Lockdown Bounce-back; Time to Plan for Sales Take-off!
The Covid-19 pandemic has changed the lives of us all. So many businesses have been adversely affected through seemingly no fault of their own. But let us look at this a little more closely. To the true marketer there may be more going on than first meets the eye. No doubt opportunities beckon; some you would expect but others you may not. So with plans to ease the restrictions announced (1) now is the time to plan your lockdown bounce-back.
Sales fading away?
Sales of high heeled shoes have fallen dramatically (2) notwithstanding the staying at home, health and fashion memes that are already taking hold. Car usage has also declined due to concerns about climate change and healthy living. And sales, by uncertainty and lack of understanding about electric and hybrid.
Pandemic magnification
However, these underlying shifts are merely being magnified by the C-19 pandemic. And the biggest shift of all … to a digitally dominated world …. is facilitated by evermore smarter phones with increasing accessibility and more acceptable access cost.
The shift is most obvious in retail (3). Whilst many retailers bemoaned the health crisis and gobbled up the Government grants, this merely diverted attention from their inability to anticipate and position themselves to compete in a digital world.
Identify or face the consequences of shifting markets
Consequences flow from the inflexibility of Marks and Spencer, to the ubiquity of Tesco, to the profit squeezing of fund-owned brands such as Boots and Debenhams. Also the fall from grace of wheeler dealers who grew fat on the glories of pre-existing brands. All of course were further compromised by greedy local government making it difficult and costly to visit any high street.
Bounce-back Marketing Inspiration
As the UK Government recently announced plans to lift the lockdown, now is the time to plan your lockdown bounce-back!
Firstly it is important to consider the overall trends; what are the underlying forces, and what do these mean for your future? This is key to devising effective business and marketing strategies.
A recent CEO survey suggests that 77% of UK CEOS are increasing their investment in digital transformation as a result of the pandemic. So work out the best balance and inter-relationship between on-line and offline, and invest accordingly. Many recognise too that the balance of office and home working has changed forever. This is an opportunity to boost staff morale, as well as improve efficiency, and enhance sustainability credentials. We certainly feel this way. And we’ve heard anecdotal tales of staff at some businesses being told to work more slowly because they were getting more done at home!
Remember too that managing marketing in a digital world contains lots of traps for the unwary. So tread carefully. The quickest wins are likely to come from your core target market. So focus on the ‘sweet-spot’, and promote in tones that reflect the circumstances in which we live.
Lockdown bounce-back also means recognising the long term benefits and the importance of your brand, as well as giving attention to your detailed product and service offering. So remain true to and clear about what sets you apart.
Going forward retailers must pay more attention to the shopping experience that they control rather than hand it over to the brands they stock and don’t own. John Lewis, and many garden centres, for example, have long realised the appeal and profitability of restaurants.
And finally the Government must step-up too. And strike a fair playing field in terms of taxing the High Street, and on-line pure plays. It is time to change the rules for those who are based in, or channel revenue through, offshore havens.
References
(1) Press release from The Prime Minister’s Office February 22 2021
(2) Glossy.co (2020)
(3) A record 35% of sales were online (January 2021 – ONS)
(4) CEO survey (PricewaterhouseCoopers March 2021)
Strategic Planning; 3 Steps to Grow Your Business
We often get asked to help businesses get closer to customers and to develop new business, marketing and brand strategies. Yet businesses plan, organise and manage in different ways. Virtually all also have their own lexicons. Thus sometimes a challenge to address the latter really requires the former and vice versa.
However, a marketing mindset is powerful to address either, and indeed all of these challenges. Marketers are also increasingly empowered to lead business strategy, and many of the world’s most successful businesses are led by CEOs who previously held marketing functional skills.
However, marketing has not always been viewed as a strategic planning and management discipline. It only emerged formally as such in the 1950s (1). Marketing functions evolved from sales, and brand functions, from communications. However, customers and brands are the only constant in a fast-moving digital world.
Simplified strategic planning: 3 steps to success
So here is a simplified strategic planning process that is adaptable for all (2) (Figure 1 – Infographic).
Step 1: Clarify where the business or brand is now
By understanding where a business or brand is now and where a business wants to be in the future allows route-map development.
So first understand where the business or brand is now. Ask what are current business, marketing and brand strengths and weaknesses and business drivers?
The marketing discipline uniquely looks through the lens of customers and customer segments to assess issues, size market opportunities and demand influences. It also looks at competitive relativities. So the answer these questions looking through these lens.
Step 2: Use imagination and analysis to generate ideas, and determine where you want to be
Work with colleagues and allow human imagination to generate and build ideas (2). Then create clear, challenging, and inspiring goals. While some organisations prefer an analytical approach to business strategy development, others prefer a more creative approach. However, there is merit in dual ‘left brain’ and ‘right brain’ thinking. Left brain thinking involves assessing the pros and cons of each idea or opportunity. Right brain thinking requires stepping away from the detail, and taking inspiration from the world around, to imagine new opportunities and destinations. In our experience no-one has a monopoly on good ideas, and employing different brains fuels progress.
Planning from the customer, market and brand point of view requires considering how to establish or meet customer needs or change customer perceptions. As distinct from setting financial goals, say increasing sales by 5% or realising £Xm. The limitation with the latter is that it is not initially market and customer based. Though financials will need overlaying at a later date.
Step 3: Conduct gap analysis and figure how to bridge the gap
By clarifying where you are now and want to be, will allow you to quantify and qualify the size of the gap that needs bridging. In so doing, potential roadblocks or key issues to address should also become clear. So then the challenge is to design strategies – ‘how to’ solutions, to address the key issues. If this is not possible, then new goals need setting.
Strategic planning success factors
Engage colleagues to win a mandate for change
Engaging colleagues is important to gain buy-in to a way forward.
The best solution is seldom the one that is 100% technically correct if only 20% of stakeholders agree with it. However, a better solution is one that is 90% technically correct where most stakeholders agree with it.
Thus engage a broad church to fact-find, understand hopes and fears, and generate ideas. Then work together to turn your ideas into concrete strategies and solutions.
Through working together, and judicious market research, the best ideas should naturally surface to the top. And with agreement every step of the way, comes a mandate for, as well as desire and commitment to change.
Anticipate and mitigate risks
Change, and the journey to success will not happen overnight. Especially if the journey involves shifting customer hearts and minds. So be pragmatic about what’s achievable, at what cost, and by when. Also understand the risks and barriers to change and factor these into your plans.
Strategic planning context: The product to brand journey
Figure 2 shows a typical journey from basic product to power brand led business. At each stage on the product-brand continuum you’ll realise additional customer and business benefits (3).
If you are a product, service or sales-led organisation, there are benefits in simply understanding and meeting the needs of customers. So put the customer and his or her needs first and centre using market research.
For organisations in markets where brands are emerging as a differentiator, you also need to understand your competitors. And use these insights to better position your brand.
For digital and service organisations delivering through people, and for larger product brands, understand and influencing perceptions through all brand encounters. This needs structures, skills and processes to focus and align people activities and behaviour to deliver consistent brand experiences.
Finally, the very largest organisations and those contemplating expansion into new countries and categories require more sophisticated relationship building strategies. So build brand personality, structures, skills and processes to extend your brand.
Marketing Inspiration
- While strategic planning is as simple as 1-2-3 it is complicated by different functional leads, what went before, and who is in charge. Yet customer and brand marketing perspectives are gaining increasing traction to drive business growth. So help senior management understand this point, and start by working collaboratively to define relevant business goals.
- Rarely will success follow if the strategic planning is conducted in a silo, by one person or without engaging the business at large. It is more likely to work by engaging across the entire organisation.
- It is easy to have ‘rose-tinted’ spectacles, in other words, be overly positive about your own skills and competences. The acid test of a ‘strength’ is through the customers’ eyes and relative to competition.
- As business and brand drivers continually wax and wane, stay abreast of changing dynamics, and also what works and doesn’t. As a result you’ll be better able to deploy your businesses’ finite resources to influence customer choice.
- Finally, for those new to marketing, investing in a brand may be a step too far. However, for an inspiring view on the way forward just ask away; our marketing consulting services are always bespoke.
References
- Webster Frederick E. “A Perspective on the Evolution of Marketing Management” Journal of Public Policy and Marketing Vol. 24 (1) (Spring 2005)
- Harari Yuval Noah. Sapiens – A Brief History of Humankind (2014)
- Arnold Tim, Tomlinson Guy. The Marketing Director’s Handbook (2008)
Managing Marketing in the Digital Age
Everyone knows how much our lives have changed since the advent of the digital age and C-19.
The Coronavirus digital catalyst
The number of platforms, their actual usage and also time spent online has just grown and grown. It also sky-rocketed at the height of the Spring Coronavirus lock-down to 4 hours and 2 minutes a day (April 2020) compared with the mean time spent online in 2019 of just 3 hours and 19 minutes (1). And linked to this the online proportion of total retail sales also sky-rocketed to nearly 33% compared with less than 20% through the whole of 2019 (May 2020)(3).
It is fair to say that this massive growth caught everyone by surprise except the early digital adopters who could easily be underestimated as nerds, the youth of today or both!
Looking to the future
The world will never be the same again. Let’s face it, digital permeates every aspect of life for every generation of whatever creed or country. Generation Y (so-called Millennials) watched as the digital world erupted around them, and Generation Z were the first generation to live digital lives from birth. The current lock-down can only embed the shift to digital. And the children of Millennials (Generation Alpha) are set to be the most digitally savvy ever (Figure 1).
Dominance of Google and Facebook
But did you know the extent to which Google and Facebook dominate online reach and time spent online? (Figure 2). In the UK, they reach over 95% adults and command over 45 minutes and 30 minutes a day respectively. Their dominance is such that a massive 39% of total time is spent on Google-owned media (including YouTube) and Facebook-owned media (including Instagram and Whats App) (4).
And as the public turned online, so has Marketing. As a result, some 57% of total UK advertising expenditure now goes online. Initially and still mostly to Google, who offer certainty of audience reach at a competitive cost and also expertise on the vagaries of search and algorithms. All without the need for a long term commitment to planning or creativity.
Yet their costs have grown and thus the balance of spend has tilted their way at the expense of TV and press, outdoor and public relations, and even other online media. Such that some 78% of online advertising spend, now goes to Google and Facebook (5). However, advertising was not their original nor primary intent, and their advertising and analysis offers are only based on a superficial understanding of marketing. Not for these digital experts the troublesome need to build brands or customer loyalty, but merely to attract clicks.
However, there are now signs that the emperors’ clothes are wearing thin. Google’s annual minutage fell in 2019 (6), and search advertising revenue appears to be flat-lining. Though Facebook advertising shows continued growth (Figure 3).
The role of marketing in the digital age
So how to manage marketing in the digital age? Building strong brand relationships and customer loyalty remain the bedrock of marketing.
While the digital world perpetuated keeping in touch and entertainment in many forms, customer usage also expanded through predictive text and emoji. Because people do what they always do … congregate and gossip, and be amused and saddened.
For human nature is what it is. And understanding human nature and their concomitant behaviour is also at the heart of Marketing.
Marketing Inspiration
The fundamentals to manage marketing in the digital age remain constant as much as change is a constant. It is in embracing change and remaining customer-centric that Marketing is most successful.
The Marketing Director’s role is to understand and exploit the change to benefit their organisation by always staying one step ahead. That’s what successful marketing has always done and must continue to do.
To help you stay a step ahead, we’ve now launched Volume 2 of The Marketing Director’s Handbook – Managing Digital Marketing. This spotlights, and puts marketing in the digital age in context. It provides practical insights to help you understand the changing digital world and also to manage key digital marketing activities. In particular, to optimise your website for search, and better use advertising, and social media to attract and engage more customers. And most fundamentally to better lead your organisation, and manage the marketing whole.
This new volume fits like a jigsaw piece with the original practical marketing guide. It is a unique reference work you’ll be able to refer to time and time again. It is available from all good bookshops, including The Chartered Institute of Marketing bookshop, Foyles, Waterstones, WH Smith, Blackwells, Amazon, many university bookshops, as well as our own bookshop (with free P&P).
References
1, 2, 5 and 6. OFCOM Online Nation 2020. Base: All adults 18+
The UK Productivity Conundrum; Eight Insights for UK plc
Productivity is an economic concept (Figure 1). It represents the ratio of economic output: input. Practically, productivity assesses the competitiveness of an economy, and the health or otherwise of constituent businesses. It also indicates a country’s ability to improve raise wages over costs as this depends largely on raising output per worker. Thus understanding UK productivity is key to determining how to improve the UK economy and businesses.
Since 2008, UK productivity failed to follow the previous 10 years plus trend line (Figure 2). Overall output fell by 6% yet employment by just 2%. As a result, productivity fell by 4%. Exactly why UK productivity failed to grow is hotly debated by economists (1). The decline is similar to other major OECD countries (with exceptions such as the USA and Ireland (2)).
We, therefore, thought it helpful to have a view. So in this article, we investigate why? We also pin-point lessons for UK plc and businesses. In particular, we cover:
- How to measure productivity?
- The employed population
- The role of the service sector
- The role of the Internet
- The rise of challenger brands
- Management influences
- Conclusions
How to measure productivity?
In general, labour productivity is the ratio between a measure of output volume (gross domestic product or gross value added) and a measure of input used (the total number of hours worked or total employment).
For our analysis, we use the following UK Office for National Statistics (ONS) definition (3).
Productivity = output per worker i.e. Gross Value Added / Total Number of Hours Worked (by those employed).
Gross value added (GVA) is the same as gross domestic product (GDP) minus taxes on products plus subsidies on products. We use the ‘Chained’ definition to eliminate the effect of inflation.
We also use time series data with 2007 indexed as 100 to match Figure 2.
Thus, for productivity to improve, this means that output must rise ahead of hours worked. Or more must be produced in the same or fewer hours. Let’s investigate further.
Reasons behind UK productivity decline
Figure 3 shows first, that total hours worked failed to keep pace with the trend line between 2008-2014. The decline between 2008-2014 reflects the fall-out from the banking crisis. Between 2007 and 2009 some half a million lost their jobs when many firms down-sized, went out of business (and/or were taken over). Some notables in financial services include Northern Rock, Bradford and Bingley and Lehman Brothers. However, total hours worked is now back on the long-term trend line mirroring population growth. Nevertheless, the number of hours worked has failed to ‘grow output’ or it has held up despite the fact there is less to do. Both options suggest some time is ‘wasted’ or ‘inefficient’.
Second, total output (Chained GVA) grew strongly between 2000-2007. It also fell sharply at the height of the banking crisis, yet continues to under-perform the trend line. Thus this also appears a compelling reason for the productivity decline. Let’s investigate both of these factors further. Starting with the supply-side.
The growth of single owner businesses and part-time employees depress output
Since 2008 the number of single owner businesses and part-time employees grew above the trend line (Figure 4).
However, according to the Annual Business Survey, the ONS’s annual tracker, small firms produce less than large firms (Figure 5). Overall, therefore, it seems that a shift in the mix to less productive firms has depressed overall UK productivity. Further, as Figure 5 also shows, even the productivity of the largest firms fell during the heights of the financial crisis. This suggests that even switching some workers to part-time contracts, failed to maintain productivity. Of course, both part-time and full-time workers still require the same training.
Further, looking at the ‘W’ shape of Figure 5 suggests that firms of all sizes have ‘bounced-back’ from the worst of the recession. With output at between £43-52,000 per worker, figures match those a decade earlier. It therefore appears that both employers and workers appear to have swallowed a new pill to keep businesses fully functional, flexible and to benefit quickly from an economic recovery.
The service sector is a key growth driver (Figure 6)
The UK service sector currently accounts for 80% of output and hours worked (2018). This is an increase of 7% points in output and hours worked since 2000 (from 73%). Further, in the 7 years to 2007 the increase was 4% points, yet in the last 11 years, just +3% points. While the service sector continues to grow ahead of the rest of the economy, growth remains below the pre-2007 trend line. As Government has focused on ‘belt-tightening’ since 2008, and Brexit since 2015, it is unsurprising, that spending remains depressed. But what’s going on in the different sectors?
Under-performing and over-performing service sectors
Closer inspection of the performance of individual service sectors reveals six laggards: wholesale/retail, finance/insurance, recreation/culture, hotels/catering, transport/storage, and the public sector (Figure 7). All six continue to perform below the historic trend line. Performance changes may be due to lower levels of expenditure and/or trading down to lower value, margin, or non-essential services. This seems reasonable given several sectors appear more ‘discretionary’. A decline in transport could also be explained by an increase in ‘stay-at-home’ entertainment.
Two sectors are yet to show a marked change of trajectory post the financial collapse. First, the finance sector which grew very rapidly to 2007 (with historical evidence pointing to uneconomic over-lending as the reason). ). Yet the sector still trails the pack. This seems due to a combination of low interest rates, low consumer confidence, and the rise of challenger banks (offering better value, and perhaps an opportunity for revenge). Second, the public sector; while resilient post ‘crash’, public sector GVA declined from 26 to 22% of the service economy from 2000-2017. However, hours worked remained c. 28% throughout the period. Thus output per hour has fallen and remains subdued.
Over-performing service sectors
Conversely, some service sectors have over-performed: services businesses (including rental, building and employment services), real estate, IT (including media and telephony), and other services (includes scientific, technical, law, accounting, advertising and consulting professions) (Figure 8). However, growth for all but two remains below the historic trend line. Growing most strongly, are IT (reflecting many new markets and growing customer penetration), and service businesses. Some services businesses, such as employment, advertising, consulting, and media firms, were highly responsive to changes in the economic environment. They quickly laid off staff or reduced hours or salaries, and vice versa, to maintain competitiveness and profitability. Many are also highly reliant on people, particularly well-educated people, to deliver services. Also on personal relationships to drive demand, rather than mass marketing, and the Internet.
The growth of online is the elephant in the room
Since 2007 the UK has experienced major sociological shifts, ‘belt-tightening’ societal pressure, and the rise of online channels. The financial crisis of 2008 also seems to coincide with a tipping point in the rise of the Internet. In 2000, just 27% of the UK population had Internet access, and fast speeds were non-existent. In 2007, 75% of the population had Internet access, and 50% received broadband at an average speed of 4.6 Mb/second. The first iPhone also launched in 2007. Yet today UK Internet penetration is over 90%, and average download speeds are 45-47 Mb/second (4). The first iPhone also launched in 2007 yet today 80% own a smartphone.
Aided also by the growing number of comparison sites, there is an increasing and high propensity for customers to compare and hunt lower prices (up to 30% less) online.
Thus online purchasing has grown significantly from just 3.4% of retail sales in 2007 to nearly 18% in mid 2018. Further looking at trends (Figure 9), overall retail sales since 2007 remain below the overall output trend line. And retail sales excluding online sales, even further below the trend line. The pattern of decline is almost a mirror image of the growth in Internet users.
The arrival of Black Friday
The convenience and financial benefits of shopping online enabled by increasing broadband and mobile penetration continue to drive online sales growth at the expense of ‘bricks and mortar’ retailers. Black Friday appeared in the UK in 2009 championed by etailers such as Amazon, eBay, and others. It was also spurred by Asda in 2013. However in 2015 Asda de-clined to participate, announcing that their customers preferred year-round deals rather than a single day of discounting. Reading between the lines, this suggests the event had little effect on Asda’s bottom line. Perhaps merely serving to bring forward demand. Conversely, etailers have experienced significant sales and growth.
The rise of online challenger brands
The UK branch of Amazon EU alone amassed £21 billion sales in 2017, +80% over 3 years (and equivalent to £7.5m per employee). However, as this Amazon business is based in Luxembourg these sums are largely removed from the UK’s accounts.
While the wholesale/retail sector only accounts for a 10-11% of total output, other sectors such as real estate, hotels/catering, recreation, transport, and finance /insurance markets, also have burgeoning online sectors. And the last decade or so has seen online challenger brands enter and grow share in other markets too. Examples include Rightmove in real estate, Booking.com in travel/hotels, a myriad of flight search engines, Confused.com and ComparetheMarket.com in finance and insurance, and uswitch.com in energy.
The growth of online therefore appears to coincide with the removal of a significant chunk of income from the UK economy.
Significant growth in online advertising
Figures were first recorded for digital advertising expenditure in 2005. In 2005 spending was just under £600m (some 5% total advertising expenditure). In 2007 digital advertising spend was 9% of the total, and by 2017, 28% of the total (£5.7bn). This is a growth index of 474 vs. 2007 (Figure 10).
While online advertising potentially influences all purchases, growth better correlates with online sales rather than total output (Figure 10). While online advertising potentially drives income, it is also a cost, and only adds to profits if extra income generated exceeds extra costs. It remains to be seen whether this level of online advertising is sustainable (6-8% income) and grows margins.
What we do know however, is that a very great proportion of online advertising income is also due to US owned Google and Facebook – both based in Ireland. Google Ireland’s turnover is £27.5bn (£9.2m/employee) and Facebook Ireland’s turnover is £16bn (£4m/employee). Again this suggests a significant chunk of UK advertising output has shifted offshore.
Structured management practices enhance productivity
Now let’s return to the role of internal business influences on productivity (Figure 11). In 2016, the ONS surveyed management practices among 25,000 firms. The so-called ‘management practice’ score is an aggregate of several measures including practices relating to continuous improvement and employment management – such as those relating to promotions, performance reviews, training and managing under-performance. In the questions, a score of 1 is assigned to the most structured management practice and 0 the least. The mean score across all organisations was 0.49. Their analysis found a statistically significant correlation between management practices and labour productivity, with an increase in management score of 0.1 associated with a 9.6% increase in productivity.
The analysis also shows a statistically significant relationship between management practices, the size of a firm, and productivity. Further analysis also reveals that family firms have lower management practice scores and productivity than non-family or foreign-owned firms. Management scores are also higher for the real estate, service business, and other services (scientific and technical) businesses. A higher incidence of degree-level staff is also associated with a higher management practice score and greater productivity.
Does time spent online at work affect productivity?
Finally, we explore the effect of hours spent online at work to see if this has any bearing on productivity (Figure 12). Since 2007 the number of hours spent online at work (or in education) doubled from 3.3 hours (10% total in 2007) to 6.6 hours (20% total in 2017) (6).
While we cannot precisely quantify productivity in those hours, some research raises questions. Asked whether ‘I feel more productive without the Internet’, 10% of adults 16+, and 15% of those aged 18-34 answered ‘yes’ (6). Recent announcements that Wetherspoons, and Lush Cosmetics, are closing their social media accounts, also confirms (at least for them) that the marketing time-costs fail to outweigh the benefits. And if marketers are failing to realise benefits, it raises the question are you?
Marketing Inspiration
- It appears that there are many supply and demand side-factors that depress UK productivity. Including competition from other nations.
- While the financial crisis spurred many new businesses, the smallest are least productive, and have most to learn. They should seek help from the UK’s world-leading academic, creative, and marketing consulting community.
- The financial crisis of 2008 also depressed customer confidence and purchasing. However, marketing deals with changing attitudes and perceptions. And basic marketing communication principles suggest that businesses and customers will buy and invest to secure benefits, rather than to avoid disbenefits. To drive demand, all should therefore promote positive messages. The national campaign starts here.
- Further technological and societal change is inevitable. And with online sales accounting for c.20% total, expect further growth. Marketing’s answer to the UK productivity crisis is to invest more in understanding the social and behavioural causes and effects, and inspiring products and services that deliver benefits.
- Off-line players face threats from low price online players and disintermediation. So choose to join and beat them. Or lose out. Winning requires improved customer value propositions or world-efficient supply and production capabilities.
- Digital promotion is here to stay. Though online advertisers should carefully measure returns. And remember that the marketing mix also includes off-line media with very high reach and impact.
- Declining public sector productivity is a threat to the whole economy, as income comes from private sources. The challenge is to deliver more for less, build world-class organisations and reduce income loss from UK shores.
- The openness of the UK economy, high Internet and smartphone penetration, and fast broadband, fuels customer and business agility, and innovation. However, the Internet also brings distractions that appear to dilute UK productivity. Addressing this starts with awareness of the issue.
What do you think?
References
(1) Patterson, Peter, Deputy Chief Economist, Office for National Statistics, The Productivity Conundrum, Explanations and Preliminary Analysis, 2012
(2) Organisation for Economic Development (OECD)
(3) Camus, Dawn, Editor, The ONS Productivity Handbook – A Statistical Overview and Guide, 2007
(4) UK Fixed Line Broadband Performance (Residential), OFCOM, November 2017
(5) Management and Expectations Survey, Office of National Statistics and Economic Statistics Centre of Excellence (ESCoE), 2016
(6) Communications Market Report, OFCOM, August 2018
Thanks to the UK productivity team at the Office of National Statistics for answering our questions and helping with our analysis. Also to fellow marketing consultants at The Marketing Directors, Chris West, and Tim Arnold. To anyone wishing to build on this analysis, please do. We’re also happy to share our datasets and insights to help you.
B2B vs B2C Marketing; What works best on the dance floor?
B2B vs B2C marketing is a very different proposition. Or is it? The growth of digital media means that there is an increasing number of channels and methods from which to choose. So how should marketers approach the task of engaging and winning customers? It’s a bit like learning a dance.
Comparing B2B vs B2C marketing
Businesses that Sell to Consumers
The B2C marketing challenge is to build product awareness and convert browsers into buyers. As it’s usually a ‘low involvement’ purchase, say to buy a confectionery bar, thus marketing campaigns must capture the consumer’s interest immediately. Typically mass promotion activities like tv and press advertising are employed. In addition, special offers such as discounts or vouchers ‘activate’ the purchase. The challenge is therefore to establish an effective one-step routine.
In the online world, an email or search marketing campaign encourages consumers to click and buy. The email or advertisement encourages consumers to a website landing page designed to sell the product. The purchasing process must be simple and easy, for example, by integrating the shopping basket and checkout page. Requiring more than a couple of clicks risks the customer shopping elsewhere.
Businesses that Sell to Businesses
The goal of B2B marketing is also to convert prospects into customers but the purchase is usually more considered. More decision makers are usually involved and the challenge is also to engage and educate the target audience and build relationships. To succeed a B2B company must generate and nurture leads over a longer time period. A careless or quick step could mean a lost partner (or customer). The challenge is to therefore also to establish an effective multi-step relationship building routine.
In the online world, an email campaign or online advertising campaign again typically drives prospects to a website. However it is less likely to achieve an immediate sale. A more realistic goal is to secure a meeting with a sales representative in order to discuss the customer’s business requirements in more detail and also influence him, her or them to buy (i.e. complete a sale). By providing information about the products and services, benefits, features, possibly pricing, and also contact information, reassures customers and wins trust. Conceiving marketing activity as one of several steps in a longer, integrated, multi-step campaign is more likely to persuade. Consider awareness and relationship building via direct mail, newsletters, video promotion, webinars, virtual exhibitions, conferences or live events and also social media such as Twitter or Linked In .
Marketing Inspiration
While there are differences between B2B vs B2C marketing, the principles about engaging and building customer relationships remain the same. At the outset use market research to understand the customer journey from the customer’s point of view. In particular, the sources of information and the selection criteria that the customer uses, and the triggers and barriers to building awareness, relationships, and drive sales. At each step along the journey, consider how the experience that your brand delivers is different from or better than your competitors. And if it is no different, then work out what improvements to make.
This information will then help you build a better marketing communication strategy. Specifically the key messages, media and timing to attract and engage customers at each step on the journey. If you are a B2B marketer, learn how to dance the marketing 2 or 3 step. And while B2C marketers may be 1 step routine masters, learning a 2 or 3 step routine may help you to build stronger customer relationships. In so doing you will better invest your resources to really make a difference.
Additional reading
1. How B2B customers search for tech solutions, Tenfold.com
Brexit Planning; Time for UK business to embrace the world
On Dec 31st 2020 the UK left the EU single market. So what does this mean for UK businesses and marketers? As everyone digests the facts, and plans are enacted, new issues and opportunities become more evident. So it is never too late to finesse your Brexit plans.
Rather than think doom, gloom and despondency, think positive, and as global citizens, embrace the world
The trade barriers erected around the EU protect EU businesses from global competitive pressures. As a result they cause ‘flabby’ rather than ‘fit’ competitors. The UK has a proud history as a free trading nation and being ‘open for business’. Thus UK business should be materially ‘fit’ to compete in unfettered markets. Also to attract inward investment.
The world is a big market
According to the IMF (1) the world economy was worth $73.2 billion with the EU accounting for $16.2bn (22%) (Figure 1) in 2015. Thus the rest of the world accounts for the larger proportion (78%), with the USA, China and Japan, being the largest markets.
Many global opportunities
Moreover, emerging markets are forecast to grow faster than the developed markets, and China and India will both reach the top 3 by 2030 (Figure 2). There are many opportunities to grasp.
As marketers we know that the most successful businesses are those that understand and meet the needs of their customers. Thus investing in research and marketing to better understand and meet future customers’ needs, and build relationships and value makes sense.
Marketing Inspiration
1. To best manage the risks, and realise opportunities, you should continually update your business and marketing plans. Also make clear that you that you value your customer relationships, and take steps to strengthen those relationships.
2. Keep searching for win-win opportunities to sell, invest and buy. Also acquire knowledge to build competitive advantage. Use research to uncover insights and and realise short and long term opportunities.
3. Have no fear. The fittest or most able will be the most successful. So stay true to good business and marketing principles; understand customer needs, and demonstrate and deliver value in meeting needs.
4. For any business that considers themselves unfit, finesse your Brexit plans to maximise the value of your offer and embrace the world.
References
- International Monetary Fund
- PricewaterhouseCoopers
Business Strategy; The Role of Marketing in Driving Success
What enables some businesses to weather the changing economic climate and the cold wind of market forces, while others wither? The most successful grow income and budgets steadily, while the weakest are left with diminishing income and budgets. Or none at all. Just as Darwin observed, the fittest survive or thrive, and the weak die. While research by Jim Collins and Jerry Porras (1) revealed the benefit of an ambitious, engaging business strategy, however, the role of marketing has received less attention.
Business success factors
Business strategy, and marketing, were first recognised as important in the middle of the twentieth century.
The role of marketing is also best understood by leading consumer goods companies. It is most influential in the most successful businesses, such as Procter & Gamble and Unilever. By contrast the discipline plays second or third fiddle in companies in sectors such as business-to-business (b2b) and utilities.
Marketing is a success factor
The effects of marketing communication campaigns are also well documented. Some show positive results, yet some, negative. Though it is difficult to find empirical evidence to prove how or what aspects of marketing drive business success. Or explain what businesses should do strategically. So we’ve done some research and thus, here, we summarise some ‘hard’ evidence to spotlight the role of marketing.
In 2006 Booz & Company (2) identified that businesses with ‘healthy marketing DNA’ were almost 60% more profitable than their competitors. Further, that those with ‘super DNA’, some 9% of the sample, were 20% more likely to show superior growth. But what is ‘healthy marketing DNA’ and how can it be ‘bottled’?
Here’s a summary of three marketing functional characteristics that correlate with business success:
1. Ability to measure contribution to business growth
In 1955, Peter Drucker wrote ‘what gets measured gets managed’ (3). Yet in 2005, a CMO Council study of US CMOs (4) revealed that over 80% of organisations had yet to develop meaningful and comprehensive organisational measures or metrics. However, the 20% introducing useful measures substantially outperformed their competitors in terms of revenue growth, market share and profit. Thus, around two-thirds now believe that measuring marketing ROI will be the most important measure of success in the next few years (5).
Yet, many organisations hire marketers with lots of experience in a business sector and then rely on them to ‘judge’ what to do and where to invest. This compounds a perception that marketers are ‘fluffy’. It also compounds that they are unworthy of a seat at the board-room table. While far from easy, success requires measuring and proving marketing activities drive sales and profits.
2. Broad capabilities, scope of operation and ability to influence senior decision makers
In some organisations, marketing operates solely as a communication or promotion department. In others, as a management ‘gopher’, responsible for tactical initiatives, and also reactive to management demands. Organisations with marketing functions that work closely with the CEO, work across the organisation, and also assume broader strategic responsibility, are more successful. Their roles include business analysis and development, product innovation, and also approving large investments. In particular, grasping customer insights quickly, and communicating and making decisions based on those insights across organisation boundaries. Thus better engaging management and employees also enables out-performance.
3. Deep customer understanding, adding value proactively
Successful business development requires deep business, customer and strategic understanding to design, promote and deliver experiences that customers want. Outperforming organisations also invest much more effort in capturing and using customer information to make decisions and foster customer relationships. A further CMO study confirms that market research is the single most important source of information influencing strategy decisions (cited as important by 82% CMOs). It is therefore reassuring that 63% of CMOs believe they can grow their influence by being the voice of the consumer (5). According to CIM, marketers’ influence is also greater when competition is intense and the market turbulent (6).
Marketing Inspiration
So what to do? Unlike the DNA of living organisms, organisational DNA can change. So start your business strategy process by understanding where the business and marketing capability is now, and should be in the future. From The Marketing Directors’ research (7), there are just 14 executive marketing directors on the main boards of the UK FTSE 100 companies. This therefore suggests that the role of marketing is relatively unimportant in 86 of those companies, or that competition is benign. Yet the ability and role of marketing to drive business growth is widely misunderstood.
Effective and superior marketing involves understanding customers and accumulating facts. Also using facts to influence colleagues and make better decisions to advance growth and profitability. Marketers should therefore view themselves as the voice of customers and directors of growth. They should also explain what marketing is, and measure and report on how it drives business growth. Successful marketing simply justifies a marketers’ place in the boardroom.
References
(1) Porras Jerry and Collins Jim I, Built to Last, 1994, based on research and analysis of pairs of companies in 18 industries.
(2) Landry Edward, Tipping Andrew, Dixon Brodie, Six Types of Marketing, Booz & Company and the Association of National Advertisers, 200, based on an online survey with 30,000 responses.
(3) Drucker Peter F, The Practice of Management, 1955.
(4) The CMO Council, Assessing Marketing’s Value and Impact, 2004.
(5) Korsten Peter, Heller Baird Carolyn, et al, From Stretched to Strengthened, Insights from the Global Chief Marketing Officer Study, IBM, 2011, based on face-to-face conversations with 1,734 CMOs in 64 countries.
(6) Argyriou Dr. Evmorfia, Leeflang Prof. Peter, Saunders Prof. John, Verhoef Prof. Peter, Paper: The Future of Marketing, The Chartered Institute of Marketing, 2009.
(7) Arnold Tim, Tomlinson Guy, The Marketing Director’s Handbook, 2008.
Restoring Business Growth ; 3 Step Business Turn -around
Restoring business growth
Often new hires, either a CEO, or CMO, coincide with a challenge of restoring business growth. But how? Here are three steps for a fast and effective business turn-around.
1. Understand the effect on your business
First, understand the effect on your business or portfolio as a whole. How significant or material is the effect in relation to the business as a whole? If it is small then delegate responsibility to solve the problem, if large, then there is a case for you to invest more of your own time.
2. Diagnose the problem
Then diagnose the cause as quickly as possible. Ask questions and form your own opinion of the cause and the ability of your team to solve the problem. The scale, complexity, political sensitivities of the problem will affect the ability of your own team to develop a solution.
Then diagnose the cause as quickly as possible. Ask questions and form your own opinion of the cause and the ability of your team to solve the problem.
- First, is the problem a one-off, recurring or ongoing?
- Second, is the problem caused by an internal operational issue or external market forces?
- Third, is the problem product, promotion or strategy related?
- Fourth, is it people or process related?
- Finally, what plans do we have to deal with the issue?
To check that the problem is understood, and to corroborate this is the case, ask for a paper discussing the issue as well as recommending options to deal with it.
The scale, complexity, political sensitivities of the problem will affect the ability of your own team to develop a solution. If your own team struggle to be objective, seek help from a third party. Using experienced consultants and conducting original customer research helps you remain objective and apolitical.
3. Drive change
When you fully understand the issues and then create a marketing strategy and plan to drive change. However, the nature of your approach should depend on the effect of the business problem, and the ability of your team to solve the problem. If the problem is less significant, prefer a light touch approach. If the problem is significant or catostrophic, prefer a more directive and hands-on approach. First, check that the problem is understood. To check ask for a paper discussing the issue as well as recommending options to deal with it. Then drive action. If the problem reaches across departments, set-up a task force to deal with it and ensure clear access to relevant senior management. If the problem is beyond the ability or experience of your current managers, then strengthen the team or replace the key people.
Dealing with Tough Times : Six Steps to a Rapid Business Turn-Around
When dealing with tough times, a recession, or recovery from C-19 issues, marketers have a key role to play. So how to take the opportunity to restore business growth. Here are six pointers for a speedy business turn-around:
1. Start by ensuring your business fundamentals are sound
It has always been the case that the most successful businesses are those that are the most customer or audience driven. If the tough times have caused a sales reduction, this may indicate weakness in your offer which needs to be fully understood and addressed. Whatever the economic situation, robust insights must inform your targeting, products, and promotions. Only when you have a strong offer and sound strategy in place will you ever be in a position to invest and grow.
2. Maximise cash
Marketers can do much to bring forward and maximise cash flows, for example by rewarding early payment. Do your bit to control costs too. Consider using more efficient communications and seeking out smarter and better value agencies. If a worst-case rationalisation is required, view it as an opportunity to ‘right-size’. Also, make sure that the right resources are in the right places and perhaps refresh the culture. This then provides a more robust foundation for renewed growth.
3. Be more vigilant to threats and opportunities
Marketers should lead; in particular to ensure that corporate antennae are installed and working properly. While tough times present threats, they also present opportunities – a weak competitor here, a lower cost investment opportunity there. There will rarely be a greater opportunity for the smart marketing and research department to prove their worth. So provide timely intelligence and quality thinking on how to realise those opportunities. In particular, look to, and try and anticipate the future. Specifically, look for threats and opportunities by talking to consumers and reviewing what your competitors are doing. Reading investment blogs and company reports also provide potential sources of insight. In addition, consider using scenario planning to work through and determine the best business turn-around strategies.
4. Don’t stop promoting your products but do be smarter about how you do it
There are many studies that show how the share of advertising voice correlates with market share. Further, those who invest in proactive marketing during tough times are the first to emerge and the strongest when the good times return. Also use creativity to add value to your brand and avoid creating a hostage to fortune.
5. Cultivate a mindset of controlled aggression!
Test major business building initiatives on a low cost, controlled risk basis to ensure that they work. Only when you have the metrics to prove that they work should you invest heavily.
6. Invest while the bargains abound
In tough times those under pressure often cut their prices or become cheaper to buy. So grab bargains, for example cheaper advertising, while they are around. Also consider good value hires or business acquisitions.
Marketing Inspiration
1.Darwinist fundamentals apply. So make sure that your business and brand strategies are based on true insight and facts by using robust market research. Only then can you best focus resources on being as fit and competitive as possible.
2. Take a long and also a short term view. Take proper notice of threats and opportunities by making sure your corporate antennae work properly. Thus you’ll be more proactive and timely in spotting opportunities and making investment recommendations to your Board.
3. Grasp lower cost marketing opportunities while they abound. In so doing you will be able to go for growth while others are still sitting on their laurels. Thus ensuring a speedier business turn-around.
Marketing Inspiration
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