Marketing is all about strategy — or is it? To find out, the August 2019 CMO Survey asked Marketing leaders: “How much time do you spend managing the present versus preparing for the future of marketing in your company?” Overall, 341 leaders responded by reporting they spend 68.5% of their time “managing the present” and only 31.5% of their time “preparing for the future.” This finding holds across company size, sector, and industry. This blog has been extracted from the Harvard Business Review’s reflection on what marketers can do to overcome short-termism.
This finding may surprise you given the business and marketing chatter about developing a digital business and navigating technological change to a better future. Visit any marketing blog and you will find practitioners discussing using advanced technologies such as artificial intelligence, machine learning, personalisation, and analytics to win future business by improving the customer experience and creating new products and services. So what accounts for this seeming disconnect?
Looking at other evidence in The CMO Survey and business press, the HBR identified four drivers causing marketers to focus on the present at the expense of the future:
Pressure for short-term earnings: Marketing’s role is often viewed as a lever for driving short-term sales instead of the long-term growth engine it has been demonstrated to be. Quarterly earnings pressure from the stock market triggers the need to focus marketing campaigns on achieving immediate customer wins or extending product lines rather than building new capabilities or creating a breakthrough subscription or platform-style businesses.
Too few strategic roles: Marketers are often assigned tactical roles, such as managing social media or promotions. We see this in the August 2019 CMO Survey results showing that marketing leads market entry in only 37% of companies, revenue growth in only 36%, and market selection in only 20.6%. If marketers are not given a seat at the leader’s table, they will not have the credibility to inspire or lead strategic change.
Role ambiguity: Additionally, in the February 2019 CMO Survey, only one in three marketing leaders reported that they felt their role was “very clear.” If they feel their roles are too ambiguous, we believe it is likely that marketers may focus on immediate priorities rather than long-term strategies in order to make quick wins and protect what they can control.
Marketer compensation structure: In the February 2019 survey, marketers reported that 18.9% of their compensation is a performance bonus, on average, with an additional 8.2% in company equity. This imbalance can lead to a focus on short-term success in financial metrics to achieve performance bonuses, rather than focusing on long-term strategic objectives associated with building equity in the firm.
Takeaways to adapt a future focus
Allocate time every week to think long-term: Strategic planning should not be something that happens once a year. It should be a part of a marketing teams’ daily and weekly thinking.
Invest in marketing capabilities: Organisational-level knowledge and skills embedded in key processes are engines that drive success. Capabilities allow firms to repeat successes, work more productively, eliminate errors, and institutionalise practices. Figure out what capabilities are key to your business and build them. On top of this, work to create a culture of continuous learning, where employees can obtain new skills on a regular basis.
Drive decisions from data: Marketers report using marketing analytics to make decisions only 39.3% of the time. This is too low. Embedding analytics into decision architectures can promote a stronger data-driven approach that is not overly reactive to short-term events and weans marketers away from “gut instincts” that are increasingly out-of-place in our data-driven culture.
Focus on growth: Marketers report in the February 2019 CMO Survey that “driving growth” is their top challenge. We think it may also be their ticket to maintaining a focus on the future. A growth mindset by definition puts the emphasis on new markets, new products and services, and new partners. Marketers should be encouraged by senior leadership to take calculated risks that align with corporate growth and have these behaviours reinforced in annual goal setting and performance incentives.
Deepen cross-functional ties: When marketing partners with R&D, digital, technology, operations, and finance, its sights are set on critical firm-level outcomes. Marketing can, in turn, keep a strategic focus on serving the customer. The value of such ties is why companies are increasingly setting up cross-functional teams to address critical transformation imperatives such as improving the customer experience.
Fund marketing for the long-term: Building growth takes sustained investment. Marketers have reported that their budget is about 9.8% of firm revenues and has hovered between 6% and 11% since 2011 in The CMO Survey. As companies grow globally, enter new markets, and digitise products and services, they will likely need to invest in marketing to drive new capabilities.
Demonstrate the impact of marketing: When asked whether they have been able to demonstrate the impact of marketing spending over the long run, only 41.6% said they have been able to prove the impact quantitatively, 39.7% said they have a good qualitative sense of the impact but cannot measure it quantitatively, and 18.7% have not been able to show the impact yet. Some 10.8% of marketers rated providing the ROI of marketing activities as their number-one challenge. The ability to use data analytics to demonstrate ROI will become a strategic priority in the industry and will separate super-star marketers from the rest.
Don’t compete on price — build value: According to the most recent CMO Survey, marketing leaders now believe that customers are less focused on low prices than they are on getting excellent service and superior product quality. A buoyant economy can create such a shift as customers worry less about debt and more about quality. This strategy sets the stage for long-term growth with options to innovate, deepen customer relationships, and partner to access new sources of value and new markets.
It’s human nature to focus on easy tasks that keep the business humming, but over time this short-term mindset delivers diminishing results. Marketing can lead into the future with the right support and the right focus.
With this in mind, if you feel your team needs a marketer with the strategic prowess to combat short-termism and prepare your organisation for the future, we would love to hear from you - feel free to get in touch today.