Companies need to take a strategic view of marketing, which involves not just physical goods, but also the myriad services surrounding these goods. Services play a vital role in our economy. As marketers in the services industry, it’s important to understand the key factors that enable us to profitably acquire and keep customers. Rather than taking an academic view, we have been working with numerous companies to learn what makes a difference.
We have identified four factors that make a difference and represent best practices for marketers. Based on input from hundreds of companies, representing a multitude of diverse industries, four components rose to the top as being critical success factors:
1. Having an approved marketing plan.
2. Having an approved marketing budget.
3. Having identified and secured resources.
4. Well-defined and established metrics that demonstrate marketing’s effect on the business.
The companies that consistently address these four factors are more likely to achieve their revenue and profitability business goals. How do you stack up compared with the survey participants? According to the participants, 72 percent of the respondents had a marketing plan, 70 percent had an approved budget and 65 percent had resources identified and secured. Hopefully this is the case for your company as well. If not, there’s work to be done.
Likewise, only 43 percent of the respondents had metrics in place to measure program effectiveness, and a mere 33 percent had metrics in place to measure marketing’s impact on the business — two areas that most every company needs to improve.
Let’s take a closer look at each of these four components. While reviewing each, think about how your company is performing.
An approved marketing plan in time to matter. A marketing plan serves as a roadmap or blueprint that guides a firm’s course of action. A good marketing plan should include at least a clear set of quantifiable objectives and a set of strategies, tactics and milestones that support the objectives.
Two years ago, 75 percent of companies surveyed didn’t have an approved plan. These companies suffered from long sales cycles, weak pipelines and customer churn. Today, most companies have come to realize that without a plan, they may be engaged in many activities, but not necessarily moving forward. Winners realize not only that an approved plan matters, but the timing of the plan is just as important. An approved plan halfway through the year impedes a winner’s ability to make sufficient impact on the year.
In reviewing many plans, one item that distinguished the winners is the inclusion of a compelling positioning platform. A well-developed positioning platform clarifies why people should buy from you and how you are better and different from the competitors. Developing a positioning platform requires you to understand your target, their problems and needs, and then to purposefully position your offer specifically to meet these needs. This is what is known as being customer- or market-centric.
Many of the research respondents indicated that they often end up revising or redoing their positioning over and over. The lack of a consistent positioning platform ends up confusing the market. Targets are not able to understand why they should select your firm over another. This results in longer sales cycles and a lower conversion rate. Winners have done their homework and are confident in their positioning and invest in it for the long term.
Having a plan is a good first step, but without adequate resources, people and funding, achieving a plan is as good as wishing on a star.
Money matters. Those marketers who are the most successful have an approved budget. They do not have to go back to the well to request funds time and time again. They did their homework when they developed their plan, and the rationale for the plan supported their investment requests.
Having a stable budget that is really committed to marketing and owned by marketing enables marketing to operate on a long-term basis, rather than just day to day. By working with a budget, looking at the big picture and into the future becomes easier, as it is known there is a financial resource available and specifically allocated to marketing efforts.
Today, more companies are recognizing the benefits of a specific budget. Two years ago, only 40 percent of companies had an approved budget and expected to achieve more with less, raising their revenue expectations, only to be met by disappointment. This last survey revealed a significant difference. Being ready for the market takes an investment. For the first half of the year, 70 percent of respondent companies had an approved budget. Companies have come to realize that the saying “Show me the money” has meaning even for marketers. Winners have a budget.
Resources. In addition to a budget and plan, what other types of resources are needed? Marketing has been hindered over the past two years by lean staffs. In many companies, marketing efforts are led by non-marketers, people with predominantly sales, communication and domain experience. In addition to that, marketing headcounts and hiring plans remain unstable year to year.
Over the past two years, lack of marketing expertise and the inability to leverage external experts kept some companies from being able to achieve their goals. Two years ago, 66 percent of companies did not have resources in place to achieve the company’s goals. However, this time around, 65 percent of the survey respondents believe they have resources in place.
Metrics. Marketers are being asked more and more to be able to connect the dots between their marketing efforts and business outcomes. Yet even today, 75 percent of the companies surveyed do not measure the impact that marketing has on their business goals. Why is this? Are companies lost when it comes to metrics or just unaware of the value in measurement?
Many companies have no idea where to begin with metrics and which ones should be used. In fact, from the few respondents that were using metrics, it was found that metrics were being applied incorrectly. The most common metric used to measure marketing’s effectiveness was “number of new deals,” which is historically a metric used for sales.
Without metrics, a marketer is operating blind. Success depends on being able to establish the right metrics for linking marketing investments to business goals.
Three metrics gauges. Discussing metrics could be an article itself. But to get started, there are three gauges marketing should drive: market share, lifetime value and brand equity.
These gauges should be identified in the marketing plan and directly linked to the appropriate marketing objectives, strategies and tactics. That is, those objectives, strategies and tactics that are intended to increase your portion of the market should be clearly stated along with the exact portion in each market segment. Strategies and tactics that might move the market share needle include share of voice, share of preference, share of distribution and rate of customer acquisition. Winners have strategies for each of these.
The same holds true for objectives, strategies and tactics that address improving the lifetime value of your customer base. These efforts focus on share of wallet, recency and frequency of purchase, referrals and so on. Winners also recognize that their job includes increasing the value of their company’s brand and incorporate objectives, strategies and tactics designed for this purpose. They have a clear understanding of their brand’s current value and the impact this value has on being able to secure a price premium for their services and faster market acceptance for their new offers.
Winners, both the marketers and the executives within the company, realize they have a responsibility to the strategic success of their companies. They realize the cornerstones of strategic success include having a roadmap, budget, resources and clearly defined metric targets. If you want to join the winners’ circle — in other words, grow customer base and the share of wallet from customers — you will need to take the time to invest in developing a plan, securing a budget, establishing the right metrics and securing appropriate resources.
These may seem obvious, but the results of the semiannual surveys over the past five years tell us that many companies have yet to master these basics. By just considering these components and how they can be applied to your company, you are taking one step closer to joining the winners’ circle.