How to Address the Growth Challenge

Growth is to a business organization what oxygen is to a living organism. It is the life force of the organization. For decades, sustained profitable growth has been the linchpin of long-term business prosperity. Profitable growth creates a virtuous cycle of forces that supports and drives business success. When a company stops growing, these same forces begin to run in reverse, creating a vicious cycle that makes success difficult to achieve.

My first post of 2019 asked the question:  "Have Marketers Fully Embraced the Growth Challenge?" Back in January, I answered that question this way:

"The recent research indicates that leading business growth is more of an aspirational goal than a current reality for most marketers. Overall, the studies show that most marketing leaders are still relying on conventional marketing communications tools to drive growth, and they remain much less involved in other business activities that have a significant impact on growth."

Research published this year indicates that my conclusion is still largely accurate. For example, in the February 2019 edition of The CMO Survey, respondents identified driving growth as the top challenge for marketing leaders. Yet only 43.4% of the respondents reported that the marketing function leads revenue growth in their organization. In the August 2019 edition of the survey, the percentage of respondents saying that marketing leads revenue growth dropped to 36.0%.

(Note:  The CMO Survey began asking this question in August 2016. Since then, the percentage of respondents reporting that marketing leads revenue growth has ranged from a low of 29.0% to a high of 43.4%.)

This fall, the CMO Council published a strategic brief that discussed the importance of growth and the major issues surrounding growth. The brief also discussed some steps that companies need to take to successfully address the growth imperative.

How to Achieve Transformational Growth described the issues surrounding growth in emphatic terms:

"For many companies, growth is the driving force that brings it all together. Yet questions loom:  Where do you find it? How do you inspire it? What hinders it? How do you invest in it? Who within the organization orchestrates and owns it?"

The CMO Council observed that many companies are addressing the growth challenge by creating new C-level positions to lead growth initiatives. The brief noted that:

• According to research by Singular, more than 21% of brands with at least $50 million in advertising spend now have chief growth officers (CGOs).
• More than 6,000 executives profiled on LinkedIn have the CGO title.
• 15,000 executives on LinkedIn report being the chief revenue officer (CRO) for their company.
• 28,000 of the executives say they are chief commercial officers (CCOs).

The CMO Council discusses three keys to maximizing growth:

1. Align the functional areas of the organization that play critical roles in driving growth. This will include marketing, sales, product, customer experience, technology, and analytics.
2. Create a growth culture. Nurture inclusiveness and encourage input from all organizational levels.
3. Set a growth agenda that identifies attractive growth opportunities and builds a sound strategy for exploiting those opportunities.

Regardless of whether growth is led by the CEO, CMO, CGO, CRO, or CCO, companies face two distinct but related tasks when addressing the growth challenge. First, they need to identify what growth opportunities are (or can be) available to them and which of those opportunities are most attractive. And second, they need to balance short-term and long-term growth opportunities.

I'll be discussing both of these issues in upcoming posts.

Image courtesy of Mike Lawrence (CreditDebitPro.com) via Flickr CC.

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Why Your Marketing Content Should Be "Job Focused"

The first step to designing an effective marketing strategy and creating compelling marketing content is to understand what your potential customers are trying to accomplish when they purchase products or services like those you provide. In most cases, people don't buy a product or service because they want that product or service itself. More often, what they really want is what the product or service will help them accomplish.

Theodore Levitt, the legendary professor of marketing at the Harvard Business School, captured this idea in a memorable way when he often reminded his students that, "People don't want to buy a quarter-inch drill. They want a quarter-inch hole."

In The Innovator's Solution, Clayton Christensen and Michael Raynor built on Professor Levitt's idea to describe what is called the jobs-to-be-done framework. The basic idea of this framework is that when people become aware of a "job" they need to get done, they look for a product or service they can "hire" to perform the job.

Christensen and Raynor argue that this is how customers "experience life." Their thought processes begin with an awareness that they need to get something done, and then they seek to hire something or someone to to the job as effectively, conveniently, and inexpensively as possible.

What Milkshakes Can Teach Us About Marketing

Christensen and Raynor also provided a memorable example of hiring a product to get a job done. In their case study, a fast-food restaurant chain wanted to increase sales of milkshakes, and it commissioned market research to determine how to accomplish this goal. The most surprising finding of the research was that almost half of the milkshakes were purchased in the early morning. The milkshakes were usually the only item purchased, and they were rarely consumed at the restaurant.

Digging a little deeper, the researchers found that most of the morning milkshake customers were people on their way to work. Many of them faced a long commute, and they needed something to make the drive more interesting. Also, they were in a hurry, they were usually wearing their business clothes, and they only had one hand free.

These customers sometimes "hired" other foods to fill their morning needs, but most of the alternatives had significant disadvantages. Bagels left crumbs on their clothes, and breakfast sandwiches made their hands and the steering wheel greasy. It wasn't so much that these customers "liked" milkshakes more than bagels or breakfast sandwiches, but milkshakes were simply better than those alternatives at performing the job the customers needed to get done.

The Magic of Job-Focused Marketing

The jobs-to-be-done framework is often used to guide the process of developing new products or services, but it also has implications for marketing. What it tells us is that one key to effective marketing is to focus the majority of our marketing messages and content on the jobs our potential buyers need to get done.

To create compelling "job-focused" messages and content, marketers need to thoroughly understand the jobs their potential customers are trying to get done, including:

• What the specific jobs are
• Why the jobs are important
• What happens if the jobs don't get done
• How potential buyers are trying to perform the jobs - what tools and processes they are using
• What is preventing them from getting the jobs done effectively and efficiently - the limitations and shortcomings of their existing tools and processes

As marketers, it's easy for us to forget that most potential buyers aren't really interested in our products or services per se. What they are (or can become) interested in is what those products or services can help them accomplish. Our products or services are simply the means to an end, and it's critical to keep this in mind when planning our marketing efforts. 

To use Professor Levitt's metaphor, our marketing strategy and our marketing content should be more about quarter-inch holes than quarter-inch drills.

Image courtesy of GotCredit (www.gotcredit.com) via Flickr CC.

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Two Ways to Improve Your ROI Credibility

With the fourth quarter of 2019 well underway, many marketing leaders will have already started planning for 2020. In most cases, the planning process will include an analysis of how well marketing performed in 2019. and many marketing leaders will use return on investment (ROI) as the primary tool for conducting this assessment.

Over the past two-plus decades, ROI has become the "gold standard" for measuring marketing performance and for communicating the performance and value of marketing to senior company leaders. So you would think that, by now, marketing leaders would thoroughly understand what marketing ROI is, and how to calculate it correctly. Unfortunately, however, that is not always the case, as a recent survey conducted by LinkedIn Marketing Solutions makes clear.

The LinkedIn Research

The Long and Short of ROI report is based on a survey of 4,000 B2B and B2C marketing professionals from 19 countries. Survey respondents worked in a wide range of industry sectors, including technology, financial services, professional services, and manufacturing. The survey was conducted in June 2019.

Most of the results presented in the survey report refer to "digital marketers." Unfortunately, the report does not define who "digital marketers" are, nor does it indicate whether all of the survey respondents were "digital marketers." With that caveat in mind, here are the "headline" findings from the LinkedIn study:

• 70% of digital marketers claim they are currently measuring ROI.
• 77% of digital marketers measure ROI during the first month of a campaign, even though 55% of those marketers reported having a sales cycle that is at least three months long.
• When most digital marketers say they are measuring ROI, they are actually measuring a variety of key performance indicators (KPIs), but not true ROI.
• 63% of digital marketers don't have a high level of confidence in the "ROI" metrics they are currently using.

The LinkedIn survey report argues that marketers should (a) clearly distinguish between KPI-based metrics and ROI, and (b) measure ROI over the length of the sales cycle in order to obtain accurate results.

When You Say ROI . . .Mean ROI

The findings of the LinkedIn survey highlight two of the still all-too-prevalent ways that many marketers are misusing ROI. First, many marketers use "ROI" as a catch-all term to describe a wide variety of benefits produced by marketing activities. But return on investment is a specific financial metric that has a well-established meaning among management and financial professionals.

This means that none of the following constitutes ROI:

• Increased brand awareness
• Increased market share
• Increased customer lifetime value
• Increased average deal size
• Improved conversion rates
• Improved response rates
• Improved NPS/customer satisfaction scores

For many companies, tracking some or all of these performance measures will be valuable, but they do not constitute marketing ROI. Calling any of these benefits "ROI" reflects a misunderstanding of what ROI is, and if a marketing leader presents one of these kinds of ROI calculations to a CEO or CFO, his or her credibility will be weakened.

Calculate ROI Correctly

The second way that many marketers misuse ROI is to calculate it incorrectly. The basic formula for marketing ROI (MROI) is:

MROI = (Gain from Marketing Investment - Cost of Marketing Investment) / Cost of Marketing Investment

So the basic MROI formula contains only three components:

1. The financial gain from the marketing investment
2. The cost of the marketing investment
3. Time - Although the formula doesn't expressly contain a "time" value, MROI is always measured for a defined period of time.

While the basic MROI formula appears to be quite simple, that simplicity is deceptive. In reality, calculating MROI accurately can become a complex task because every component of the formula presents questions that require thoughtful answers and sound judgment calls.

I've addressed many of these issues in several previous posts, so I won't repeat that material here. However, I've provided links to my ROI-related posts below. If you're involved in calculating MROI, I encourage you to take a look at these posts and carefully consider the issues they discuss.

Image courtesy of Rick B via Flickr CC.

ROI-Related Articles

Why Proving the Impact of Marketing is Difficult

For Better Marketing Decisions, Think Incrementally

Increased Profits, Not Higher Revenues, Determine Marketing ROI

Let's End the Obsession with Marketing ROI

Stop Trying to Measure Marketing ROI

Analyzing the ROI Formula - Part 3

Analyzing the ROI Formula - Part 2

Analyzing the ROI Formula - Part 1

The Basic Idea of Return on Investment

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A Fresh Look at Millennial B2B Buyers

The role of millennials in B2B buying decisions, and their distinctive attitudes and behaviors as business buyers have become major topics of interest for B2B marketing and sales professionals over the past five years. Since 2014, numerous research studies - including studies by the IBM Institute for Business Value, Google/Millward Brown Digital, Merit, and Heinz Marketing/SnapApp - have focused specifically on this subject.

A few days ago, Demand Gen Report published the results of new research - conducted in partnership with The Mx Group - that provides a current take on the roles, perspectives, and preferences of millennial business buyers. The B2B Millennial Buyer Survey Report is based on a survey of "close to" 200 millennials - people born between 1981 and 1996 - working for B2B companies.

The Demand Gen survey results provide numerous specific insights about the attitudes and behaviors of millennial B2B buyers, but I suggest there are three key takeaways from this research.

Millennials Take Charge

Many millennials have risen to leadership positions and are now exercising significant authority in B2B purchase decisions. Fifty-six percent of the respondents in the Demand Gen survey held director-level positions or above, and another 42% held managerial positions. Twenty-one percent of the respondents were vice presidents or held C-suite positions.

Forty-four percent of the survey respondents indicated they are a primary decision maker at their company for purchases valued at $10,000 or more. Another one-third of the respondents reported being a key influencer and/or recommender.

Other research has confirmed the growing responsibility and authority of millennial B2B buyers. For example, in a 2015 survey of 1,469 employed millennials by Merit, 73% of the respondents said they were involved in B2B buying decisions, and approximately one-third (34%) of the respondents reported being the sole decision maker for their department

A Preference for Peer/Colleague/User Content

The millennial buyers surveyed by Demand Gen expressed a strong preference for learning about products or services from peers, colleagues, and other users. When the survey participants were asked what types of content were most helpful in their buying decisions, the top choice was user reviews (61% of respondents), and case studies came in third (34% of respondents).

When the survey participants were asked what resources they usually depend on when researching business purchase decisions, the top choice was review sites (49% of respondents).

The desire to learn from peers also influences how millennial buyers use social media. When asked what role social media plays in their process for researching potential purchases, a majority of the survey respondents said they browse existing discussions to learn more about their topic of interest (63%) or ask for suggestions and recommendations from other users (55%).

On this issue, it's clear that millennial B2B buyers aren't significantly different from other business buyers. Recent research has shown that buyers of all generations are now relying more on information from peers, colleagues, users, and other independent third parties. For example, in a 2019 survey of 712 business technology buyers by TrustRadius, participants were asked to rate the trustworthiness of fifteen sources of information used in buying decisions. Four of the seven most trusted sources involved independent third parties (peers, friends, or colleagues, users, analysts, and communities or forums).

The Challenges Haven't Changed (Much)

The Demand Gen survey also revealed that millennial B2B buyers face many of the same challenges that all business buyers confront. More than half (52%) of the survey respondents said there are too many people involved in buying decisions at their company, and nearly half (49%) complained that their buying group is often indecisive and misaligned.

The next three most frequently identified challenges were:

• Difficulty getting budget allocated (39% of respondents)
• Lack of trust from senior management/not taken seriously (38%)
• Difficulty proving clear potential of ROI (28%)

While a lack of senior management trust may be a slightly bigger challenge for younger buyers, it's likely that B2B buyers of all generations would say they're affected by the challenges identified in this survey.

Image courtesy of Jeff Djevdet (www.speedpropertybuyers.co.uk) via Flicker CC.

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Two Observations on the New CMI/MarketingProfs Content Marketing Survey

A few days ago, the Content Marketing Institute and MarketingProfs published the findings of their latest content marketing survey. The B2B Content Marketing 2020:  Benchmarks, Budgets, and Trends - North America report is based on 679 survey responses from content marketers and marketing executives with B2B companies in North America. All respondents were with companies that have been using content marketing for at least one year.

The annual CMI/MarketingProfs survey has become one of the most popular and widely-cited research studies in the content marketing world. The latest survey has already triggered several articles and blog posts, and I'm sure many more are now being written.

In many ways, the findings from the latest survey echo those in previous versions of the study. For example, they tell us that having a documented content marketing strategy is vital for success, and that top-performing content marketers prioritize the information needs of their audience over their company's promotional messages.

In this post, I'll focus on how some of the attributes of top-performing content marketers have changed since last year's survey, and I'll argue the latest survey shows that most small and mid-size companies should be outsourcing more of their content marketing activities.

Notable Changes in the Attributes of Top Performers

CMI and MarketingProfs provide survey data for both "most successful" and "least successful" content marketers. The survey defines "most successful" marketers as those respondents who characterized their company's content marketing effort as extremely successful or very successful at achieving the company's desired results. "Least successful" marketers are those respondents who described their content marketing program as minimally successful or not at all successful.

The survey report compares most successful to least successful content marketers across several attributes and practices, and as might be expected, there are substantial differences between the two groups. It's also useful to look at how the most successful marketers have evolved over the past year.

The following table depicts how the most successful marketers rated several attributes of their content marketing program in both the latest survey and in last year's survey:

This table shows that in the latest survey, higher percentages of the most successful content marketers reported that their organization's content marketing is sophisticated and/or mature, that they have a documented content marketing strategy, and that they have successfully used content marketing to build loyalty with customers, nurture subscribers, audiences, or leads, and generate revenue.

Somewhat surprisingly, the share of the most successful marketers who said they measure content marketing ROI fell by five percentage points. This could be interpreted as a step backward, but I don't believe that's wholly accurate. I would argue that the change is more likely due to the recognition by sophisticated content marketers that the primary focus of marketing measurement should not be on content marketing per se. Here's my view on this topic.

Small and Mid-Size Companies Underutilize Outsourcing

In this year's survey, half of all respondents said they outsource at least one content marketing activity. However, the use of outsourcing varies greatly depending on company size, as the following chart shows:

Only 37% of respondents from small companies (1-99 employees) said they outsource any content marketing activity, compared to 56% of respondents from mid-size companies (100-999 employees), and 71% of respondents from large companies (1,000+ employees).

These findings suggest that many small and mid-size companies are outsourcing less than they should to optimize their content marketing program. Other findings from the survey show that 44% of small company respondents have no employees working full time on content marketing, and another 29% have only one full time content marketer. More surprising, just over half (53%) of survey respondents from mid-size companies reported having no or only one full time employee dedicated to content marketing.

As the use of content marketing has continued to grow, the competition for buyer attention and mindshare has become more intense. One effect of this heightened competition is that a significant amount of high-quality content has become a prerequisite for content marketing success.

The survey data suggests that many small and mid-size companies aren't committing enough internal resources to create and sustain an effective content marketing program. Under these circumstances, outsourcing some aspects of content marketing - particularly content development - can be a smart and cost-effective way to close the gap.

Top image source:  Content Marketing Institute/MarketingProfs

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New Insights on the State of Marketing Technology

A recent survey by WARC and BDO (with interviews by the University of Bristol) provides more evidence that the role of technology in marketing is continuing to grow. Martech:  2020 and Beyond is based on a survey of more than 750 brands and agencies located in North America, the U.K., Europe, and APAC. The survey was fielded in June and July 2019.

The explosive proliferation of marketing technologies has been widely discussed and well documented. The inaugural (2011) edition of Scott Brinker's marketing technology landscape graphic included about 150 companies. The 2019 version of the graphic includes 7,040 technology solutions.

Market Size and Growth

WARC and BDO estimate that total spending on marketing technology in North America and the U.K. will reach $65.9 billion this year, up from $52.4 billion in 2018. This equates to a year-over-year growth rate of 25.8%. WARC and BDO had previously estimated that 2017 spending in these two markets was $34.3 billion. So, in North America and the U.K., the market for marketing technology has nearly doubled over the past two years.

The WARC/BDO study found that marketers' commitment to technology is still growing. On average companies in North America and the U.K. will spend 26% of their total marketing budget in 2019 on technology tools and services, compared to 23% of the budget in 2018. While spending on technology seems to have leveled off in the U.K., it's still growing robustly in North America, as the following table shows:

A slight majority (53%) of the global survey respondents expect their spending on marketing technology to remain stable over the 12 months following the survey. However, of those respondents who believe their technology spending will increase, 51% expect the growth to be more than 10%. Growth expectations among North American respondents were more temperate. Only 35% of those respondents expect spending increases of more than 10%.

Need and Utilization

Fifty-five percent of the global survey respondents said they have all the marketing technology tools they need, but the findings regarding technology utilization were decidedly mixed, as the following table shows:

As the table indicates, only 24% of the respondents reported that they have all the tools they need and fully utilize them, while 41% acknowledged that they aren't fully utilizing the technology tools they have.

Among respondents from North American companies:

• Only 15% said they have all the technology tools they need and are fully utilizing them.
• 57% said they don't have all the technology tools they need.
• 45% said they aren't fully utilizing the technology tools they have.

Current Uses

In terms of how companies are using marketing technologies, more than half of the survey respondents reported using a technology tool to support each of the following marketing disciplines or activities:

• Email (79% of respondents)
• Social media (77%)
• Content marketing and management (68%)
• Customer relationship management (65%)
• Analytics, measurement and insights (65%)
• Mobile (60%)
• Data management (60%)
• Advertising technology (58%)
• Commerce, lead generation and sales (53%)

Key Takeaways

The WARC/BDO survey provides two important takeaways for marketers. First, the marketing technology space is extremely dynamic. The number of technology solutions available to marketers is still increasing, although the pace of development may be slowing slightly. And second, it's likely that most marketers will always be challenged to keep up with the rapid pace of technological innovation.

Top image source:  WARC/BDO

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Three Key Takeaways from Gartner's New CMO Spend Survey

Gartner has just published the results of its 2019-2020 CMO Spend Survey. The research report is based on survey responses from 342 marketing executives in North America and the U.K. at companies with $500 million to $5 billion or more in annual revenue.

The Gartner study produced several valuable data points, but I want to focus on three takeaways that I found particularly interesting.

Marketing Budget Growth

Gartner's survey indicates that marketing budgets will come in at 10.5% of company revenue in 2019, down from 11.2% in 2018. This agrees closely with the August 2019 edition of The CMO Survey, which found that current marketing budgets represent 9.8% of firm revenues.

However, most of the Gartner survey respondents were optimistic that their marketing budgets will increase in 2020, as the following table shows:

Gartner observed that this CMO optimism exists despite widespread concerns about a global economic slowdown among many economists and financial industry pundits. In fact, when survey participants were asked how the overall economic environment would likely affect their company's performance over the next 18-24 months, 86% of respondents indicated they believe the future impacts will be positive.

The above table also shows that marketing executives with B2B manufacturing companies are significantly less optimistic about future budget growth than other marketing leaders. In my view, this is likely due to the economic slowdown in manufacturing that is already occurring, and to the uncertainty surrounding Brexit in the U.K.

Martech Spending Falls

Gartner's study found that spending on marketing technology represents 26% of the total marketing budget in 2019, down from 29% in 2018. However, Gartner does not believe that this year-over-year decline indicates that marketing leaders are reducing their long-term commitment to technology.

In the research report, Gartner observed that spending on marketing technology has varied considerably over the years and that part of this variability is due to normal investment cycles. The report also referred to other Gartner research, which had found that some marketers are struggling to implement and fully utilize new technology tools.

I generally agree with Gartner's thinking on this issue. The explosive proliferation of marketing technologies is well documented. And with most technology tools, it takes time to assimilate a new technology and begin to fully utilize it. So, it's not surprising that technology spending is volatile, and we shouldn't read too much into a one-year decline.

The Rise of Marketing Operations

The third interesting takeaway from the Gartner CMO Spend Survey relates to the growing importance of marketing operations. The Gartner survey asked participants what capabilities they consider most vital for the execution of their marketing strategy over the next 18 months. The following table shows the percentage of respondents who included each capability in their top three choices:

As the table shows, 30% of survey respondents included marketing operations as a top three capability. Survey respondents also estimated they they are currently spending 12.6% of their marketing budget on marketing operations. Other research by Gartner (the 2019 Marketing Organization Survey) found that two-thirds of marketing organizations now have a discrete marketing operations function.

Gartner argues that the growing complexity of marketing and a shift toward a more decentralized marketing organizational structure are driving the need for a marketing operations function that is focused on creating excellence in planning and execution across the entire marketing organization. Gartner also observed that the scope of the marketing operations function is growing, and now includes diverse responsibilities such as technology management, talent management, budgeting, and supplier management.

Top image source:  Gartner, Inc.

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