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 experience 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 business success factor
The effects of marketing communication campaigns are 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’?
Three marketing prerequisites to drive business success
1. Ability to measure contribution to business growth
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.
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). So while far from easy, marketers must measure and prove marketing activities drive sales and profits.
2. Deep customer understanding
Organisations that invest more effort in capturing and using customer information to make decisions and foster customer relationships outperform others. This echoes a CMO study confirming market research as the most important source of information influencing strategy decisions (cited as important by 82% CMOs).
3. Broad strategic role, supporting and influencing 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 sometimes reactive to management demands.
Organisations with marketing teams structured to work closely with the CEO, 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. Also gathering customer insights and communicating and making decisions based on those insights across organisation boundaries. By better and more quickly engaging management and employees also drives out-performance.
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. Then where it should be in the future. From The Marketing Directors’ research (5), 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 is widely misunderstood.
Deep business, customer and strategic understanding is necessary to reveal business opportunities. In turn these insights enable colleagues to make better decisions to design, deliver and promote experiences that customers want. Thus to advance growth and profitability.
Marketers should therefore view themselves as the voice of customers and directors of growth. This is endorsed by 63% of CMOs who believe they can grow their influence as the voice of the consumer (6). According to CIM, marketers’ influence is also greater when competition is intense and the market turbulent (7). Thus, explain what marketing is, how it works, and measure and report on how it drives business growth.
(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) Arnold Tim, Tomlinson Guy, The Marketing Director’s Handbook, 2008.
(6) 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.
(7) Argyriou Dr. Evmorfia, Leeflang Prof. Peter, Saunders Prof. John, Verhoef Prof. Peter, Paper: The Future of Marketing, The Chartered Institute of Marketing, 2009.