Reaching the Next Level of Performance in Marketing

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The need to know before you go has placed a lot of pressure on CMOs to transform their marketing functions. They need to know whether they are spending their marketing money efficiently and effectively, know their customers more deeply than their competitors, and know it first--all while doing more with less. Marketing departments are no longer mere advertisers or brand stewards--they face pressure to take more responsibility for driving profit and improving productivity.

Confronted with this imperative, many CMOs have invested heavily in CRM capabilities to improve the performance of their branding, pricing, direct marketing, and go-to-market processes. But to truly change the game and achieve the next breakthrough in performance, CMOs should shift their focus from optimizing discrete functions to managing the set of customer interactions as an integrated business system.

Most marketing departments are organized around a channel, business, brand, or product, and see their role as generating demand through awareness and leads through campaigns and promotions. However, marketers should expand their focus and look for opportunities to drive incremental revenue across all stages of a customer's interactions with a company. For example, they should exploit the untapped opportunities across the value chain; this may vary across industries, but overlooked components frequently include order management, fulfillment, billing, and customer support, among other processes.

For example, when customers approach the end of a warranty or service contract, marketing can contact them to learn about their needs and offer information about additional products or services. This can also help a company looking to create a more direct relationship with its customers where they typically are only purchasing products through distributors or resellers. By leveraging the direct service or warranty contact points, the company can introduce customers to its other services, thus improving and expanding its customer relationships.

One technology manufacturer is currently using this holistic focus to improve customer satisfaction scores and move customers from a margin-eroding indirect relationship to a direct relationship.

Knowing the customer can help a company focus marketing efforts and improve ROI. A large, high-tech manufacturing firm, faced with a proliferation of channels and customer segments against eroding margins, better tailored its offerings by improving its customer experience, generating visibility into customer profitability, and maximizing the value of its limited marketing spend. The company rethought its customer interaction approach by taking the following steps:

  • It developed a deep understanding of customer interaction needs at a segment-by-segment level and identified current interaction costs by channel.
  • It estimated segment economics.
  • It developed specific offerings, which optimized products to meet specific customer needs, the marketing material, and the channel by which the customer interacts with the manufacturer.
  • It tested the end-customer experience to ensure that the overall experience across multiple touch points was easy and consistent. This gave management visibility into customer profitability, which led to an increase in sales productivity and a 12 percent improvement in sales margin.

    Understanding how marketing fits into a larger business system, gaining insight into customers, and focusing on offers and interactions will help marketing leaders truly change the game.

    Sean Collins is a consultant, Girish Nair is a principal, and Jeffrey Schumacher is an associate principal at McKinsey & Company.

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