Marketing Drives Business, Yet Marketers Are Only On 12% Of Company Boards.
Why? Because They Don’t Deserve To Be!
It is ridiculous that company boards are primarily run by financial people. In my view, this is one of the major reasons that, at nearly every conference I speak at, senior company management tell me that they estimate less than 25% of their marketing produces an acceptable result. The number of companies which measure the ROI on every campaign? About none!
That is bloody pathetic … the performance of most marketers is appalling!
While the world has been changing frenetically since advertising began, traditional marketers and advertisers have stuck to strategies based on four “tried and true” laws: brand awareness to create recall and drive sales, the attributes of the product, the price and satisfied customers. In fact, research shows that some 87 percent of all marketing and advertising is focused on either one or a combination of these four elements.
Yet advertising and marketing effectiveness has decreased dramatically over the past decade. Bob Kuperman, CEO of Chiat Day, said in Time Magazine 10 years ago that 95 percent of all advertising does not work. This research was supported by numerous other studies, including the Levi Study in England, all of which produced failure rates of 87-95%.
What? 95% doesn’t work…. and marketers keep doing it, over and over again ????
However, the financial geniuses running companies don’t get off scott free either. They have continued to write cheques for marketing they knew was not working and giving these cheques to people who were unaccountable.
If the rest of the business world had been so complacent about modifying and updating its rules, particularly those that were so obviously ineffective, and allowing Dracula to continue to run the blood bank, we would all still be driving horses and buggies and sending smoke signals.
Let’s look at Marketers’ performance over the last 10 years:
- According to Harvard Business School studies, 45 out of 51 categories of businesses are commoditized, that means that the customer cannot distinguish between the various competitors except on price…a sure recipe for disaster.
- Corporate boards are now controlled by financial people, on most boards there is not a marketing person in sight. In fact, despite marketing being the most important driver of any business, only 12% of companies have a marketer on the board!
- We all know that long term success/ brand building/developing loyal customers requires long term planning YET marketers are forced into 3 month performance cycles by financial people.
- Marketers are also forced to go cap in hand for marketing budgets to financial people, who in the main do not understand what marketing is, far less why we would want to implement a particular strategy at a particular time.
- Marketing is seen by most outside the profession as a “non exact science”.. if not just plain mumbo jumbo.
I think it is fair to say that Marketers have lost respect and influence in both the business marketplace as a whole as well as with consumers.
Why has this happened??
I believe there are four reasons –
Firstly, marketers don’t take responsibility for the real elements within the marketing portfolio.
Let’s begin with a fundamental question – what is marketing???
My definition of Marketing is “every action taken by the company, or anyone who works for the company or by any other business or agency which in any way represents the company that in any way touches a client or potential client.”
This includes not only advertising, PR, direct, on-line and other traditional marketing, but the performance when a potential customer walks into reception, phones the company, applies for credit, receives a delivery or a service call, attends a company sponsored event and so on.
Do marketers ever take responsibility and produce ROI figures for all these facets of business?? No. Even worse, in my experience very few marketers have even determined what all these customer touch points are. In most industries, there are literally dozens of them. So marketers are seen by most financial people as simply “Advertising” or worse “Sales and Advertising” or “Sales and Marketing”, not seen as “a marketer”, a highly skilled business professional who can control the long and short term destiny of a corporation.
Marketers ARE the future of business…Everything starts with a sale. Marketers drive business growth.
Are marketers seen this way by the business community? No.
Why? Because overall, performance by marketers has been pathetic!
Secondly, marketers don’t talk the language of business.
The business world talks in terms of investment, ROIs and yields… terms that have qualifiable values.
Marketers still talk about reach, frequency, CPM, and hits. This is mostly absolute crap that means nothing!
Thirdly, while marketers have the ability with today’s technology to measure everything the company does, they are primarily unaccountable.
Marketers don’t even provide measurements for the actual audience for any form of advertising, far less being able to measure the actual sales results of their efforts.
Of course, audience size means squat, the only thing that actually counts is resultant sales. But somehow marketers feel secure if they can say that 23 million people saw the advertisement. In reality, 23 million watched the program, few actually saw the advertisement and marketers have no idea who purchased as a result.
So if marketers can’t do these relatively simple tasks, it is not surprising they don’t measure the results of the literally dozens of other forms of interaction between a company and its potential customers.
Fourthly, research clearly shows that the majority of marketing and advertising does not work.
Marketers can’t be taken seriously while the majority of the profession delivers poor performance. Marketers don’t get respect because they haven’t earned it! Until there is a much better performance from marketing NO ONE will take marketers seriously.
So if these are the reasons, what are the causes of this malaise??
The three primary causes are that marketers:
- Have forgotten the basics of marketing
- Don’t do their homework and know too little about the potential client
- Don’t measure everything they do.
Whose fault is this?
It is fairly and squarely the marketers….marketing and advertising people. Business has become more and more price driven due to commoditization. A price driven, commoditized industry very quickly becomes dominated by a few huge players who have purchasing power muscle. It also opens a business up to very serious attack from price advantaged web businesses and big box retailers.
The result is that few businesses will survive in the long term. To survive and to grow your business and increase your ROI you must change the way you do business.
Marketers have allowed this commoditization to happen by not focusing on clearly differentiating from their competition. Of course, we try to blame globalization, the highly competitive environment, the increasingly price conscious consumer and so on. We need to blame someone. But to see the real culprit, we actually need to look in the mirror.
I believe that the tragedy of all this is that there is a greater opportunity for great marketers now than at any other time. Today we have extraordinary diagnostic and communication tools.
There are three reasons for this belief.
Firstly, the changes in the media environment benefit clever marketers:
- media proliferation, increased segmentation,
- more one on one communication
- media creep,
- increased content,
- time challenged public, consumer cynicism,
- increased access to information about the customer.
Secondly, and most importantly, the consumers’ “capacity enhancement’. For example, look at a Bloomberg’s screen or watch a 14 year old make a phone call, watch TV, listen to the iPOD , use his IM and be on the internet at the same time…and have reasonable recall of all.
Our involvement with the potential customer needs to be challenging, interactive and multi-channelled.
Thirdly, the changes in media vehicles enable marketers:
- immediacy of performance measurement.
- increased response,
- infallible media metrics,
- enhanced data mining opportunities,
- dialog not monolog opportunities
- dramatically lower cost of new technology communication (simple example SMS)
So there is a need for a paradigm shift in approach to marketing.
Most communication programs are still limited and simplistic in their approach to their target groups who have moved on to another level because most businesses/advertising and marketing agencies are still anchored in traditional marketing methods.
What most marketers describe as “Cutting Edge” is not cutting edge at all. Cutting edge is not more inventive stunts, creative ideas, better copywriting, more testing. These are the basic minimums of any marketing.
Today we need to consistently build customer relationship data mining and multi channel approaches that continuously:
- enhance knowledge of the potential customer.
- increase the dialog between the advertiser and the consumer,
- improve the lifestyle connection.
- build a bridge in every communication between the emotional desire to buy trigger and the pragmatic ‘show me the data as it applies specifically to me’ purchase decider.
This is true whether using traditional vehicles – such as print, radio, TV, outdoor etc or the so called new media.
For example, variable data multi-channelling enables data to talk individually to people using any channel. For instance, it allows for highly complex and highly creative direct mail packages to be fully personalized, with names, dates, an individual’s usage information, savings, graphs, even photos etc. in headings and all body copy to be totally customized to every specific customer within a normal print run.
One example is a program in September 2005 for a fixed line phone carrier who received a 22% response rate from a print DM using one to one variable data technology to over 340,000 customers, against a “traditional DM” response rate for a similar program of 1.7%.
While there is a proliferation of new technologies, I will mention just three simple examples.
Firstly, integrated SMS and radio broadcasts.
By tying SMS response into radio advertising and radio station loyalty clubs, advertisers are data mining potential customers and interacting with them one-on-one to buy a pizza, attend an event or even enhance the radio audience at a specific time.
The radio station can SMS its data base advising that in 5 minutes there will be an advertisement for Pizza Hut and if they tune in they can win a prize. When they tune in they are asked to SMS if they would like a “Special” Pizza Hut Pizza for dinner. When they SMS they get a call center calling back immediately confirming the order and upselling.
This cross communication marketing is achieving amazing responses depending on the promotion. It is both measurable and immediate.
Another example is “Upselling Chat”. Chat technology enables real time immediate post purchase on-line messaging and voice chat, in order to upsell a customer who has just purchased on-line. This is not only permission based marketing but enables the sales person to talk to the client about something they are fully interested in, making the process so much more effective.
A third example is Behaviour Triggered Emailing where software analyses data, both real time and historical, enabling immediate, automated opt-in campaigns based on in-store, catalog, on-line purchases, biographical data, events, dates or customer behaviour. This greatly enhances sales performance.
Traditional response rates are no longer acceptable. Many direct marketers are getting response rates of 10+% and 20 and 30% rates are no longer unachievable.
Direct comparisons between an identical campaign using “traditional” methods and new variable data and new technology methods in some cases show increased performance of over 1000%, so we need to be more analytical when choosing communication channels.
The DARE Digital Agency on London is wonderfully creative and has produced a host of results-achieving and award-winning campaigns. My favorite is the email campaign for Unilever’s AXE range of men’s toiletries. Unilever had an email database of just 30,000 clients so they emailed to each a sexy girl in red lingerie lying on a bed, with an invitation to use the cursor, which turned into a white feather when activated, to tickle her anywhere you fancied. When you tickle her she reacts accordingly, depending on where she is tickled.
The site is such fun that the recipients all emailed it on to their friends, the result being that over 50 million people, presumably all men, the intended target, have interacted with the site.
The most important point is that the average time spent interacting with the site is in excess of 9 minutes. Compare this with a television commercial which would be infinitely more expensive to produce, only lasts 30 seconds not 9 minutes, attracts a fraction of the audience, is not interactive, is expensive to put to air and does not allow on line purchasing or identification of the viewer.
This is cutting edge – this is the future of communication.
As key product and service offerings become similar and response times to market change become shorter, not enough marketers are using their skills to identify the communication channels that are having the most effect on influencing customer acquisition, buyer behavior or decision making, customer loyalty and retention. Even fewer are providing ‘advice’, education and specific instance comparisons tailored to specific customers, as opposed to ‘hitting them with yet another creative message’.
There is nothing wrong with any of the traditional communication vehicles we are using as a conduit for the marketing message. Despite the extraordinary proliferation of communication mediums in recent times, each have their own applications in which they are effective to varying degrees.
Complacency and Gullibility:
There are two essential causes of lousy marketing performance, both of which lead back to a combination of the complacency of the marketing industry and the almost inconceivable gullibility of the corporations employing their services.
What other business would have industry leaders saying that their applications are only 5-10% effective and still keep their head in the sand and go blithely on spending, spending, spending. You would think that they would have got the message twenty years ago when “50% of advertising is wasted…the only problem is we don’t know which half” was in vogue. What does it take to ring alarm bells? The acres of marble foyers may be down to quarter acres, but there is still an incredible lack of accountability and performance.
The first problem is the selection of the communication vehicle. Too little emphasis is put on selecting the correct vehicle, more accurately the mix of vehicles, to cost effectively impact and motivate the target market to buy. This is in large part due to the lack of effective measuring systems being implemented.
For example, it is ludicrous to measure the audience for television programs and then dissect it every which way in order to establish the target audience and advertising rates for slots in various programs. Why not just directly measure the viewing audiences for the advertisements? It is just as easy to do as to measure who watches the programs. There is a simple answer to this question. The advertising industry and its indirect masters, the media owners, have seen the extensive research that shows that in over 60% of the time advertisements are playing, there is no-one in the room and a substantial percentage of the remainder are “seriously distracted”.
The chain reaction effect of establishing advertising rates that reflect the viewing audience actually watching is too horrific to contemplate. The production budgets for shows would collapse, making most of them even more un-watchable than they are now, coverage of sports would drop from 30 cameras to 5, sports broadcast rights would drop from billions to millions, superstar athletes and entertainers would have to live on hundreds of thousands of dollars a month, instead of millions, advertising agency commissions would drop, less Ferraris would be sold and all of a sudden we would have a red wine surplus.
Hell, reality in advertising is a dreadful thing. It could be the end of the world as we know it. It is much easier if corporate executives continue to fall for the great stories spun by those extremely smooth, but sneaky, ad guys.
The second problem is the message being conveyed.
Most businesses are driven by their company and their product. So are the messages they use to try to communicate with potential customers. It is in the development of the product and the machinations of building a business that the blood, sweat and tears have been expended and most businesses think that this is what the customer will also be interested in. At very least they want the customer to know what they have gone through.
Businesses do not seem to realize that the customer doesn’t give a damn about them or, in reality, their products or service. The customer only cares about solving his own problems or issues.
In today’s global marketplace, everything must begin and end with the customer. They are all that counts. Customers can screw up all the hard work that went into creating products and building businesses in a heartbeat…simply by buying from a competitor.
Yet how many companies are truly customer centric? I believe that it is less than 1%. This is despite the daily mantra of service, service, service chanted by corporate executives around the world. They remind me of Milli Vanilli. But there is a plethora of CRM programs out there, aren’t they designed to improve customer service? Read the sales pitches for these CRM products, “cut staff”, “save money”, “cut processing time”…doesn’t sound like customer service to me, in most of the material the customer doesn’t even get a mention. Most CRM programs are a synonym for “cut heads, increase productivity’.
There almost a total disconnect between financial people and the marketers who keep talking about long term relationships, about understanding customers, about knowing customers past and present needs, trying to anticipate their future needs, about customization, about developing a long term sustainable advantage? Why don’t marketers understand that this stuff takes both time and money?
Do the financial people even care about spending more time talking to the customer? What is wrong with pouring buckets of money into totally ineffective, but immediately measurable, one size fits all monologue advertising? After all, we have been doing it for years. Do financial people even understand what dialog is? Or do marketers simply not grasp that it is cutting heads and acquisitions that drive the stock price!
Are CRM programs, the ultimate people solutions, being designed and sold by nerds who have no people skills whatsoever? Isn’t CRM just simply a faster and more efficient way of returning us to the good old days when dialog was in vogue, when suppliers knew that Mrs. Jones had three kids named Tommy, Billy and Zacchariah that play football and need a dozen Krispy Krème donuts every Sunday morning from the first of September through January?
If so, why have we screwed it up so badly?
There are four elements that are not important in marketing today. These are the product, the price, brand awareness and satisfied customers, the four pillars which the industry has used as the cornerstones of its very foundation. None of these are worth a damn in today’s information driven, increasingly competitive marketplace with its proliferation of communication vehicles, increased media clutter, customer skepticism and overload.
A marketing strategy and its advertising campaign really fly, despite the quality of the product or service, when there is absolutely no disconnect between the emotional message being conveyed, the closing techniques being employed and the desires of the customer. In order for our communication vehicles to really work we must be focusing on company-customer connects, ignoring disconnects that dilute or confuse the message, or in the case of the four traditional pillars, elements that are total non connects.
None of these four elements have a relevance to today’s customer; none of them cause a company-potential customer connection.
Why? Because no-one has a unique product…or not for long… and 92% of people find like products interchangeable, if price was important people would drive Skodas, not BMW’s and Commodores and wear cheap non designer clothes, if brand awareness was important people would identify with the high spending brands and when people buy something they are entitled to good service.
So unless you give customers a reason they can identify with to buy your product, create the value proposition and knock their socks off and make them feel special…you’ve lost them.
So for product, price, brand awareness or satisfied customers to be a focus of the communication message, it must be really special or it is a recipe for commoditization, excessive marketing costs, low return on marketing investment, decreased profitability, poor shareholder returns and an invitation for eventual takeover.
In short, if marketers want to be relevant again, we need a paradigm shift.
So if you need exceptional marketing, or global business advice…and we all do….give me a call…we DO make a difference!
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