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 (tradingacademy.com) via Flickr CC.