Nils Koch Jensen, Partner
Why marketing is about selling, but isn't sales
A study from 2012 of 1,200 CEOs in North America showed that 80% of CEOs don’t really trust their marketing team and are not impressed by the marketing work being done. In comparison, 90% of the same CEOs state that they trust in and value the opinion and work of their CFOs and CIOs (source - Fournaise Group). While the study is a few years old, I fear the differences are even more pronounced today. The question is how can we say that marketing is more important than ever, while we as marketers are leaking credibility like a sieve?
In order to reclaim our seat at the table and rediscover our mojo, it might help to go back to one of the elders - Peter Drucker. He famously said:
“The aim of marketing is to understand your customer so well the product or service fits him and sells itself.”
This simple purpose statement by Drucker in many ways says what it should. It has three interlinked tenets (my words in italic):
- “Understand customers”: Marketing should be the voice of the customer and the guiding light in terms of understanding them – who they are, what they need and want as well as what makes them tick.
- “Product or service fits”: Marketing should – armed with the voice of the customer - also be deeply embedded in the way products are created (based on customer insights) and presented (value proposition, messaging).
- “Sells itself”: Meaning that marketing – through a long line of tactics – builds demand and increases brand preference by triggering or addressing emotional and informational needs, that ultimately leads to increased sales.
Building on Drucker's final point you can say that marketing is ultimately about selling (the outcome) but isn’t sales (the activity and function). This distinction is important and ultimately makes the case for marketing as an independent function, albeit one that has a strong interplay with the sales function.
The case for marketing as an independent function
Based on Peter Drucker’s words you could conclude that everything is about selling stuff, so why not just put the two functions together?
Well, while the final outcome may be similar, the techniques, methods and skills can vary greatly.
The danger is rather that Sales or Commercial Development, etc. will swallow marketing up whole, or some professionals in these departments who are not trained in marketing will start doing marketing work. But this outcome is unwise and rests on a misguided understanding about what marketing does and how the function creates value. While some factors are external, we still see two overarching and almost opposing tendencies (at least at face level) that are leading the marketing function down the wrong path:
- If marketing constantly chases short-term sales spikes, the function will also slowly lose its mandate. This happens because price promotions, discounts, digital direct-response tactics and annoying retargeting require few of the skills that are unique to marketers, and because we lose sight of the brand and product. If these activaties take dominance, marketing might as well be placed under Sales.
- The other tendency is to focus on non-commercial activities or small-issue topics that are not linked to the business. This tendency includes spending too much energy on societal purpose (Caveat: in some cases, this can be linked to the business), Social media centrism, chasing the latest gizmo (VR, AR, Pokémon GO), chasing non-commercial publicity in broad media and endless discussions about the motifs for the yearly calendar. If these activities take dominance, Marketing might as well be placed under Corporate Communications.
The shame is that the activities above require little of the capabilities that are unique to great marketers; Customer understanding & segmentation, strategic planning, brand building, pricing, customer-driven innovation and channel management.
“Help build and price the things that customers would like to buy. Help put the products where things are bought. Help build mental availability. Be the voice of the customer. Steer the brand.”
To regain some trust, we need to clearly articulate and acknowledge the differences in the capabilities, mandates and purpose of marketing and other related functions, while at the same time increasingly make these functions even more interlinked and coordinated than they often are.
Rediscovering the marketing mojo
Based on our humble experience we see some key pointers that marketers can use to raise their game and reclaim trust from the CEO:
- Keep a commercial focus: In our experience too many marketing organisations tend to creep in on territories usually owned by Corporate Communications or HR, while more commercial functions such as business/product development and sales are increasingly becoming alien ground. I believe that this is a dangerous move and comes with an opportunity cost. While the activities of support functions are important, they don’t map well up against marketing´s purpose, and the unique capabilities that marketers possess. Marketing should stay in its lane, but also acknowledge that this lane includes clear overlaps with other commercial functions.
- Marketing should be present across the whole purchasing process: Companies should move from a vertical organization of the buying process where there is a clear hand-over from marketing to sales, to a horizontal one, where marketing and sales go hand-in-hand from initial stages all the way to final sales. This should be done with a clear understanding of mandates and capabilities, so that everybody understands their role, and resources are used in the optimal way. As an example, more companies are moving towards servitization, selling complex solution bundles and monetisation of data, so selling is increasingly becoming about consulting and problem solving. This requires insights about who you are selling to, what keeps them up at night and much more. Marketing can drive the generation of these insights and deliver the materials as well as the training needed.
- Marketing should balance promotions and brand building: Over-reliance on last touch attribution and quarterly capitalism, where future profits are often traded for current ones at a not-so-beneficial rate, often lead to a vicious spiral towards more promotions and over-reliance on direct-response tactics. They might produce some revenues in the short term but see a low return in the long term. Marketing is uniquely positioned to build long-term brand equity and mental availability – if we don’t do that, no other function will (at least as efficiently).
- Escape the ROI-trap of time-limited initiatives: While talks about ROI of a certain initiative will make the CFO drool, within marketing the effects are really difficult to measure or attribute. And too often there is a time-lag effect that makes the whole thing completely futile. While there really is no formulaic way to do these calculations that applies across all industries, the final outcome of great branding is therefore not the misguided “brand loyalty” but instead the ability to charge a price premium and make sure that your product is more likely to be bought by more people. Therefore, marketers should align KPI´s and structures to this way of thinking, and not just include campaign specific, short-term metrics such as website visits, leads or even revenues - but also long-term effects such as brand awareness, affinity, preference and differentiation.
- Make sure that marketing is more than marketing communications: Based on Peter Drucker’s statement, the product or selling should definitely not be alien territory for marketers. We marketers are too often superficial when it comes to the technical parts of the product we work with, or the business we are in. At the same time, we lose sight of the customer and get too caught up in marketing communication tactics. This is a pity, as the trifecta of insights, product and positioning creates a powerful unity, that marketers are uniquely positioned to facilitate.
While this piece is by no means a full and scientific account of the state of Marketing, it provides a glimpse into some of the patterns we see while working with companies across Europe. As technologies, customer behaviour, and the competitor are undergoing immense changes, it is more important than ever to stay true to our core purpose. While this is not set in stone, we need to be critical of the activities that take us off course and the opportunity cost they entail. In my opinion this recalibration means that Marketing as function needs to take more revenue responsibility and increasingly play a part in big-issue/opportunity discussions instead of tactical, buzz-driven and non-commercial activities.
Are you interested in how you can raise the game in your Marketing organization? Then reach out to Nils.
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