Marketing is all about strategy—or is it? To find out, the August 2019 CMO Survey asked U.S. 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 percent of their time “managing the present” and only 31.5 percent of their time “preparing for the future.” This finding holds across company size, sector, and industry.
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, personalization, 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, we’ve 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 percent of companies, revenue growth in only 36 percent, and market selection in only 20.6 percent. 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 percent of their compensation is a performance bonus, on average, with an additional 8.2 percent 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.
So, what should you do if your marketing organization is caught up in the chaotic whirlwind of the present and you don’t have the time or resources to prepare for the future? Here are a few actionable takeaways we’ve found in teaching, research, and work with companies that we think can help marketing leaders refocus on the future.
Adopt 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. The long-term view means thinking about brand building and customer relationships—both long-term plays—even as short-term decisions are being made. You can encourage your leaders and teams to think about the future by asking how short-term decisions contribute to corporate and marketing strategies. If they don’t, they should be tabled or cancelled outright.
Invest in marketing capabilities: Organizational-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 institutionalize practices. They also make it difficult for peers to imitate, thus widening the competitive gap over time.
Marketers report they approach capability-building mostly by hiring new employees with those skills or training existing employees (59.8 percent), but also rely on learning from agencies (14.5 percent) and consultancies (12.2 percent) to equip them with new capabilities and embed them into their culture. Figure out what capabilities are key to your business and build them. 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 percent 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 behaviors 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. Remember that the Amazon Prime success story was not foretold. The program was very controversial within the company when it launched in 2005. It has since become a huge platform for growth.
Fund marketing for the long-term: Building growth takes sustained investment. Marketers have reported that their budget is about 9.8 percent of firm revenues and has hovered between 6 percent and 11 percent since 2011 in The CMO Survey.
Marketing budget as a percent of firm budget matched its highest level in survey history at 12 percent this year. As companies grow globally, enter new markets, and digitize products and services, they will likely need to invest in marketing to drive new capabilities. This means higher marketing budgets are likely here to stay, although they may temporarily retrench during recessions.
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 percent said they have been able to prove the impact quantitatively, 39.7 percent said they have a good qualitative sense of the impact but cannot measure it quantitatively, and 18.7 percent have not been able to show the impact yet. Some 10.8 percent of marketers rated providing the ROI of marketing activities as their number-one challenge.
The more marketers can demonstrate their impact, the more likely they are to receive additional resources to promote strategic planning. 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. Follow these trends to build more value into offerings—don’t commoditize or compete on price. 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 business humming, but over time this short-term mindset delivers diminishing results. Marketing can lead into the future with the right support and right focus.
Author Christine Moorman is the T. Austin Finch, Sr. Professor of Business Administration at Duke University’s Fuqua School of Business and the editor-in-chief of the Journal of Marketing and director of The CMO Survey. Lauren Kirby is a second-year MBA student from Duke University’s Fuqua School of Business with concentrations in marketing and strategy.