Digital marketing: No need to be a high flier

Harvard Business Review recently presented the top 10 medical innovations, including regenerative and genetic medicine, surgical robots and virtual visits. In the new millennium, doctors are faced with a flood of possible new treatments. A consultation room with no computer is now inconceivable. The situation in marketing is similar (from my column).

Marketing leaders are feeling the fear: ‘Am I really in a position to use digital media effectively? Have I got the right team? Are my analytical skills good enough for me to keep up with digital high fliers?’ These are the same questions which doctors are asking themselves. Yet no decent doctor would just throw the latest genetic medicines at a simple influenza virus. Firstly, it would prove much too expensive, and secondly most flu viruses remain stubbornly resistant to many high-tech medicines. A bit like elusive customers, who seem resistant to using the ‘Like’ button on the Facebook pages of fridge manufacturers or following the Twitter account of health insurances. Leaders in marketing must above all retain an overview of the game as a whole. But this is easier said than done.

Analytical abilities have not always been as important. Once upon a time, many marketing managers hid behind their brand, proposition or product. Other departments handled the figures. For years, this division of labor worked well, but now those days are gone for good. The sheer volume of information from new media is simply too great to employ our existing strategies. This new reality is increasingly proving the downfall of marketing leaders.

Digitization: three steps to the top:

1. Find the biggest levers in marketing digitization

2. Set up one or two good projects (instead of many small ones)

3. Formulate a clear digital vision for the next three years

There were great expectations when Andi Meier (1) took over the marketing of a major cell phone provider. As an expert on consumer goods, he had seen international success as the leader of several brands. This was a new market; the challenge was to create a brand that attracted customers. It had to be cool and up-to-date. Initially, everything ran smoothly and growth skyrocketed. “It was such a buzz”, Andi recalls. But then the obstacles increased: campaigns attracted fewer and fewer new customers, despite high levels of outlay. Customers terminated contracts and nobody knew why. Andi was let go: it was the end of his dream career. His successors now know that the battle for cell phone customers is won on price and through customer loyalty. Andi and his team had shied away from these, while today’s best providers create prices with a precision that would impress many mathematicians. They can identify the exact customer behavior that precedes the cancellation of a contract, and act accordingly. Conjoint, regression and path analysis all used to be reserved for agencies. Now marketing departments deploy them too – this is often where the new core competencies of a marketing organization lie.

The three steps to the top of the digitization game

Marketing leaders do not need to be high fliers in digital media in order to have a successful game plan for the future. Indeed, people with a passion for specific media and methods can easily take their eyes off the ball. Top marketers now need to keep an overview of the game, and ask where the greatest potential for digitization lies, setting one or two key digital priorities and synthesizing from this a comprehensible vision of developments in their marketing.

1. Find the biggest levers in marketing digitization. Digital technologies are useful where they can help organizations increase sales and profitability, whether in the short or medium term. For example, if costs are the biggest lever then automated marketing can be key. If your focus is on customer loyalty, an analysis-based loyalty management program may be the way forward. Marketing leaders can make these matters a team task, as well as involving other departments such as controlling. Clarity about the major levers must form the basis for all subsequent steps.

Procter & Gamble is a leader in the digitization of marketing. In true Proctor and Gamble style, it began to digitize where concrete results would be quickest: in production and logistics. In the USA for example, logistics costs were reduced by approximately 15 %. New technologies are increasingly helping marketing departments with product development, market research and – most recently – everyday decisionmaking. Thus increasing amounts of customer data are entering our systems and allowing marketing managers to tailor activities with precision. P&G employees helped to develop these systems, with a single aim in mind: a measurable increase in productivity. Many marketing organizations lag far behind P&G in terms of digitization. This is not necessarily a problem; what matters is that managers and their teams clearly define where the major levers for growth and profitability truly lie and go on to tackle these issues.

2. Set up one or two good projects (instead of many small ones), combined with new abilities. Success also stems from the path not taken. There is a great temptation to launch several digital projects at once, to drive a transformation in marketing. Yet the success in such instances can be disappointing. How many customer loyalty systems have for years been stuck between IT roadmaps and test phases without having won a single customer? This must be avoided. Excellent managers plan visible, successful and sustainable projects. This in turn means one or two major projects which will see success within the first six months or so. For example, if managers set up a project to analyze customer data, concrete campaigns must also be set up in parallel to win or retain customers. This applies even where the technology is not quite mature. It is precisely these somewhat ‘homespun’ programs that provide teams with the most extensive learning experience. Such successes should be shared in order to sustain energy levels within the project. In all cases, projects must have strong links with the major levers for success. If a project does not fit this description, then it is simply not appropriate – however attractive it may seem.

The abilities of the marketing team must grow in parallel with the introduction of new technologies. Yet with many large IT projects, when the consultants leave there is nobody left who knows how to make the most of the systems. So marketing teams must never adopt a passive customer role when new technologies are introduced. Instead, the manager responsible must drive the project forward and follow it up from day one. Managers must therefore involve their teams in project planning from the very early stages. The opportunity to gain significant new skills is a particular plus with such projects.

Building analytical skills remains the greatest challenge in terms of future-proofing marketing teams. It is not a question of making all brand managers mathematicians. Tomorrow’s leaders must however be able to define analysis and derive clear instructions from data. This knowledge must be at the forefront of any choice of personnel.

Analytical skills in demand for marketing

Define your analysis: translate business issues into analytical questions and solve these with expert assistance. For example: ‘What theories do we have about our prices, and what type of analysis would confirm these? What sort of survey would we need to conduct in order to understand why we are losing existing customers?’

Translate analysis into a plan of action: the ability to pick out the key information from complex analysis data and translate it into the world of business. For example: ‘One percent of our customers leave us each year. We could invest EUR 1.2 million in retention, with no effect on EBIT, provided our success rate was 30 %’

The detailed technical skills, such as handling specific databases or software systems, can of course be covered by specialists. However this will only work where the marketing leader is in a position to provide the content of the analysis program and translate the output into a plan of action. In the transition to a digital era, the ideal marketing organization will have a good mixture of analytical generalists and analytical experts.

3. Formulate a clear digital vision for the next three years. Even where clear priorities are set from the start, new ideas will always emerge for upgrading or adding technologies: perhaps a new Facebook page, a digital channel to reach our suppliers, an online connection to our market research agency. These are all important issues, but it is difficult to decide which to pursue. That is why leaders in marketing need to develop their own vision for the digital development of their Marketing departments at a relatively early stage. Where do you see yourselves in three years’ time? What are the important levers in achieving this? What priorities will you pursue in support of these? It is important to agree this vision with colleagues at management level. A clear vision will make it much easier for managers to make decisions on new issues. Above all, this vision will channel new ideas before they disappear into obscurity. It is true that some effort will be involved in formulating this vision, but a clear vision provides leaders in marketing with significantly greater security on the road to digitization.

Excellent marketing leaders position themselves at the forefront of the digital movement. Yet you do not need to be a digital high flier to occupy this position. Instead, understanding the major levers, establishing one or two beacon projects and formulating a comprehensible vision for your future digital game plan are far more important. Developing internally rather than outsourcing, thinking holistically rather than learning just through trial and error. After all, it’s no less than you would expect from the best doctors of the future.

(1) Name changed

Future CMO challenges

What are the challenges facing CMOs? What are their worries? What ideas are available to help with these? IBM has news.

Once again, ‘Big Blue’ has lived up to its nickname: in the company’s first study of this kind, IBM consultants asked over 1,700 CMOs in 64 countries about their view of the challenges facing marketing. ‘From Stretched to Strengthened, Insights from the IBM Global Chief Marketing Officer (CMO) Study, 2011’ is one of the biggest CMO studies in recent years. The results reveal what many had suspected. According to IBM’s Senior Vice President of Marketing & Communications, Jon Iwata, the biggest challenges faced by today’s CMOs are an explosion of data, social media, the proliferation of channels and devices, and shifting consumer demographics. Exciting revelations can also be found by reading between the lines of the study.

The IBM consultants have drawn the following overall conclusions:

The most proactive CMOs are trying to understand individuals as well as markets. Customer intimacy is crucial — and CEOs know it. In IBM’s last CEO study, they learned CEOs regard getting closer to customers as one of three prerequisites for success in the twenty-first century. This sits squarely in the CMO’s domain. But the advent of social media is challenging older, mass-marketing assumptions, skill sets and approaches. CMOs everywhere are acutely aware of the distance they have to cover. In addition to using traditional information sources, such as market research and competitive bench-marking, the most proactive CMOs are mining new digital data sources to discover what individual customers and citizens want.

CMOs in the most successful enterprises are focusing on relationships, not just transactions. They are using data to stimulate interest in their organizations’ offerings and form bonds with customers to a much greater extent than their peers in less successful enterprises. The outperformers are committed to developing a clear “corporate character.” CMOs in such organizations recognize that what a business believes, and how it subsequently behaves, are as important as what it sells. And they make it their job to help management and employees exemplify the company’s values and purpose.

Most CMOs are struggling in one vital respect – return on investment (ROI). The study shows the measures used to evaluate marketing are changing. Nearly two-thirds of CMOs think return on marketing investment will be the primary measure of their effectiveness by 2015. But proving that value is difficult. Even among the most successful enterprises, half of all CMOs feel insufficiently prepared to provide hard numbers.

Leadership abilities are also valued by CMOs. Some 65% of CMOs listed leadership abilities as the most important for personal success in the next 3 to 5 years. In second and third place came voice of the customer insights (63%) and creative thinking (60%) respectively. So successful CMOs need to master new media while continuing to invest in their leadership abilities.

The CMO role remains an exciting one. IBM asks if the role is “Swimming, treading water or drowning?” We are sure that CMOs are good swimmers.