Marketing Failing to Fuel the Business

Michele Hudnall September 3, 2018 0 Marketing, Sales Alignment, Strategy

S Y N O P S I S

The sales and marketing misalignment has been the most discussed B2B marketing topic and I would go so far as to say that it is a Business Alignment challenge. According to Gartner’s 2017-2018 CMO Spend Survey, the marketing budget is declining from 12.1% of revenue to 11.3% or a 6% decrease in overall budget – indicates declining growth of the business. The resolution for some large organizations is leadership replacements – Hershey’s, Kellogg and Coca-Cola replacing their Chief Marketing Officers (CMO’s) with Chief Growth Officers (CGO’s), sales leadership titles also reflect the focus on revenue with Chief Revenue Officers (CRO’s) and the rise of sales strategy roles, inclusive of cross functional enablement and likened to that of the Product Manager for Sales.

While I applaud the focus on growth strategy as the priority and alignment to it across the organization, I question if this is an over correction creating different challenges at this time without the right talent and processes in place. The right leadership will develop and drive strategy across the disciplines of sales and marketing creating a new single entity, focused on the customer (not the market) at every stage of their journey from investigation, acquisition, advocacy, retention and growth. This will take an individual with analytical, business strategy, customer, sales and marketing skills and I would expect this new organization to bring in what the CEB calls Challenger Marketer (page 8) to bring back displaced skills in research, analysis, positioning and customer strategy talent.

Change is inevitable,
growth is optional.
– John Maxwell, Author, Speaker, Pastor

I’ve listened to my fair share of marketing disdain and stereotyping as the lone marketer in a room of sales and business leaders and I gracefully point out that you have received what you measured and incented. If you measure only for quantity of leads and budget spend, that is what you receive. Leads do not equal revenue and revenue does not equal profit margin. Most organizations have driven the building of an execution based marketing team, losing your strategic talent who analyze the market, customers, buying trends, positioning and go-to-market planning that you seek to fuel the revenue engine. I still hold marketing responsible for measuring and communicating their results in terms of financial returns and in lieu of that, have measured quantity of leads I would call contacts and not leads at all causing today’s friction.

I expect in time, sales and marketing will come together under one organization (Growth Organization – CGO) with functional groups focused on customer Engagement, Acquisition, Advocacy and Retention. Strategy will go back to basics to include the customer and market research, positioning and planning that fuels the execution for customer engagement at all stages of investigation, acquisition, advocacy, retention and growth as a single sales and marketing entity.

In the meantime, the two organizations can begin by focusing on common goals, adjusting execution and engagement with customers. This entails understanding your customers and defining an agile content strategy that fuels the:

Prospect who are performing ~75% of their research before they engage with a supplier
Customer for advocacy, retention and growth

BUSINESS ALIGNMENT AND MARKETING DISCONNECT

The latest CMO Council Report illustrates the disconnect between the business and marketing at the core of mismatched priorities:

C-SUITE PRIORITIES MARKETING PRIORITIES

Revenue Growth (95%) Revenue Growth (70%)

Margin (51%) Brand Valuation (32%)

Market Share (49%) Market Share (32%)

This should be no great surprise, I have worked with and for many organizations, large and small, and the challenge is universal – marketers have to go to the table speaking the same language as the rest of the executive team, with the data. No one cares how products are built, nor do they care what it takes to execute a marketing campaign, NPS and brand stories. Marketing must start by aligning to the same objectives and drive the programs and tactics that will support common objectives.

By design the organization is misaligned. The business measures against profit margin, sales measures revenue driven and marketing counts leads produced. All of the blame for this does not rest solely on marketing, but marketing has been ineffective at communicating how to measure business impact for the work and end up counting leads that do not equate to driving revenue at the expense of about 10% of revenue and declining.

I once worked for a very large organization with many products and I represented a product family that was a rounding error and not a focus for the organization. I had no execution budget, but was more committed than my teammates to producing digital content through as many medium as I had access to at a time where social media was barely being used as a bull horn to the market. I earned repeated press coverage and customer engagement driving awareness for the product. Each quarter end, field marketing would knock on my door to spend their “use it or lose it” budget. I quickly learned they were measured on burning budget and creating numbers of leads. This is how I attained high dollar assets and updated creative from outside agencies for the product I represented. This is a sad, but all too true situation in many organizations. A waste of valuable resources, spending on rounding errors to drive awareness and not revenue, business impact.

TIME FOR CHANGE

The compound challenge is we’re already behind, the executive team has lost their appetite for a year of building and thus marketing needs to address short term gains in the right zip code, while building a strategy to execute longer term. Many marketing teams hold brand and storytelling and marketplace awareness as their mission.It is important and important for consistency across the organization, however, in perspective of a customer journey from investigation, acquisition, advocacy, retention and growth with a cross functional content delivery strategy as the imperative. I use this quote to hold the discussion with the remainder of the execution team to illustrate the relevance of consistency:

A brand is a living entity and it is enriched or undermined cumulatively over time, the product of a thousand small gestures. – Michael Eisner – CEO Disney –

When sales teams, pre-sale engineers and sales enablement teams begin crafting their own messages, which they are doing today, the brand is dying a death of a thousand small cuts, defeating the spend and priority on brand and message.

The second thing that marketing leaders must do is stop speaking about marketing as a cost center if they expect others to not treat them like a cost center. As an example, instead of speaking about cost per lead, start speaking in value per lead in driving customer engagement, acquisition, advocacy and retention. This is in terms of revenue driven prior to the deduction of cost. Manage for efficiency and cost internally against the budget to spend and maximize for revenue driven.

WHERE IS MARKETING FAILING

How are executives in the SAME organization
this misaligned on priorities?

This is a shared misalignment, however, marketers are focusing far too much on brand and awareness (their comfort zone) than they are driving revenue. Marketing must change the conversation from one of cost to value creation and stop counting things, but rather drive revenue impact for the same target goals of the organization. I make that second distinction for those companies with multiple product groups, as all products are not created equal in terms of execution. All need to have the same cycle with aligned priorities regarding execution. You cannot apply the same resources to all products just because they exist. The portfolio must be reviewed as to where each product falls in it’s life cycle of goals and support execution accordingly with consistency across all products and the organizational brand.

I hate to admit this, but just >20 years ago I drew a 2 x 2 grid for a sales team to help them conceptualize where a given prospect is focused and how to message to them, you see, I was in the sales organization for the second time in my career. This seems to happen every 10 years and is happening again to aid in messaging for Account Based Marketing (ABM). The grid represented:

Cost Reduction – Drive out cost and think of utility companies- Message to cost reduction
Cost Efficiency – Not a company driving new services, but focused on lean operations and think of manufacturing – Message to efficiency
Operational Effectiveness – Some new services, focused on high customer service, some investment in a competitive environment, think retail banking – Message to effectiveness
Operational Innovativation – Spending to transform and grow to lead a market, think Healthcare IT – Message to Transformation

To make this easy, there were 3 categories: Cost, Optimization (whether for efficiency or effectiveness) and Transformation. Apply the same solutions to these types of organizations with slightly differing messages. Also, focus on the sweet spot, rather than all 4. This is not vertical marketing, however, verticals lend themselves to these categories based on the nature of their business. Here we are another 10 years later, wrestling with the same execution. However, this time the customer has changed and they have become the influencer making the content strategy that much more important.

I did not start out as a marketer and didn’t study marketing in college much past what was mandatory for a Management Information Systems student. At that time, marketing was based more on consumer goods and brands, thus our heritage to the brand, as we had not yet reached the advent of personal computers, a consumer market for software and off-the-shelf business software. I was and still am a dedicated student to the study of marketing and in this current era of change and growth advocate it will take a different kind of marketer with a mind for research and analytics, customer behavior and influence to align and execute with the organization.

I believe there are fundamentally four challenges at work here:

GROWTH – It has stalled and/or is declining. It is not just a sales and marketing misalignment, it is business misalignment. Gartner indicates that marketing budgets are declining and I’ll say that is due to declining revenue growth.

RANDOM ACTS OF EXECUTION – I say this with disappointment for my chosen passion, marketing. Most marketing organizations are reacting and are not planning and leading. We’ve got to alleviate pressure, act tactically with agility in the short term and continue that agility to act strategically in the long term.

ENGINE WITHOUT FUEL – Businesses are expecting their elite sales team to go out and sell without the basic of tools (i.e., messages, content, etc.) from their marketing teammates. In essence, you are putting a high performance engine on a rusted out chassis or as a CEO once said to me as I was working with a challenging customer, “Mee-shell … you have a Ferrari with no fuel.”

SAVVY CUSTOMERS – Customers know you have their information, after all, you SPAM them constantly. They realize that you have many systems, but yet do not understand and treat them as customers, a partner they would choose to do business with.

DRIVE TO CUSTOMER ENGAGEMENT

The biggest complaint from sales and customers alike is that the content, the story, the messages are not resonating. SiriusDecisions estimates that up to 80% of content is not used by sales or customers. To add insult to injury, we’ve been talking about this for >5 years without improvement. Let’s put the content problem into revenue perspective, on average it is 1% of revenue (e.g., a $500M organization represents ~$4M wasted on unused content). Content represents about 7.4% of the budget – on par with events – according to the Gartner CMO Spending Survey. In this example, that is ~$20M over the 5+ years this has been occurring.

It is estimated that it takes on average 8 touches and 75%+ of customer research being complete before they engages with a supplier. Customers expect you to understand them when they do engage, personalization and segmentation, they know you have the systems and capability and yet the information is not used. Harvard Business Review – The New Sales Imperative cites the following statistics:

65% customers cite they spend as much time getting ready to engage with a supplier as they expected for the whole process

86% customers cite an increase in purchase ease when a proactive, prescriptive approach was taken with clear recommendations

62% of customers cite awarding a supplier with a high quality sale (i.e., premium offering and price point) when buying is easy

6.8 influencers are involved in the buying process today as compared to 5.4 just 2 years ago

Customers are seeking suppliers to partner with, those who will offer guidance, recommendations and make the sales cycle easier and are willing to pay a premium for this relationship. It requires knowing the buyer and there is only one buyer, however, there are many influencers and it is incumbent upon the suppliers to proactively arm their sponsor and buyer with the materials that the influencers will require.

HudnallsHuddle | Marketing Failing to fuel the Business

Marketing must focus on only two persona’s with a single message: 1) the message targets the Economic Decision Maker (EDM) and 2) the project leader who will influence the EDM. There can be 3 – 5 messages per product family, keep it simple and target where you have the most success in acquiring a new customer and arm the project leader and EDM with the content they will require when interacting with influencers within their organization. Typically, there can be 5 – 7 other constituents influencing an acquisition.

We have entered the next generation of sales and marketing, Influencer Marketing. The chart published by MarketingCharts above represents results from a survey conducted by RAIN Group for Sales Research of 488 B2B buyers across industries, roles and regions representing $4.2B in purchases and just screams Challenger and Influencer marketing.

Customers are seeking advisors with targeted and personalized content to help them solve their challenges, not sell them utility software. This is the wake up call to shift gears and work towards a content strategy with customer engagement at it’s core across sales and marketing for the entirety of the customer journey. Today’s customers become tomorrow’s advocates and influencers in the market.

LET’S WRAP THIS UP

I have learned through a career of sitting at all sides of the table (i.e., buyer, technician, supplier, consultant and industry analyst) and experiencing things that most marketers have not experienced today. I have spent as much time with customers, the market and with products and services as I could so as to understand points of pain and value. This seems common sense, but it is not for most driven by reactionary tactics in an execution mode and who arrived during the second generation of marketing and the explosion of MarTech. Just as it will be challenging for a fresh college graduate, well trained in sales philosophy and tactics to show up to meet a seasoned executive to challenge them and tell them they have been doing things wrong and they have the new way to sell them.

The voice of the customer, market, story and value to the customer and the business has been devalued in exchange for just executing and automating as cheaply as possible. In the meantime, the customer is using technology to investigate and be influenced on their journey to find solutions to their challenges. The customer has evolved, as has their journey, and organizations have not invested in evolving in the same direction as the customer, nor at the same pace. The market is poised to pivot from demand generation lead activity, to an inbound customer journey.

INBOUND SUCCESS

A friend of mine just shared a story this week how he received a call from someone who said they had been on his website and his LinkedIN page and believes he could help his organization with their sales team. Of course, this comes as a bit of a surprise, they speak further, exchange requirements for the engagement and within a week, contract signed and project ready to begin.

This illustrates the power of the right message and content to take advantage of the pivot toward inbound leads with customers performing their research before engaging. This and the continued journey with the customer has to become today’s focus in this next generation of influencer growth.

OUTBOUND NOT SO SUCCESSFUL

Another organization I’ve worked with that has a fixed market of customers had marketers that served the product managers largely as order takers to execute tactics that educated existing technical, administrative customers. Thus their activities were categorized as awareness building and education to meet the requirements of the product managers and eliminate any further follow-up, not unlike the quarterly spend story I shared previously.

I was in a leadership meeting where a sales leader decided to share his excitement that more than 1500 customers (yes, current customers) were signed up for an event for a new feature that was expected to drive cross sell growth within the customer base. I and the inside sales leader could have died on the spot, we knew the skinny on this and now the wrong business expectations were set at the senior executive level – time to salvage this event into something of value.

The event was set up as awareness building / education session for customers, product management driven, a check mark on a launch list. In fact, this feature was “free”, a feature, not a sellable SKU. A feature, however when implemented, would enable future growth in existing customers. The audience was a mix of technicians and senior leaders (80 / 20), but the content would be technically targeted and now the senior leadership team had high expectations for the execution of the tactic because it was on the topic of a feature expected to drove cross sell growth.

To add insult to injury, there was a customer advisory board occurring in the building while the event was executed. Senior leaders in our customer base were left asking why the content was not targeted to their expectations and the message they were consuming in the advisory board meeting, in the building while we were all present.

Post event I manually worked through a spreadsheet to get down to the 200 or so attendees of the right buying title, who were not current customers, rather users, of the feature we were touting, but were customers of other products – eliminating the 1300+ technicians there for education. Questions:

Why wasn’t segmentation done ahead of time?
Why wasn’t the content targeted ahead of time?

Again, a case of being driven by product to execute education, drive conversion of current customer education, not driven by new business or business goals. Senior level customers were left confused with inconsistent messages and information that did not target what they were consuming in the advisory board meeting. Just like this example, customers EXPECT that you have targeted them with the message, segmentation ahead of the event and content specific to their interests and yet it is largely not happening.

I’m sure this story sounds familiar to many of you and illustrates working hard, not working smart as we entered salvage mode post event tactic.

TAKE AWAYS

CMO’s are beginning to be replaced with CGO’s as a reaction by the C-Suite not understanding the tie between business alignment and marketing and reaching a level of frustration in working to grow the business. As marketers, that is shame on us. Marketers are at a fork in the road, step up to the challenge and embrace the change for growth or someone else will take it. This evolution should be approached in an agile manner and driven jointly with the business, product and sales with short term and long term strategies and tactics.

Marketers must work to a strategic better world long term, while delivering within the zip code tactically in the short term. Marketing needs to start speaking in business terms of driving business, not in the details of marketing tactics and costs as a cost center – speak in outcomes as a value center. Brand, storytelling and messaging are all are important, but as a tactic inside of driving business outcomes. Let’s go back to the beginning of this article:

GROWTH – Has stalled and/or is declining. Develop a strategy that drives growth. Focus on what sales is focused on in driving revenue with an integrated strategy and customer journey content strategy. Stop generating watered down, misaligned content and tactics.
RANDOM ACTS OF EXECUTION – Spend the time to learn your market, customers and target content and tactics to a focused market that will deliver results. Invest in Marketing Owners who drive market research, positioning and strategy once again.
ENGINE WITHOUT FUEL – Focus and build the content and tactics that are aligned with your revenue engine. Help them with the messages that they require.
SAVVY CUSTOMERS – Customers know you have their information, after all, you SPAM them constantly without segmentation, target or focus. They realize that you have many systems, but begin to understand them as customers – pre, during and post sale.

I shared a couple of stories that likely sound familiar. I have a passion for marketing and business alignment – we succeed together and we fail together. Never have we been in a market where customers are rewarding those who consult, guide and help them solve their challenges at the same time our businesses expect growth. It’s time to step up to the plate as a team and define this joint strategy against common goals.

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Now I ask you: How will your organization fuel your future growth engine?

Share your comments below or connect with me!

Michele Hudnall