demand both strong analytics and inspired creativity.
The need for CMOs to acquire and demonstrate new skills and capabilities is also being driven by broader business management issues. Another recent article at the Harvard Business Review website observed that the average size of the senior executive team at large firms has ballooned in recent years. 
Although these larger teams provide some benefits, they also come with downsides. For one thing, many CEOs increasingly find themselves refereeing conflicts between senior executives. And even when outright conflicts do not erupt, there is a danger that each C-level executive will bring an overly narrow perspective about how to achieve enterprise-wide business objectives.
What CEOs really need are senior leaders who combine a broad and deep understanding of the business, functional expertise, and perhaps most importantly, sound business judgement. So the most desirable skill for "tomorrow's CMO" to demonstrate is the ability to understand how the business works economically and competitively, and how the marketing function can effectively support and advance the company's strategic agenda.

Image courtesy of cykocurt via Flickr CC.

Sunday, November 25, 2018

What Distinguishes Top-Performing Marketing Organizations

A recent survey by B2B Marketing and The Mx Group identified several differences between top-performing and poorly-performing B2B marketers. Not surprisingly, the research revealed that the best-performing marketing organizations excel at maintaining accurate data and integrating data systems, fully leveraging technology, and closely aligning with sales.

This survey included respondents working in a range of industries, with technology (27%), professional services (16%), and industrial/manufacturing/engineering (13%) being the largest segments represented. Eighty-eight percent of the respondents were located in the U.S. or the U.K., and 83% were CEOs, CMOs/VPs of marketing, directors of marketing, marketing managers, or marketing executives.

To identify the distinguishing attributes and behaviors of top-performing marketers, B2B Marketing and The Mx Group polled survey participants about ten factors that affect marketing performance. Top performers (17% of all survey participants) were respondents who rated themselves as successful or very successful across all survey questions. Poor performers (14% of all survey participants) were respondents who rated themselves as unsuccessful across all survey questions.

The following table lists the ten marketing performance factors that this research addressed. The table also shows the percentages of top performers and poor performers for each factor and the percentage point difference between top-performing and poorly-performing respondents. As the table shows, there is a gap of more than thirty percentage points between top performers and poor performers for seven of the ten marketing performance factors.

The data from this survey is interesting, but with a few exceptions, the reported findings leave a significant "hole in the middle." As noted earlier, top performers included only those respondents who rated themselves as successful or very successful on all ten performance factors, while poor performers were respondents who rated themselves as unsuccessful on all of the factors. Together, the top performers and the poor performers account for only 31% of the total survey respondents. So, 69% of the respondents fell somewhere in the middle, and the survey report provides little data about the attributes of those respondents.

It does, however, include overall response data regarding two important issues. First, only 31% of all survey respondents said they have fully deployed their marketing automation system. I would have expected this percentage to be higher by now, given that B2B marketing automation is a relatively mature technology category.

But other recent research has produced similar results. For example, in the 2019 Data-Driven Marketing & Advertising Outlook study conducted by Adweek Branded on behalf of Dun & Bradstreet, only 26% of surveyed B2B marketers said they use the "advanced functions" of their marketing automation platform. Another 31% of the survey respondents said they only use the "basic functions" of their marketing automation system.

The other somewhat surprising finding in the B2B Marketing/Mx Group survey relates to marketing-sales alignment. The survey report states that most of the surveyed marketers claim success at aligning with sales. However, specific survey findings raise some doubt about the accuracy of this perception.

Only 25% of all survey respondents said they and their sales counterparts share a "full definition" of who constitutes a qualified lead. Another 56% of the respondents said they and sales have agreed on a "limited definition" of a qualified lead, but they have no formal documentation of that definition in place.

This finding is particularly concerning, given the undeniable need to have sales and marketing teams work collaboratively to maximize profitable growth. Obviously, effective marketing-sales alignment requires much more than a shared definition of a qualified lead, but that is one of the essential building blocks.

It's increasingly difficult to understand why marketing-sales alignment is still such a seemingly difficult challenge for many B2B companies. The need for better alignment and closer collaboration between the two functions is clear and unambiguous. And one thing is certain. In today's B2B demand generation environment, the lack of effective alignment and meaningful collaboration between marketing and sales is both intolerable and inexcusable.

Top image courtesy of Ron Cogswell via Flickr CC.