You don’t have to look far to find tales of marketers excluded from boardrooms
Today, you don’t have to look far to find tales of marketers excluded from boardrooms, accused of focusing on irrelevancies and berated for not being able to prove return on investment.
But when marketing strategy truly aligns with business strategy, the results can be miraculous writes Jason Ball, founder of B2B marketing agency Considered Content, who explains why marketing deserves equal footing with the rest of the C-suite.
Back in 2012, a global study by the Fournaise Marketing Group found that 80% of CEOs were either unimpressed or simply did not trust their chief marketing officers, compared to just 10% who felt the same about their CFOs and CIOs. It was felt marketers had simply lost sight of their goal, i.e. to generate increased demand in a way the company can measure.
Now, new research with 200 leading C-suite executives by McKinsey suggests the tide may be turning. CEOs are now the most enthusiastic supporters of marketing, while CFOs and COOs tend to be more sceptical.
But, while McKinsey’s research shows 83% of global CEOs think marketing can be a major driver of growth, almost a quarter (23%) feel that marketing is not delivering on that agenda.
Let’s be clear. If there is insurmountable friction between C-suite expectations and marketing performance, nothing will work as it should. It is simply doomed to failure.
A big part of the problem is the C-suite is not always clear about what the business strategy actually is. In fact, in research by my own company, lack of clarity from management was cited as the number one barrier to marketing hitting its revenue and pipeline targets. Of course, marketing is not always great at asking the right questions either.
What we have here is a failure to communicate effectively.
The way to get on the same page is for the CEO, CFO, head of sales and head of HR to sit down with the CMO and answer this question: What are we trying to achieve in the next one to five years?
Forget marketing for a minute, these conversations need to focus on the wider business strategy. How many people will it employ? Where will it compete? How will the mix of products and services change? What does the CEO/CFO think the wider market will be like in five years’ time? What will we need to do to get there? What are the stages involved?
Marketing can have a valuable, positive impact on virtually every one of the challenges a business faces, be it a failure to attract the right talent or an inability to expand. It is far more valuable than the tactical lead generation and sales support role it gets pigeonholed into.
Ultimately, however, it will never get the opportunity if marketers cannot have a business-level conversation with senior management.
In business, obstacles are just about the only certainty. Your CMO needs to understand all of them, and know how they rank in order of importance to the business. What’s the number one thing that may negatively affect the chances of success? What’s second, and third? This will determine where marketing can deliver the most value.
Putting it into practice
Let’s look at an example. Say you are a product-focused business with a large sales team that drives revenue. Your average sale is in the £50k range and closes in 56 days on average. Profit on each sale is £20k. But the products are somewhat undifferentiated and you already have a reasonable share of the market. One obvious approach would be to try to capture more market share from competitors through demand generation activity, business development and direct sales.
However, the CMO knows from conversations with the CEO that the ambition is to become a solutions-based business that operates at a more strategic level. This will involve moving to a more consultative type of sale that can lead to deals in the £250k range with a good proportion of ongoing revenue coming from professional services. Profit here is significantly higher and the recurring revenue model helps significantly increase customer lifetime value.
But this part of the business is currently embryonic with just a couple of customers and competition from entrenched vendors. You have a small team of high-ticket consultants but sales take three times as long.
How does a marketer decide where to focus attention, efforts and budget?
This is where a good relationship between a CMO and the CFO comes in. The CFO will be able to model and map out the trajectory of different products and solutions. Regardless of the pressure from sales (more leads, better leads!) you will be able to gain a more valuable joint perspective of what really matters to the business and the role marketing needs to play in delivering success.
In the scenario above, it might be that you need to scale back on quarter-by-quarter lead generation in the product business and scale up long-term brand and reputation building in the solutions business. However, as this involves a multi-quarter sales cycle, the CFO and, ultimately, the CEO need to support the approach as the investment they make now is unlikely to show tangible returns in the next six to 12 months.
Arming a CMO with this kind of insight offers the ability to move marketing away from the purely tactical and increasingly towards the business-critical.
Marketing needs to operate firmly in the objective value-creation side of the balance sheet. If done right, CMOs will be able to prove, measurably, that marketing can be a major value driver for the business. And that way, everybody wins.