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Jonathan Becher

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Marketings New Mandate:

Core Principles for Driving Business Value

AT A TIME WHEN BUSINESS MODELS ARE CONTINUOUSLY CHALLENGED, MARKETING MUST PROVIDE THE GLUE THAT BINDS THE DIFFERENT PARTS OF THE COMPANY TOGETHER AROUND THE BRAND PROMISE. HERES HOW.

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CEOs and their leadership teams are well aware of the rapid-fire disruptions taking place around their business models. One visible example is the practice of showrooming, whereby customers browse in brick-and-mortar stores but use their mobile devices to find better prices online. According to comScore, 4 out of 10 consumers showroom first, and then purchase online.1 Some retailers have rolled out price-matching guarantees in an attempt to counter the trend. But discounting is not a long-term solution in the Internet age, when global pricing transparency makes low price an indefensible strategy.

At a time when business models are continuously challenged, businesses that want to stand out must ensure that every customer knows exactly what the company stands for. Target, for example, has successfully staked out a position as a high design retailer at an affordable price. Target understands that positioning means more today than a snappy tag line hatched by advertising madmen. In a digital world, its no longer possible for a gap to exist between what a business says and what it does. Thats why brand positioning is no longer a marketing problem its a company problem. In todays environment, in which bad news travels at the speed of a tweet, positioning is not just about message consistency, its about survival.

Every CEO needs to clearly articulate the urgency of this new reality and unite the organization around a common strategy and a consistent message. So where does marketing fit in? Marketing must support the CEO in determining the right positioning for the organization, but it also has a bigger role to play: providing the glue that binds the companys different parts around the promise. This broader role requires a significant rethinking of structure, process, and skills a transformation that is well under way at many marketing organizations. More than two thirds of marketers in a 2012 survey by ITSMA, an association for IT services organizations, say marketing has transformed or is undergoing a transformation.2

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The devil, however, is in the details and the funding. Many chief marketing officers (CMOs) continue to chafe under a do more with less mandate. Costcutting has kept many marketers from achieving broader transformation objectives. Marketing budgets are creeping back to respectability after bottoming out during the global recession; ITSMA estimates that marketing budgets among business-to-business (B2B) companies, for example, will make up 1.5% of total revenues in 2013, a nice rebound from a low of 0.8% in 2009 but still well below the historic 2.3% seen in 2001.3 Budgets are unlikely to ever return to the highs seen during the dot-com bubble.

How can CMOs build a case for marketings broader mandate while dealing with more conservative budget realities? Reallocating existing budgets toward new channels (for example, mobile or social media), new tactics (such as content marketing), and new tools (like analytics and optimization) will help brands more effectively engage with customers without adding costs. But to secure marketings position as a strategic driver of business growth, CMOs need more than tweaks to the current ways of doing things.

Five core responsibilities are required for modern marketing departments:

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Marketings New Mandate: 5 Core Principles for Driving Business Value

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Represent the Voice of the Market

Most companies still think in terms of researching customers. But if Starbucks Coffee Company founder Howard Schultz had listened only to customers, he would have gotten out of the coffee business. Research into the market revealed why customers werent buying coffee. The decline in coffee drinking was due to the fact that most of the coffee people bought was stale and they werent enjoying it, Schultz said. Once they tasted ours and experienced what we call the third place a gathering place between home and work where they were treated with respect they found we were filling a need they didnt know they had.

has built a trends and insights team that is charged with helping Gap stay culturally relevant in an industry where styles change in the blink of an eye. Giving our designers a sense of how the world is changing and where the culture is going inspires them to create styles that are a little more forwardthinking, said Farbman. If youre always looking backwards in a dynamic industry like ours, pretty quickly you find yourself three or four years behind.

Match Product Names with What Customers Seek

Go Beyond Customers

Of course, the voice of the customer is still vitally important in setting strategic direction, but its not enough. Today, marketers must also take advantage of the tools at their disposal for capturing the viewpoints of everyone who is not a customer: prospects, business partners, competitors, economists, trendsetters, and anyone else who may influence their business or industry. A global survey of 3,000 business leaders by GE found that 91% of respondents said understanding customers and anticipating market evolutions are the keys to successful innovation.4

Listening to the voices of the market is not just a defensive tactic. Several years ago, SAPs analytics products were called business user solutions. But the search analytics team uncovered an interesting trend. By analyzing the search terms that were sending traffic to the analytics section of SAPs Web site, analysts found that the phrase business user wasnt even in the top 500. The top phrase people were using was business intelligence. However, the analytics team also noticed that business intelligence was trending down; the numbers were dropping weekly. Meanwhile, another search term was rising in popularity: analytics. So SAP changed the name of the product line to business analytics. The market helped SAP determine the name that would drive more awareness, and ultimately, more sales.

Build a Dedicated Market Insights Team

Market voices will reveal new trends, uncover needs for products and services that havent been created yet, and identify opportunities in adjacent markets that could be captured. Nowhere, perhaps, is trendspotting more important than in the retail apparel industry. At Gap Inc., Global CMO Seth Farbman

Use Market Understanding as a Cultural Catalyst

By developing a more complete understanding of the market, CMOs can position marketing as the cultural catalyst that uses market insight to keep the organization from getting stuck in the success of the present and prepare for the next big shift.

ONCE THEY EXPERIENCED WHAT WE CALL THE THIRD PLACE A GATHERING PLACE BETWEEN HOME AND WORK WHERE THEY WERE TREATED WITH RESPECT THEY FOUND WE WERE FILLING A NEED THEY DIDNT KNOW THEY HAD.
Howard Schultz, chairman, president, and CEO, Starbucks Coffee Company

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Conviva: Working Backwards from the Future

Competing in a changing industry such as digital video requires a clear vision into a fuzzy future. At Conviva, which provides streaming video optimization services to global media companies, part of marketings mandate is to define what will happen next with Internet video and the potential impact on viewers and Convivas media clients, which include HBOGO, NBC, ESPN, the GRAMMY Awards, and the Academy Awards. Im focused on where the streaming industry will be in 2020 and committed to the viewing experience being better, said CMO Hope Frank. We need to climb into the heart and soul of the viewer and consider not only what he or she may want today, but also how the experience will differ several years from now. By taking this view, Franks team can build a business case for change. For example, Conviva determined that if todays streaming video experience doesnt improve, media brands stand to lose $20 billion in revenue as viewers shift to new or emerging content experiences, and advertisers follow.

With these types of metrics, its easy for our development teams to have valuable conversations with our clients about the importance of elevating the quality across the viewing experience today, Frank said.

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Synchronize the Customer Experience Across All Channels

In 2012, Carnival spent $61 million advertising its fun ship brand positioning. But by the end of last year, #cruisefromhell was trending on Twitter after one of Carnivals ships had an onboard fire that left passengers stranded for five days without fresh food, air conditioning, or working toilets. The social media backlash that Carnival endured as a result of the customer experience aboard the Triumph is just the latest example of the perils companies face in the social media era. Customers arent just getting online to complain about an experience, they are actually mobilizing to get companies to change experiences they disagree with. As if that werent enough, social media is just one channel among many that add up to the overall experience of a brand. The challenge is that each of these experience channels, from the Web site to the call center to postsales support, are usually developed and managed independently, often by different groups within the organization. Given the way business units and functional groups are organized and measured inside companies today, most care only about the slice of the experience theyre directly involved with.

Counsel Rather than Manage

Thats why marketing needs to become a champion for the customer experience across all channels, not just its own. A cohesive marketing communications plan carries no weight if customers have disjointed experiences across the companys Web site, in a retail store, at corporate headquarters, or even with its partners. While it may seem impossible for marketing to ensure a consistent experience across all of these channels without owning and managing them, it can be done. Consider SAPs brand promise, Run Better. This promise must be more than a catchy slogan employees must live and breathe it every time they interact with customers. If our sales team invites a group of executives to a corporate briefing center for a day of meetings, they are obligated to deliver a seamless, consistent experience, starting with the messaging on the invitation through every customer touch point and ending with the car ride back to the airport. Marketing doesnt manage the briefing centers, but it does provide counsel to the facilities managers and the sales teams that run the meetings to help them understand the story they want to tell and provide them with the right assets to help them tell the story.

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Marketings New Mandate: 5 Core Principles for Driving Business Value

Broad Perspective, Narrow Focus

Synchronizing the customer experience begins with a full understanding of how customers interact with your brand. To do this, most organizations will need to expand their definition of customer lifecycle beyond the traditional sales funnel. What problems are they trying to solve? What outcomes do they achieve by using your product or service? Its critical to define the experience before you design the experience. Marketing can take this customer perspective to different channels, and the teams that own those channels, to create better experiences. Small shifts can have a positive impact. Deploying single sign-on capabilities, for example, allows customers to more easily navigate across a brands online touch points. Orienting a customer event around solving customers problems instead of selling them products can create more engagement and affinity. These individual projects serve as lighthouse examples that can be used to build acceptance as they cascade across the organization.

The Cost of Not Acting

In The Customer Experience Edge, authors Reza Soudagar, Vinay Iyer, and Volker G. Hildebrand explain the central paradox of customer experience: Companies want to do right by their customers, but their customer experience efforts must also drive revenues and profits. The authors emphasize that companies cannot build a customer experience program without a clear sense of the return on that investment. One way to do this is to calculate the cost of not focusing on the customer experience. What is the cost, for example, of a single bad experience? they ask. Many companies jeopardize their customer relationships by making decisions that dont take these types of costs into account. The cost of doing nothing to the customer experience, they conclude, can be significant.5

Intuit: Capturing Behavior, Not Just Data

Creating an engaging and consistent customer experience requires insights that go beyond clicks and transactions. At financial software developer Intuit, founder Scott Cook started a follow-me-home ethnographic program to spend time with customers where they live and work. The goal of the program which involved all employees, not just marketers was to gain insights by observing not just how customers used Intuits products but how they went about their lives. An early insight involved mobile devices: Our hypothesis was that only power users were doing any types of small-business transactions on smartphones, said Nora Denzel, Intuits former senior vice president of marketing (she left in September 2012). But we found that even the non-power users were running businesses from mobile devices.

Identifying the trend early convinced the leadership team to invest heavily in mobile product development. When you have hundreds of employees spending time with consumers in the field, you get a pulse that you wouldnt get by just doing primary or secondary research, Denzel said. That was our secret sauce.

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Be the Brand Steward

Brand management has become far less about compliance, in which marketing creates strict guidelines for how the brand should be represented in all materials across all channels, and more about loosely defined governance. Think of it as moving from brand police to brand catalyst. Marketers can no longer control their brand, but instead they have an opportunity to create and amplify a consistent message, using the same tools and channels as consumers to help the positive experiences outweigh the negative ones.

Social media plays an increasingly important role in a marketers ability to humanize a brand or, if managed poorly, to dehumanize it. A 2012 study commissioned by Conversocial found that 55% of consumers were disappointed by brands communication on social media. And nearly 9 in 10 consumers (88%) said they were unlikely to buy from a brand that ignored their complaints on Facebook or Twitter.6

Humanizing the Brand

Customer Service Through Social Media

The best way to influence how people discuss your brand is most simply, to humanize it. Its an approach that marketers have long used to sell soft drinks, luxury cars, or shampoo, but humanizing a brand that sells shop-floor equipment, accounting software, or aircraft parts can be far more challenging. Keep in mind, however, that businesses dont make buying decisions, people do, which is why brands in any industry can still make an emotional connection with their target audience to drive awareness and advocacy.

Brands are moving beyond simply monitoring social media and are devoting more resources to actively engaging with and responding to people who talk about their brand or ask direct questions on social media platforms. Brands such as Comcast, UPS, Target, Zappos, Weight Watchers, and American Airlines have launched Twitter accounts dedicated to service issues (for example, @comcastcares) or monitor their general accounts for complaints or questions, responding directly and in a timely fashion. Others use their Facebook pages as de facto customer service channels.

Scotts Miracle Gro: Educate and Engage

Lawn-care brand Scotts Miracle Gro has found social media to be an effective tool for making a stronger brand connection with its customers. Facebook in particular provides several benefits, including:

Problem Peer

resolution: Associates monitor and respond seven days a week. engagement: Members often chime in with their own answers to customers queries. Customers frequently post photos of great-looking lawns created with Scotts products, validating Scotts brand promise. savings: A video explaining Scotts lawn aeration service reduced inbound customer service calls by 30%. At $48 per call, thats a noteworthy savings.

Promotion/up-selling:

Cost

Scotts has found that many of its customers prefer social media interactions over a phone call to talk about their lawn problems. We are seeing an enormous shift of people who have their digital devices in hand and really dont want to talk with us on the phone, said Beth Dockins, Scotts director of customer service for Scotts Miracle-Gro. Scotts social media associates engage regularly with customers on social media.7

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Marketings New Mandate: 5 Core Principles for Driving Business Value

Real Conversation Requires Educational Content

These channels, however, are not just for resolving problems. Consumer and B2B marketers alike are finding that they can actively engage in compelling conversations with their customers and prospects, but only if they avoid viewing canned responses and press releases as content. Real content authentic, original, and thought-provoking can help brands build credibility on the topics that are most important to their customers and, by extension, their business. Storytelling is an incredibly important part of what marketing needs to do, internally and externally, said Nick Besbeas, vice president of marketing at LinkedIn. Its easy to get caught up in the numbers that drive any business. Were trying to take a broader view of the messages were delivering so that we always keep the benefits to our members top of mind, not just the actions were trying to drive.

professionals said thought leadership was important or critical when evaluating potential vendors.9 Increasingly, marketing is taking the lead on creating thought leadership content, becoming what ITSMA calls the ambassador of ideas. Investments in content marketing are rising among both consumer and B2B marketers. Consumer marketers already spend 28% of their marketing budgets on content marketing, and 55% plan to increase their content marketing spend in 2013, according to the Content Marketing Institute. The numbers are similar for B2B marketers: one third of their budgets are spent on content marketing, and 54% plan to increase their spend over the coming year.10 Effective content marketing involves more than simply creating great content. Frequency, distribution and interaction also play a critical role in attracting and engaging with a target audience. Successful lead nurturing, for example, often requires a sequence of different types of content, delivered at different times during the buyers path to purchase. Research from technology publisher IDG found that IT professionals typically read, view, or download five pieces of content, created by or on behalf of the vendor, before they are ready to speak with a sales representative, and they download a total of nine assets during the entire purchase process.11

Using Thought Leadership to Build Affinity & Grow Sales

This type of thought leadership everything from blog posts, to white papers to videos can have a significant impact on customers buying decisions, especially in B2B industries. In a 2012 ITSMA survey, 88% of IT services

GE: Marketing in the Moment

Marketing traditionally views careful, upfront planning as a critical skill. Thats still true, but marketers must now also be able to react in the moment in a planned fashion. That is, its not enough to monitor social media and react in an ad hoc way; marketers must be prepared. General Electric is one company that plans real-time moments in advance. A four-person team (a strategist, producer, designer, and lawyer) collaborate during each event to make rapid decisions on content and distribution. One recent real-time campaign, launched on Thomas Edisons birthday, asked people to share their invention ideas on Twitter; GE picked the most interesting ideas and sent them to a design studio, which created digital blueprints. The studio sent the blueprints to the person who submitted the idea within an hour. GE produced 70 digital blueprints over the course of seven hours.8

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4 Keys to Effective Content Marketing

Content development has always been a staple of marketing. But content marketing in the digital age requires a different approach. Here are four critical elements of a content marketing strategy:

1. Inform, educate, entertain but dont sell. Thought leadership is about establishing your brand as an authority on a particular topic. Sales pitches and product brochures dont play well in this part of the funnel. 2. Tap into internal expertise. Marketers are not the thought leaders at your organization. Encouraging contributions from executives, engineers, line-of-business managers, and others throughout the organization will add authenticity to your content.

3. Encourage active discussion. Content marketing is not a one-and-done activity. Teams must be prepared to actively engage with whoevers reading your thought leadership on forums, in comment sections, on social media. 4. Think and act like a publisher. Content marketing requires real process and workflow, with editorial schedules, deadlines, and accountability. If treated as a side project, the initiative will eventually wither and die.

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Marketings New Mandate: 5 Core Principles for Driving Business Value

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Capitalize on Insights

Weve all heard that marketing needs to be more data driven. Yet too many marketers are focused on ego-metrics: Web-site page views, Facebook fans, conference attendees, Net Promoter Score (NPS), and similar metrics, which may look great on a dashboard but dont by themselves create value for the business. Instead of tracking activities with these types of ego-metrics, marketers need to measure outcomes. Its not just reading our Net Promoter Score but also understanding the drivers and then helping the product engineering and sales teams understand the implications of NPS to drive the right action items, said LinkedIns Besbeas.

Collaborating with the Business on Better Data

At BBVA Compass, a customer intelligence team within marketing works with line-of-business colleagues to determine the best ways to use data in support of the banks customers. Were looking for actionable insights that help us manage the business, said William Koleszar, a senior vice president who oversees marketing for BBVA Compasss wealth management and commercial banking lines. Theyre starting to come to us more proactively to propose new ways they can use the data. Examining behaviors of wealth management clients, for example, has led to new ideas for services for those customers. Combining internal and external data has also helped the bank identify prospective wealth clients from among its retail banking customers.

Marketing Transformation: Three Questions to Ask

The ability of marketing to deliver actionable insights across the organization may require a transformation of skills, mindset and culture. Consider these questions to assess marketings ability to assume a more strategic role:

Do we have the right skills? Todays marketers must possess a hybrid of traditional marketing skills and quantitative skills, mixing art and science. But its not enough to have both on the team; you have to some of each in everyone. Think of it has having a major and minor in college. The science doesnt replace the art but should certainly influence it.

Are we measuring what matters? Marketers need to collaborate with business leaders on metrics that measure outcomes, not activities. Think about what youre trying to achieve and track whether an investment had an impact on that outcome. Also remember that while metrics offer great input for decision making, they cant completely displace judgment or experience. Not everything that can be counted counts, and not everything that counts can be counted.

How well do we really understand our customers? When was the last time you called your contact center? Or tried to purchase a product or find information on your Web site? Are you listening to live conversations on social media? Marketers can spend so much time tracking customers activities that they forget to consider what the customers are experiencing. If you want to be a champion of the overall experience, you first have to experience it yourself.

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5
Be an Integrator and Force Multiplier Across the Company.

Most large organizations are designed around any number of silos, by geography, product, or function. Outside of the C-suite, the reality is that very few groups think about the overall success of their company. Marketing should be the exception. By integrating marketing messages and insights across business units, geographies, and functional groups, marketing can become more of a strategic partner internally by connecting disparate parts of an organization to deliver a consistent, cross-channel experience. CMOs have made some strides in leveraging customer insights to influence business strategy. A 2012 report from Forrester and Heidrick & Struggles concludes that marketing is moving from the outskirts to the core of the

enterprise in helping leadership teams develop and implement customerfocused strategies.12 LinkedIn has followed this path; marketing and product development teams are highly integrated and share customer experience insights to determine what to build, how to deliver it, and how to communicate the brand value. [Marketing] is the connective tissue between our sales team and our product teams, with the voice of the customer at the center, said Besbeas. The ability to divine customer insights and make them relevant to business users is the key to raising marketings strategic profile. A few early wins, shared throughout the organization, can help change the perception of marketings value contribution.

Cognizant: Marketing and Strategy Under One Roof

Heres one way to ensure that marketing lines up with business strategy: put both functions under one executive. At technology services firm Cognizant, Executive VP Malcolm Frank serves as both chief strategy officer and chief marketing officer. The decision to combine the roles was driven primarily by two external megatrends: the global financial crisis and rapid shifts in the technology landscape. Jittery customers suddenly were looking not simply for technology solutions but for help in solving their business challenges. Many clients started looking to us for leadership, said Frank, who joined Cognizant in 2005. Back in 2006 or 2007, client business architectures and the technology stack were both fairly stable. You didnt have to explain the world; all you had to do was explain where you fit in that known world. In todays environment, we actually have to describe where we fit not just in where the world is now but where its going. Without that strategic context, many customers have trouble understanding a businesss value proposition. If you cant provide that direction for them, they presume youre stuck in the past and probably wont want to invest in a company that they perceive as unable to carry them forward, Frank said. Overseeing strategy and marketing makes it easier for Frank to enlist all of Cognizants employees as brand advocates. Our marketing department cant just be the people in marketing, which is less than 1% of our employee population, he said. I view marketing as all 155,000 associates, who can provide a multiplying effect for our brand. The integrated approach also enables close collaboration between marketing teams and business leaders across Cognizants industry practices and geographies. Not only does that ensure a consistent brand position, it also keeps marketing grounded in the realities of the business.

We dont want marketing in an ivory tower at corporate, staring at each other and convincing themselves through an agency that something sounds good, Frank said. That can be not only expensive but also incredibly dangerous.

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Visualizing and Evangelizing the Future

Mastering these five core responsibilities will help CMOs exert their influence as change agents, driving future business models and strategic direction. Together, these responsibilities add up to something very powerful: the ability for marketing to both visualize and evangelize the future. Jonathan Becher is the chief marketing officer of SAP. You can follow him on Twitter @jbecher.

WE WILL BE RESEARCHING AND WRITING MORE ABOUT MARKETINGS NEW LEADERSHIP ROLE IN THE ORGANIZATION THROUGHOUT THE YEAR.

More to come.

The SAP Center for Business Insight discovers and develops new research-based thinking to address the challenges of business and technology executives.
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Gian Fulgoni and Andrew Lipsman, The State of the U.S. Online Retail Economy in Q3 2012 (Webinar, November 2012), http:/ /www.comscore. com/Insights/Presentations_and_Whitepapers/2012/SORQ32012. Julie Schwartz, Dianne Kim, and Kerry Johnston, Marketing Transformation: Are We There Yet?, May 2012, http:/ /www.itsma.com/research/marketingtransformation-are-we-there-yet/. Julie Schwartz, 2012 Services Marketing Budget Allocations and Trends, February 2012, http:/ /www.itsma.com/research/services-marketingbudgets-and-benchmarks-2012/. GE Global Innovation Barometer 2013 (New York: Strategy One, 2013), http:/ / www.ideaslaboratory.com/projects/innovation-barometer-2013.

Reza Soudagar, Vinay Iyer, and Volker G. Hildebrand, The Customer Experience Edge (McGraw Hill, 2012). Laura Stample, These Are the Best (And Worst) Brands in Social Media for Customer Service, Business Insider, June 12, 2012, http:/ /www. businessinsider.com/these-companies-are-major-brands-that-are-the-bestand-worst-at-using-social-media-for-customer-service-2012-6.

Jay Baer and Jeffrey Rohrs, How Scotts Uses Social Media for Maximum Customer Support, SocialPros Podcast, April 2013, http:/ /www. convinceandconvert.com/social-pros-podcast/how-scotts-uses-socialmedia-for-maximum-customer-support/. Giselle Abramovich, GEs Take on Real-Time Marketing, Digiday, May 2, 2013, http:/ /www.digiday.com/brands/ges-take-on-real-time-marketing/. ITSMA, Thought Leadership Marketing: How to Build Relationships and Revenue Through Ideas (slide presentation), April 11, 2012, http:/ /www. slideshare.net/itsma/itsma-special-report-thought-leadership. Constituent Market Institute and Marketing Profs, 2013 Content Marketing Benchmarks, Budgets and Trends(slide presentation), October 23, 2012, http:/ /contentmarketinginstitute.com/research/.

2013 SAP AG or an SAP affiliate company. All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP AG and its affiliated companies (SAP Group) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. Please see http:/ /www.sap.com/corporate-en/legal/copyright/index.epx#trademark for additional trademark information and notices.

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2012 IDG Enterprise Customer Engagement Survey, September 25, 2012, http:/ /www.idgenterprise.com/report/customer-engagement. Forrester and Heidrick & Struggles, The Evolved CMO, 2012, February 14, 2012, http:/ /www.heidrick.com/PublicationsReports/PublicationsReports/ HS_EvolvedCMO2012.pdf.

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