As a direct marketing practitioner, I was tempted to write that CEOs and CMOs are finally catching up.
Catching up to what, you may ask.
They are realizing that strategically driven direct marketers had it right all along. It's not just about demand generation, positioning or branding as important as these all are. But that these were never the goal of marketing, but rather strategies to achieving the ultimate goal -- ROI.
For decades agencies and their clients thought that if they focused on demand generation, that sales would automatically follow. In the background, direct marketers were seen as second class citizens who were concerned only about short term sales. Except perhaps for a few such as David Ogilvy who undertood better the value of the direct marketing discipline. Rodney Dangerfield reflected the reality of the direct marketer's plight when he said, "I don't get no respect"!
But lo and behold came the digital age, where the customer rules. And every marketing expenditure must be measured based on its ability to yield profitable revenue within a financially acceptable timeframe.
Instead of soft quantification for millions of dollars spent on awareness advertising, CMOs must now give hard justification for their budgets.
Those days of anecdotal evidence are gone forever. And CMOs everywhere are still adjusting to a world direct marketers have championed for decades.
In what I consider to be the best research on this subject, IBM conducted a study in 2011 that aimed for 1,000 participants. In this Global Chief Marketing Officer Study, more than 1,700 CMOs from 64 countries spoke face to face with IBM Interviewers for an hour. Here is a brief analysis of the results as I see it.
Determining ROI the number 1 issue facing CMOs today
"Most CMOs are struggling in one vital respect — return on investment (ROI). Our research shows the measures used to evaluate marketing are changing. Nearly two-thirds of CMOs think return on marketing investment will be the primary measure of their effectiveness by 2015. But proving that value is difficult. Even among the most successful enterprises, half of all CMOs feel insufficiently prepared to provide hard numbers".
Let's be honest. In the past, most CMOs were not required to provide hard evidence that their strategies were working in the form of monthly or weekly ROI reports. But with increasing pressures brought on by the global economy, an increasing flood of competitors facilitated by digital media and a slow growth economy, organizations are keeping a tighter rein on their marketing expenses.
CMOs must now focus on deeper knowledge of customer behavior and not just markets
Many direct marketers become frustrated with agency educated CMOs who rely on market reports rather than a deep understanding of the behaviors exhibited by their own customers.
"One reason most organizations struggle to get the customer insights they need is that they still focus on understanding markets rather than individuals. At least 80 percent of CMOs rely on traditional sources of information such as market research and competitive benchmarking to make strategic decisions. Similarly, more than 60 percent rely on sales, campaign analysis and the like."
In the new world, CMOs must get a better handle on where buyers look for information, move from channel to channel and ultimately reach the buying decision.
It is no longer enough to know how segments make the purchase decision, but how each individual customer makes a purchase. This knowledge forms the foundation of the CRM strategy by customizing the message, selecting the preferred channel for repurchase and other steps each customer uses to purchase your product instead of a competitor's.
CMOs finally understand the need to marry up with IT
If you have read other posts on this blog, you know that direct marketers consider the relational customer database as the core of any significant marketing program.
Without it, any analysis of ROI tied to specific channels or testing is impossible. In fact, the ROI analysis relies wholly on the quality and quantity of the CMOs understanding of individual customers.
"The data explosion tops the list of headaches. More than 70 percent of the CMOs who think it's important say they aren't fully prepared to deal with its impact".
As one CMO stated: "I don't see how we can go forward without embedding IT into marketing."
Gearing up the staff to handle the analysis needed to run a state-of-the-art marketing effort
Marketing demands more now than just great creative concepts and flawless media execution. More than ever, customer insight comes more from understanding behavior than primary research.
As direct marketers have said for some time, what customers do and what they say end up dramatically different.
In the new world, data driven marketing makes companies more competitive. It also makes customer driven CMOs invaluable to the company because they understand customers better than any one else in the organization.
Pertinent and accurate knowledge of customer behavior requires a different skill set from the traditional marketing group.
Now marketing teams need analysts and digital experts who possess marketing know-how.
CMOs grapple with this staffing question. What is best? Marketers who have an understanding of digital or digital technicians who have some knowledge of marketing.
My contention is that you should be open to both options.
"Likewise, nearly two-thirds believe they will need to change the mix of skills within the marketing function and enhance its analytics capabilities. A telecommunications CMO in China summed up the general view when he noted, "Re-thinking our skills mix within the marketing function and aligning with IT are priorities for us."
The bottom line
CMOs must move from soft results analysis to hard ROI evaluation criteria as quickly as possible. They must also find a way to shore up their own skills in database marketing, analytics and CRM. Then integrate these concepts into the company's DNA starting with the CEO and then moving over to IT and ultimately overall operations.
This is a tough subject, because it is multi-faceted.
To begin with, as a direct marketing consultant I face client skepticism about marketing almost every day.
Many companies have spent a lot of advertising dollars that did not yield the revenue they needed or expected. So they draw conclusions about what caused the failure.
Some will never touch Pay Per Click with Google again because it didn't work. Or direct mail doesn't work. Or we tried outbound telemarketing three years ago and we found that it just cannot deliver the ROI we need.
More often than not, the marketers they hired did not know how to develop the value proposition, lacked objectivity or knowledge to create multi media strategies, or they simply planned and implemented the test incorrectly.
The bottom line -- marketers come with varied backgrounds and poor training. So that skepticism is valid.
In turn, I do not readily believe what clients tell me about the effectiveness of their marketing initiatives. Nine times out of ten, they either did not track the response correctly (or at all) or structure the effort as a test from which an analyst could draw reliable conclusions.
But to be truthful, marketing as practiced by most practitioners lacks discipline. So our reputation is well earned.
The process for achieving success in direct marketing is well documented. But few marketers and clients understand the considerable contributions the direct marketing strategy as a whole will bring to their business.
And unfortunately, the shrinking pool of expertise in this area makes my job more difficult because of the resulting skepticism brought about by inexperienced marketers and the growing number of new media platitudes that are propagating unchecked in the trade press and blogesphere.
A March, 2011, Advertising Age addressed one of the primary reasons why expertise and passion for marketing may be in decline.
The article, "Left to Fend for Themselves, Employees Feel No Loyalty to Agencies," the author reports on a speech given by global CEO Andrew Bennett of Havas' Arnold Worldwide.
Why is this an important issue?
For one, the advertising industry remains a primary breeding ground for CMOs and other marketers. And secondly, the article begs for a reason why this is so.
Note this from the article:
As for training, employees said they generally had to essentially train themselves, or figure out many aspects of their jobs on their own. According to the survey, there was a large disconnect between what employees and managers are saying in terms of training: 90% of employees said they learned by figuring out problems on their own. Conversely, 25% of execs said employees figured out their own issues. "The average Starbucks barista gets more training than the average communications employee."
Lack of training is the symptom and not the reason for the dearth of marketing talent. This lack of talent development comes from a focus on short term profits that favors shareholders rather than employees and clients. Furthermore, this trend exists throughout the whole of American industry and not just with agencies.
Most interesting, however, were comments from readers reacting to the article.
Training your people is not an elective, Business is getting harder, clients are becoming more senior, and agency people are more unprepared than ever before to address increasngly complex marketing challenges. ROBERT SOLOMON NEW YORK, NY
Agency staff are getting younger, less seasoned, and are virtually untrained. Some manage to find their way, others don't." Jamie Harding Birmingham, AL
The publicly held holding company model essentially destroyed the large agencies they hold. In order to constantly increase earnings per share, and satisfy large clients desire to hold down costs, the holding companies must reduce cost of goods sold (talent) to increase margins. The holding companies are trying to "save their way into growth" and this has never worked in the past. CHARLES LARSON INDIANAPOLIS, IN
So how do we overcome Corporate America's Skepticism about advertising and marketing?
Like most big problems, it begins and ends with stronger leaders and better trained employees. Those who benefited from mentors, company training and strategic vision need to hand their knowledge down to the next generation. Those endowed with a passion for marketing excellence need to continue to grow and share that growth with others at every opportunity.
Fortunately, many of you are teaching in universities, training corporate staffs and mentoring future leaders. We need you more than ever.
You may be looking for a marketing consultant now or some time in the not too distant future. How do you find one? And once you do, how do you qualify them for your project or specific marketing challenge?
The first step is to organize your thoughts and lay out the task at hand. Once that is done, then the job of finding a consultant becomes second nature. You ask your business friends and other contacts if they know of someone who might best help you with your project. Or even a web search can quickly round up some likely candidates.
Look them up on LinkedIn for credentials and referrals, do an Internet search and start the process of culling down the filed to those who can do the exact task you have in mind.
But what I have found is that most successful projects begin with good planning on the client's part. So the rest of this post deals with helping you, the company in need of a consultant, prepare for a successful search
1. Determine what you want a consultant to help you accomplish.
You obviously want them to help you achieve your sales goals. But that is far too general. So get as specific and quantitative as possible.
For example, we have determined that we need to increase sales by 10% in the following target market over the next 12 months for a total of X. We have X dedicated sales people who need a lead flow of 2 appointments per week with a sales conversion rates of 20% for X number of new customers.
All objectives whether big or small should specify volumes if at all possible. Otherwise, how are you determining whether the consultant or your decision to spend the money worked?
Determine what success is before you enter into a contract relationship with a consultant.
Other legitimate objectives might be to make it easier for people to find your website or improve the effectiveness of your existing programs. But again, you should determine this as far as possible before you begin your search.
2. Help yourself and the consultant by defining your perfect prospect
If you have a business to business market, define your perfect prospect. Who makes the final decision? Who are the decision influencers in a typical prospect company? What industries are you most interested in attracting as new customers? How many employees do they have? Are they startups? New companies? And so forth.
For business to consumer, give the marketer a feel for who your best customers are, where they live and something about their demographics and lifestyles.
This gives the marketer critical information about how to approach your challenge.
3. Evaluate the marketing consultants based on the questions they ask during the initial interviews.
Are they results oriented? Are they interested in making money for you? Do they ask penetrating questions about your business, your customers, your prospects and your competitors?
4. Are they objective about their recommendations?
My first comment to this heading -- is that even possible?
MarketingZone.com says: "You want them to be 'marketing tactic neutral' meaning that the person understands and appreciates all the different marketing tactics (email marketing, direct mail, advertising, PR, trade shows and events, social media, online marketing, web sites)."
But I've found marketers tend to recommend what they know best.
I have yet to find a marketer with 100% objectivity. All are influenced by past experiences of what worked and what didn't. And no two marketers come with the same backgrounds or experiences.
So what do you do?
It helps if the client has some idea about what they want to do to accomplish their objectives. That's why preparation prior to looking for a consultant helps so much. As the marketing consultant searcher, you know what you are looking for.
Do you want to sell primarily over the Internet and believe your ultimate sales goals can be achieved by maximizing your website, then look for a Search Engine Marketing (SEO) specialist to help you build your Internet reputation and organic search.
If you have a highly defined decision maker in specific geographies that are targetable, then you should consider a direct response specialist to help you generate leads and sales from them rather than waste money trying to build awareness.
PR, image advertising, Search Engine Optimization, direct marketing, sales promotion and so one are all valid approaches, but marketers who know all of these areas equally do not exist. Nor will they all recommend the same approach.
5. Should you elect a consultant with specific industry expertise?
Not necessarily. I would focus first on someone who has the marketing expertise you need.
Selecting someone with specific industry expertise does have some benefits.
The upside is that they know the regulatory and competitive environment or other quirks about the industry. This could make them more efficient in some cases.
Consultants who sell vertically within the same industry makes some clients uncomfortable. They can take what works well for one competitor (and that may be your firm) and duplicate it across the board if it is transportable. If it's not, then why hire them in the first place?
Another problem is that vertical marketing specialists tend to bring inbred marketing ideas with them rather than cross-pollination from multiple industries.
More important is to hire a marketing specialist who may have little to no experience in your specific industry, but brings depth in the specific marketing specialization you have identified as a need.
Asking a marketing generalist who knows your industry inside and out to handle your direct marketing program will likely not do nearly as well as a direct marketing specialist with no comparable industry experience to handle the same program.
Marketing expertise trumps industry expertise when it comes to marketing.
What other things should clients consider before looking for a marketing consultant?
There are essentially three ways marketers will respond to today's quickly evolving marketing environment. The first type responds quickly on impulse, the second attempts to understand the marketing environment based on universal principles before reacting, and the third demonstrates behavior that reflects a combination of the two.
As much as I would like to think that one of these three approaches is the best way to go, I think they are all equally important for success.
- Social marketing should be the focus for the next 12 months
- Internet marketing without the support of other media is the new wave
- Email is the way to go leaving direct mail, print and DRTV as irrelevant to what we need in the future
- Crowd-sourcing! Now that really points us in the right direction
Such marketers see the marking assignment as a series of tasks or tactics that focus on trends rather than overarching strategies. They rarely recognize, or care about the underlying triggers that form marketing trends.
They have the ability to change on a dime and rarely slow down to think through anything too much. Action rather than thinking wins the day.
2. The marketer driven by the need for change
Evangelists who support universal marketing strategies regardless of the environment reflect these types of marketers.
Such marketing principles might include these kinds of ideas:
- Customer driven
- Quantifying results
- Purchase motivators
- Multi-channel marketing
These marketers follow their internal muse and believe every marketing process and strategy leaves ample room for improvement.
Trends may inspire them to action. But it is more likely that something within inspired them to pursue a long term vision only they can see.
They see the world as a place where they can bring new thinking and new ideas that transcend trends. They believe in universal marketing principles that do not change with the times. Such marketers do not readily embrace trends until they understand them and have identified the principles that created them.
These marketers believe that principles precede strategy.
In fact, they believe that a tree falls in the forest whether someone hears it hit the ground or not.
3. The marketer driven equally by principles and free flowing adaptability
This third marketing type represents flexible marketing leaders who combine adaptability with deductive reasoning. This is a balancing act few can follow.
Analytical thinking continually challenges all trends whether new or old. Yet such marketers do not require full understanding of trends before acting on them. They are naturally curious and will continue to examine any trends for their impact on their businesses.
They have an inborn ability to unite adapter and change agent marketers. They understand the power of the evangelist as well as the adaptive marketer who will react quickly to poorly understood trends.
There are certainly other types of marketers. But these three types tend to stand out in my experience.
What other types of marketers have you seen? And what strengths and weaknesses do they bring to the table?