Download The New Calculus Of Marketing

A Forrester Consulting
Thought Leadership Paper
Commissioned By Salesforce
ExactTarget Marketing Cloud
The New Calculus Of
Marketing
How Marketing Leaders Must ReEngineer For The Internet Of
Customers
April 2014
Table Of Contents
Executive Summary ........................................................................................... 3
Marketers’ Old Habits Die Hard ........................................................................ 4
Marketers Feel Unprepared............................................................................... 5
The New Calculus Of Marketing Needs New Skills ....................................... 8
Key Recommendations ................................................................................... 10
Appendix A: Methodology .............................................................................. 11
Appendix B: Demographics/Data ................................................................... 11
Appendix C: Endnotes ..................................................................................... 12
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3
Executive Summary
channels to choose from than ever before. In the coming
years, their choices will become even more numerous,
thanks to increasing device proliferation, the Internet of
Things, and the digitization of offline channels. Forrester
predicts that in 2014, big data will finally be put to good
use as marketers stop waiting for insights to reveal
themselves and start finding actionable paths through the
information. Marketers will develop smarter, more relevant
programs across their mix by incorporating data-driven
insights into their planning and then using the new robust
data they get out of those programs to inform their future
plans. But there is work to be done as marketing
executives equip themselves to face these new
challenges.
In the age of the customer, only customer-obsessed
enterprises can survive the disruption caused by
empowered customers. Marketing leaders, who are on the
frontlines of this disruption, will need to pull dollars away
from traditional areas of investment, such as brand
advertising, and invest in creating real-time data intelligence
1
and contextual customer experiences.
This type of transformation requires marketing leaders to
rethink their roles, responsibilities, and priorities as they
prepare to steer their organizations toward customer
obsession.
In December 2013, Salesforce ExactTarget Marketing
Cloud commissioned Forrester Consulting to evaluate the
changing role of marketing leaders, their level of
preparedness to embrace the consumer-driven
transformation, and the new capabilities required in the
marketing organization. Then to further explore this trend,
Forrester tested the hypothesis that marketing leaders must
become transformative and strategic business leaders and
build critical capabilities in data, analytics, and marketing
technology to use as levers to win, serve, and retain
consumers.
›
›
Marketing leaders feel unprepared to cope with
consumer-driven, technology-led disruption of
their roles.
In conducting in-depth surveys with 118 marketing leaders,
Forrester found that the majority of the marketing leaders
surveyed do not feel prepared to meet the ever-growing
demands on consumers. They struggle with people- and
skills-related challenges and instead focus on traditional
marketing capabilities such as brand building. Those
marketers that do feel adequately prepared are already
driving strategic transformation within their organization and
are building deeper relationships with their consumers.
KEY FINDINGS
Forrester’s study yielded four key findings:
›
The growing complexity of the marketing role places
a huge burden on marketing leaders. Seventy-two
percent of respondents stated that they expect marketing
to become much more complex or somewhat or more
complex in the next two years. Marketers have more
›
Digital, data, and analytics expertise has replaced
traditional skills in brand development and campaign
planning. Marketing leaders in our study told us that their
responsibilities in the areas of defining digital strategy,
driving strategic transformation in the organization, and
data and analytics capabilities are the three areas that
have changed most dramatically in the last two years.
Their responsibilities to execute traditional mass
marketing campaigns for brand-building purposes have
taken a back seat.
Marketing leaders are slowly arming themselves to
take on the new world of marketing. Marketing leaders
who improve their team’s agility and develop the right
capabilities for the future will enjoy more executive
confidence and move on to greater corporate leadership
opportunities. Our study indicates that these executives
are thinking about the right building blocks to prepare for
the transformation: improve data and analytics
capabilities, invest in marketing technology chops, and
adopt a performance-driven culture.
Customer orientation is essential for differentiation.
Over the years, we’ve seen how marketers have
transformed from being product-focused to customerfocused. In our survey, we found that this focus translates
to maintaining a fine balance between customer
acquisition and retention and using data and analytics to
determine how to tip the balance.
4
Marketers’ Old Habits Die Hard
FIGURE 1
Marketers Prioritize Acquisition Over Retention
Digital marketing technologies are a seemingly endless
source of innovation for marketers. In recent years,
marketers have gained access to real-time engagement,
predictive analytics and behaviorally triggered automation.
Yet many marketers continue to approach marketing much
as their mid-20th century forbearers did with acquisition
marketing: targeting large-scale, demographically defined
audience segments, defined by publishers and evaluated by
the reach and frequency of impressions.
“What are the top three marketing goals of your
organization?”
Priority one
Priority two
Priority three
Acquire new customers
Retain existing customers
›
12%
15% 14% 17%
Improve marketing ROI 12% 13% 12%
Launch new products and
10%12%10%
brands
Increase customer satisfaction
and advocacy 8% 8% 9%
Improve customer experience 5% 8% 14%
Long-term relationships matter, yet marketers focus
heavily on acquisition. Although marketers prioritize
retaining existing customer relationships, they cling to
acquisition as the top marketing goal (see Figure 1). As a
result, marketers continue to focus on investing and
building capabilities around mass media acquisition
channels and engage customers through onedimensional campaigns.
Marketers continue to build brand relationships, while
their customers build digital relationships. Consumers
are rapidly shifting to mobile devices and digital platforms,
leading to a profound shift in the ways that marketers
2
must relate to customers. This means that consumers
are building their capacity for digitally based relationships
3
with companies and brands. Despite this, marketers
invest in building primarily brand-based relationships by
focusing their marketing efforts on increasing brand
awareness and defining their corporate brand.
25%
Increase brand awareness 13% 9% 12%
Today, however, digital technology enables brands to build
relationships directly with individual customers. This practice
enables brands to target and respond to individual
customers or prospects — anonymous or known — with
personalized content and offers. We found that marketers in
our study faced similar challenges:
›
31%
Increase digital marketing
tactics
3%7% 6%
Innovate with marketing tactics 2% 3% 8%
Increase revenue 1% 0% 0%
Increase profitability 1% 0% 0%
Base: 118 marketing leaders
Source: A commissioned study conducted by Forrester Consulting on
behalf of Salesforce ExactTarget Marketing Cloud, December 2013
›
Marketers recognize the need to focus on leading
strategic change. Marketers recognize that by purely
focusing on excelling in brand- and campaign-centric
activities, they are understating their potential as business
leaders. The marketers in our study believe that one of
their core responsibilities today is to drive strategic
transformation within their business (see Figure 2). This
puts marketing leaders in a position to drive overall
business growth as opposed to ensuring efficiency and
4
effectiveness of marketing processes.
5
Marketers Feel Unprepared
FIGURE 2
Marketers Aspire To Become Strategic Change
Agents
“What your top responsibilities today as the senior marketing leader
within your organization?”
Priority one
Priority two
Priority three
Building customer relationships
17%
Driving strategic transformation within the
organization
12%
Defining your corporate brand
10%
Creating marketing big ideas
10%
Shifting away from traditional mass marketing
methods
Foster connections between marketing and
other parts of the business
Fostering innovation
Defining your digital strategy
Priority four
8%
9%
10%
8%
Priority five
11%
8% 4%
14%
3%
8% 6% 3%
12%
8%
7%
14%
7% 5% 8% 7% 4%
7% 8%
9%
11% 4%
6% 8% 6% 6% 6%
6% 8%
8% 4% 8%
Establishing clear marketing processes 5% 7% 6% 8% 6%
Developing customer intelligence strategies 4% 8% 3% 8%
Building data and analytics capabilities 4% 6% 3%5%
8%
15%
Managing marketing technology purchases
3% 2%3% 3% 1%
Hiring staff with digital marketing experience
3% 3%4% 0% 2%
Acquiring new data sources
3% 2% 3% 4% 1%
Sourcing leads for sales
1% 0%0% 0% 0%
Educating critical stakeholders about new
marketing technology or approaches
Marketing the right idea at the right time to
the right consumer
Managing agency vendor or partners
Brand awareness
The technology-led and digitally enabled change in
consumer behavior is making marketing executives
optimistic about the opportunities ahead. Marketing
leaders are increasingly finding themselves working in
data-driven and customer-empowered environments.
They must be proficient in digital tools, data, and
analytics and have the ability to orchestrate crosschannel customer experiences. This type of capability is
not built overnight.
1% 3%3% 3% 8%
0% 0%0% 0% 1%
0% 4%5% 6%
Our study revealed two personas of marketers,
conventional marketers and mindful marketers, with
respect to their level of preparedness for the change that
marketing is currently undergoing (see Figure 3). While
conventional marketers are brand-focused, mindful
marketers focus on building customer relationships and
raising their role as strategic thinkers in the organization.
›
People- and culture-related challenges get in the
way of marketing’s transition. Both types of marketers
are challenged by people- and culture-related challenges.
Thirty-six percent of respondents stated that managing
resource constraints, managing an innovative culture,
and hiring the right talent are the main challenges they
face as a marketing leader (see Figure 4).
FIGURE 3
Two Marketer Personas Define Readiness To
Embrace Transformation
10%
0% 0% 0% 0% 1%
Base: 118 marketing leaders
Source: A commissioned study conducted by Forrester Consulting on behalf of
Salesforce ExactTarget Marketing Cloud, December 2013
Base: 118 marketing leaders
Source: A commissioned study conducted by Forrester Consulting on
behalf of Salesforce ExactTarget Marketing Cloud, December 2013
6
FIGURE 4
People- And Culture-Related Challenges Hinder Transition
“What are the top three challenges that you face as a marketing leader today?”
Managing resource constraints
22%
Establishing an innovative corporate culture
9%
Hiring the right talent
5%
Personalizing customer experiences across touchpoints
16%
Understanding the wants and needs of empowered
consumers
8%
Staying on top of digital innovations
4%
Responding to changing consumer behavior especially
with social media and mobile adoption
4%
Dealing with marketing channel proliferation
1%
Responding to competive pressures
14%
Quantifying the value of marketing
7%
Devising a globalization strategy
3%
Understanding how big data can be used for better
market insights
3%
Managing marketing technologies
3%
0%
5%
10%
15%
20%
25%
Base: 118 marketing leaders
Source: A commissioned study conducted by Forrester Consulting on behalf of Salesforce ExactTarget Marketing Cloud, December 2013
›
Conventional marketers focus responsibilities on
brand stewardship instead of building customer
relationships. These marketers consider building the
corporate brand as one of their main responsibilities. This
reflects how marketers are still focusing on old-school
approaches and not equipping themselves with new skills
in analytics, marketing technology, and digital customer
experience (see Figure 5).
›
Consumer-driven challenges confound marketers’
journey toward transformation. Coupled with internal
and organization-related challenges, consumer-driven
trends further complicate how marketing leaders make
the leap toward leading strategic transformation within
their organization.
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›
The New Calculus Of Marketing
Needs New Skills
This is not time for business as usual. In the age of the
customer, only enterprises that are customer-obsessed will
5
survive. Marketing leaders are at a critical place in the
organization to lead this change toward customer
obsession. Today, many of these executives feel
unprepared to embrace consumer-driven disruption, but
tomorrow, they will be well positioned to become strategic
business leaders if they invest in core skills that are
essential in the new calculus of marketing. The new
calculus of marketing forces marketers to adapt and break
habits from the past.
›
›
Marketers are enforcers of the firm’s digital strategy.
No longer is marketing responsible for purely designing
campaigns or supporting promotional activities. The
marketers in our study told us that their responsibilities
around defining a digital strategy have changed most
dramatically in the last two years. They are now less
focused on designing traditional mass media campaigns
and more focused on driving strategic transformation in
their organizations, using digital as the anchor capability.
Focuses on data and analytics and marketing
technology for better personalization and targeting
are driving marketers to rethink skills. A central part of
becoming a customer-obsessed enterprise is to use realtime customer intelligence to deliver relevant experiences
consistently through every interaction. This requires the
careful orchestration of data and analytics along with a
marketing technology infrastructure to deliver on the
promise of personalization.
Strategic smarts, digital chops, and data and
analytics form the trifecta of skills needed for
marketing’s new calculus. The three capabilities that
both marketing executives and their teams must reengineer or even acquire are strategic thinking, digital-first
thinking, and customer insights. We found in our study
that marketing leaders expect their teams to continue
pushing creative thinking through the organization while
expecting them to build business acumen, digital
marketing skills, and data analysis skills for their team.
Each one of these capabilities will inch marketers closer
to feeling more prepared to cope with the new calculus of
marketing.
FIGURE 5
Mindful Marketers Focus On Customer Relationships, While Conventional Marketers Focus On Brand
Building
“What are your top responsibilities today as the senior marketing leader within your organization
today?”
Conventional
marketers
Vulnerable Marketers
Mindful Marketers
24%
5%
4%
2% 0%
5%
0%
4%
0%
Others
4%
5%
2%
Acquiring new data sources
4%
7%
2%
Hiring staff with digital
marketing experience
7%
4%
Managing marketing
technology purchases
Defining your digital strategy
Foster connections between
marketing and other parts of
the business
Fostering innovation
Driving strategic
transformation within the
organization
14%
7%
Building data and analytics
capabilities
4% 7%
1%
Building customer
relationships
12%
Establishing clear marketing
processes
9%
Devloping customer
intelligence strategies
9%
5%
Defining your corporate
brand
13%
Shifting away from
traditional mass marketing
methods
16%
10%
Creating marketing big
ideas
12%
Base: 118 marketing leaders
Source: A commissioned study conducted by Forrester Consulting on behalf of Salesforce ExactTarget Marketing Cloud, December 2013
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Key Recommendations
The new calculus of marketing means that marketing executives and leaders must transform the way they have been
carrying out their responsibilities. It flips the traditional skill set on its head and pivots to skills that haven’t always been
native to marketers, such as data and analytics and technology management. Mindful marketers who feel prepared for
the new calculus of marketing are already re-engineering their skills, while conventional marketers stand a greater risk
of being relegated to marketing’s back office. The new calculus of marketing requires marketers to re-engineer their
skills to:
›
›
›
›
Stop thinking of marketing in terms of campaigns. Campaign-centric thinking has led marketers to develop
capabilities and skills that are channel-based. But the ultra-connected consumer will not tolerate uncoordinated,
irrelevant messages. Instead, these consumers will look for seamless interactions with brands anchored in their
digital platforms and devices. This calls for a different set of skills to execute on this promise that focuses less on
campaigns and more on interactions.
Become analytics wizards. Marketers have been fairly good at measuring vanity metrics for various channelbased campaigns and programs. These have primarily looked only backward and provided limited insights into
future customer behavior. In the new calculus of marketing, marketers must adopt forward-looking analysis and
predictive analysis, not just of marketing programs but of customer behavior.
Lead technology selection decisions. Marketing needs technology to run. Some marketing leaders have been
passive participants in technology buying; they now need to amplify both their understanding of the marketing
technology landscape and their approach to technology selection, dependency mapping between technologies,
and articulating the vision for technology-enabled marketing execution.
Adopt a digital-first mindset. The argument is no longer about offline versus online — or mass media versus
digital. It is about understanding the triggers of customer behavior, wherever an interaction happens — on digital
devices, in-store, or in the call center. A digital strategy that aligns marketing, customer experience, eCommerce,
and IT means marketers must think of digital as the thread that runs across these various internal groups, as well
as the core driver of consumer behavior.
The new calculus of marketing will spur a new generation of digitally savvy, analytically inclined, and strategically
aligned marketers who will lead their organizations into the age of the customer.
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Appendix A: Methodology
In this study, Forrester conducted an online survey of 118 marketing leaders in the US. Survey participants included
executives through managers who either influence or make cross-channel marketing decisions. The survey sample included
organizations with $100-plus million in revenue with greater than 500 employees.
Questions provided to the participants investigated what level of awareness current marketing leaders have on the shifts in
consumer behavior and technology, how prepared marketing leaders are to embrace this change, and the capabilities
marketing leaders need to lead this transformation.
Appendix B: Demographics/Data
FIGURE 6
Number Of Respondents By Career Level
Career level
Number of respondents
Executive
7
Vice president/director
50
Manager
61
Total
118
FIGURE 7
Number Of Respondents By Organization Revenue
Respondents by organization revenue
50
45
40
35
30
25
43
20
15
30
10
5
13
16
16
0
$100 million to $500 million to
less than $500 less than $1
million
billion
$1 billion to
less than $5
billion
$5 billion to
Greater than
less than $10 $10 billion in
billion
annual revenue
10
Appendix C: Endnotes
1
Source: “Competitive Strategy In the Age Of The Customer,” Forrester Research, Inc., October 10, 2013.
2
For example, Forrester recently uncovered an important change in customers’ experience of and responsiveness to
brands, dubbed the mobile mind shift. These “shifted” customers hold the expectation that any information or service must
be available at their moment of need and tailored to their context and prior interaction history. Source: “The Mobile Mind Shift
Index,” Forrester Research, Inc., April 19, 2013.
3
Source: “Start To Build Your Ultimate Customer Relationship,” Forrester Research, Inc., January 22, 2014.
4
Source: “The Evolved CMO In 2014,” Forrester Research, Inc., February 24, 2014.
5
Source: “Competitive Strategy In The Age Of The Customer,” Forrester Research Inc., October 10, 2013.