How Leading Marketers Outperform


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In 2012, IBM surveyed 362 leading marketers from around the world to better understand today's rapidly evolving marketing landscape. We found that there is a segment of Leading Marketers that have a high level of responsbility for engaging with customers across channels and that have a sophisticated approach to investing marketing resources. These Leading Marketers' organizations had significantly better financial performance over the past 3 years. We explore what exactly these Leading Marketers do differently than the rest.

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How Leading Marketers Outperform

  1. 1. IBM Center for Applied InsightsWhy leading marketers outperformEffective engagement and intelligent investment
  2. 2. 2 Why leading marketers outperformEvolving technology and social trends hold The opportunity of a connected world We live in a world of connections, awash in data. Thanks totremendous potential for engaging customers technology, customers interact with brands and one anotheron an individual basis, helping to turn marketers’ in ways unimagined only ten years ago. Relationships used to be simple and unidirectional, with brands reaching out tolong-held aspirations into reality. Conceptually, customers through static media channels such as advertising. Now, interactions are true dialogues, complex and bi-these new capabilities should yield more directional. Customers are deeply involved in shaping theireffective marketing and ultimately better relationship with the brand and are communicating that point of view to others through social and mobile results compared to traditionalapproaches. But can this prove true in practice? This dynamic environment represents a vast opportunity for those who can meet the demands of ever-more sophisticated consumers. Today, people are primed to expect a high-The answer is yes – though the story has an quality overall experience, one based on a deep knowledge of their motivations, desires and preferences. At the same time,interesting twist. Marketing outperformers excel marketers need to effectively use their limited resources toat engaging individual customers systematically. move the needle where it matters most. If the organization can balance these external demands and internal requirements,What truly differentiates them, however, is that it can consistently touch customers in exactly the right way.they also have the insights and organizational Today’s abundance of customer data is a priceless resource.influence to invest marketing resources to better Armed with advanced technology and more scientific approaches to harness this big data, marketers can finally becoordinate the customer experience across their equipped to do what they’ve always wanted: market to indiv-enterprise. Their marketing approaches contrast iduals. They can detect patterns, make new associations and acquire a deeper understanding of customers as individualswith the rest of the pack and provide valuable – thereby enabling new methods of personalized engagement.lessons for those looking to boost returns on That same approach is making it possible for marketersmarketing investments. to demonstrate tangible returns on marketing spend. They now have the ability to gather, analyze and use hard data to discern marketing effectiveness and make fact-based invest- ment decisions.About the studyTo understand the impact of marketing management onbusiness outcomes, IBM surveyed 362 marketingprofessionals from around the world across more than fifteenindustries. We linked these responses to publicly availablefinancial information to identify possible correlation betweenmarketing sophistication and financial performance.
  3. 3. IBM Center for Applied Insights 3Paying off on the opportunity organizations also make spending decisions differently,So what’s the upside for marketing organizations that can employing a more analytical and cooperative approach. Often,both engage customers effectively and invest their marketing line-of-business peers are part of the process, providingspend better?1 What it adds up to in real terms is the power to valuable input on the marketing better financial performance (see Figure 1). As a group,businesses armed with forward-thinking marketing Simply put, leading marketers establish a system of engage-organizations have three-year revenue CAGR more than ment that can help drive quantifiable outcomes. They deploy40 percent higher than that of other companies, and their innovative technology and processes to automate, deliver,gross profit is growing at a rate double that of their peers. guide and accurately measure the impact of marketing actionsThose are impressive figures, especially in light of the current across all channels. This system allows them to engage witheconomic climate. customers in a personalized way and make more informed marketing investments with greater ROI.Beyond the revenue and gross profit differences, what’sequally significant is rate of gain. These leading companiesare growing gross profit faster than revenue. This suggeststhey’re able to maintain high margins and sell more products Lands’ End: Engagement in actionat full price instead of relying on discounts. Catalog retailer Lands’ End created a customer data mart to gain a greater understanding of buying behavior andInside the forward-thinking develop systematically targeted, personalized marketing strategies. The end goal was to drive cross-channel stream-marketing organization based and longitudinal campaigns. For example, automatedThe stand-out financial results that some companies are able to campaign management software is able to support anyachieve suggest that they manage marketing more effectively. number of versions of a mailing, meaning Lands’ End isIndeed, leading marketers report greater effectiveness across able to coordinate customer relationship management andall four of the classic marketing “Ps”: Promotion, Product, campaign management with the catalog bindery to createPlace and Price (see Figure 2). They are more likely to assume custom, individualized mailings.2an all-encompassing role, “owning” the customer experienceacross channels and/or business functions. These marketing Revenue growth Gross profit growth 3-year CAGR, 2008-2011 3-year CAGR, 2008-2011 10% 12% 7% 6% Leading marketers Others Leading marketers OthersFigure 1: Leading marketers both perform better and are able to grow profit faster than revenue.
  4. 4. 4 Why leading marketers outperform Engagement: A system thatInfluence of marketing organizations works holistically Leaders Ownership Effectiveness A robust system of engagement fuels marketing innovation, Others % responded 4 or 5 % responded 4 or 5 “full ownership” “highly effective” enabling the business to meet customers whenever and however they wish to interact with the brand. It also leads to 91% 72%Promotion greater flexibility and speed of execution with campaigns that 79% 55% are more accurately targeted, integrated and closer to real time. The system allows leading marketers to drive customer valueProducts 71% 66% at every interaction – online, offline, inbound and outbound,/services 48% 48% across all channels. 64% 57% Tapping into the power of integrated,Place multichannel campaigns 50% 46% By linking timely information about customers with flexible campaign management, it becomes possible to craft morePrice 62% 52% personalized offers across all available channels and make use 41% 39% of technology to optimize interactions. Leading marketers are 33 percent more likely to serve personalized or targeted offers in four or more channels and in real time and are better ableFigure 2: Leading marketers report greater influence across the to create integrated online/offline marketing programs (seeorganization, including areas outside the traditional marketing silo.Correspondingly, they also indicate greater effectiveness in these areas. Figure 3). They see the value of a coordinated, dynamic effort and tend to use technology across all channels.Channels used to deliver targeted/personalized messages in real-time Leaders Others 74% 63% 63% 62% 62% 51% 53% 49% 47% 38% Website Customer service/ Face-to-face Social media Mobile channels call centerFigure 3: Across the board, leading practitioners make greater use of a wide variety of channels to deliver targeted/personalized messages in real-timebased on customer interaction with the brand.
  5. 5. IBM Center for Applied Insights 5If leading marketers are more likely to deliver messages across Leaderschannels, which ones are they using? As it turns out, they Othersexcel at leveraging these offers across virtually every channel: Mobileweb, call center, social media, mobile, and face-to-face.Consider what that means from a system and process stand-point: campaign management has to be tightly integrated,highly efficient and very agile. This is where a well thought-out system of engagement shows its true value.Putting personalization to work with mobile andsocial marketing 41% 25% 36% 20% 33% 18% Currently use mobile Currently use location- Currently useBy integrating technology across the marketing function, messaging campaigns based targeting mobile adsleading marketers can make better use of specific tactics withinmobile and social media marketing. Although mobile andsocial have become commonplace – “table stakes” in marketing Socialtoday – these companies are able to innovate while those theyoutperform are more likely to merely follow trends.In mobile marketing, for example, the vast majority ofcompanies today make use of standard tactics such as mobiledevice applications, optimized websites and emails formattedfor smart phone delivery. Leading marketers, however, takeit to the next level by using time- and location-specific mobile 71% 56% 48% 31% 43% 30% Currently use apps Currently use Currently usemessaging campaigns and ads (see Figure 4). Knowing not on 3rd party social social/local group location-based games networking sites buying (or plan to (or plan to use withinonly to whom you’re talking, but also where they are is critical (or plan to use within use within a year) a year)intelligence as it drives the ability to make relevant offers that a year)reflect customer context. Imagine someone walking into a Figure 4: Leading marketers make greater use of specific mobile andconcert or sporting event and having a virtual “pop up” store social marketing tactics. They are quicker to incorporate location data andappear on their mobile device, with specific promotions linked embrace new marketing models such as social/local group that event.Social media marketing follows a similar trajectory.Brand accounts on Facebook and Twitter have becomethe new “brochureware” and are seen as ordinary. Leadingmarketers are innovating with new models such as local/socialgroup buying and creating engaging apps that run on siteslike Facebook.
  6. 6. 6 Why leading marketers outperformTelefónica: Fine-tuning the The critical importance of attributioncustomer interaction Many organizations have only a general sense of how wellSpanish telecommunications provider Telefónica executes their campaigns and tactics work. Leading marketers stand200 campaigns per month through millions of SMS marketing out because they place greater emphasis on measurement,messages and emails. Its outreach is coordinated and tracking results and linking them to individual efforts.optimized based on customer actions, an approach that While their methodology may vary, 88 percent engage ingoes beyond predictive modeling to prescriptive, “next best attribution in some way. And of that group, 93 percent haveoffer” marketing. Each new offer is precisely tailored based a set process for determining how results are attributed toon customer purchases, segmentation, behavior, geography various marketing activities.and external data, with business rules around profitability,company values and regulation. This has helped deliver a What that means for the marketing organization is greater35 percent increase in the number of customers in just efficiency in their use of marketing budgets. They havethree months.3 complemented investments in real-time engagements with corresponding measurement and analytics capabilities so they can optimize new efforts. Earning influence through resultsInvestment: Making resources count The same measurement-driven insight that informs opera-The technology that enables multichannel, personalized tional spending decisions also impacts the role of marketingmarketing is readily available, and many companies have within the organization. Leading marketers’ ability totaken steps to implement it. So why exactly don’t more demonstrate results helps them build credibility and theorganizations achieve the results shown by leading marketers? financial justification needed to construct an enterprise-wideIt has to do with their ability to invest effectively, making system of engagement. With this grounding, they’re ableresults-based allocation decisions that maximize the return to enlist the support of other business functions in knittingon marketing spend. together a common view of the customer across different points of interaction.In part, investing wisely means putting marketing funds wherethey’ll do the most good. However, it’s also about enabling Collaboration with IT is particularly important since thismarketing to justify a broader role in consistently coordinating system of engagement increasingly depends on technology.and leading the customer experience across the enterprise. Leading marketers have a distinct advantage here. Because they’re farther along the business transformation and technology adoption curve, these organizations have greater freedom of action. They are focused on how to improve and scale operations to differentiate their customer experience and grow their businesses.
  7. 7. IBM Center for Applied Insights 7In contrast, their less successful peers still struggle with basic • Encourage innovation – Leading marketers are at the fore-alignment and coordination between marketing and IT – and front of adopting innovative technologies and channels andtechnology integration with the rest of the organization. analyzing customer behavior and preference trends. ByCompared to leading marketers, they’re less likely to “own” embracing new technologies and channels – and makingmarketing technology decisions. Consequently, it’s more a concerted effort to coordinate activities – the businessdifficult for them to invest in the technologies that enable an can shift its consumer interaction stance from reactiveeffective system of engagement. to proactive. • Measure what matters – Marketers need to demonstrate theThe ability to show ROI on marketing investments not only benefit of everything they do – every touch point, interactionhelps leading practitioners to invest more intelligently, it also and outcome. This will help them justify their expanded roleelevates their role in the business. They’re positioned to guide and optimize future technology decisions and shape the customer • Collaborate with IT – To create a system of engagement thatexperience across business functions. They can focus on delivers value to customers at every touch, marketers needdriving strategic growth and shaping business strategy versus technology. By working closely with their IT colleagues,simply managing the mechanics of marketing. leading marketers can advance their ability to deliver a differentiated customer experience across a broad mix of channels.Seton Hall University: The demonstratedvalue of attribution Valuable lessons can be taken from leading marketers. BySeton Hall University made innovative use of social marketing looking closely at what they’ve done to enhance their abilityto make smarter marketing decisions. The University cor- to engage and invest – develop a robust system of engagementrelated Facebook usage and traditional marketing campaigns and rigorously attribute all results – clues can be found forwith subsequent applications and enrollments to fine-tune its improvement in your own organization. Equally important,outreach. The result: the largest freshman class in 30 years, however, is the strategic role of marketing within theseaccounting for an 18 percent increase in net present revenue forward-thinking organizations. Their view of marketing as– all in an era when overall higher education enrollment is an activity that interacts with and serves the entire businesstrending downwards.4 is an essential part of their success. It’s this rich combination of engagement, innovation, measurement and collaboration – all enabled by technology – that can help produce betterWhat should you do? financial performance.As you look to improve your ability to engage and invest toconsistently drive greater performance for your enterprise,consider these key initiatives:• Expand the role of marketing – Leading practitioners have made marketing a business priority and given marketers a voice in overall strategy. Through greater ownership of the 4Ps and demonstrated results, these marketers have moved beyond traditional demand generation activities and are shaping the customer experience across the business.
  8. 8. About the IBM Center for Applied InsightsThe IBM Center for Applied Insights ( introduces new ways of thinking, working and leading.Through evidence-based research, the Center arms leaderswith pragmatic guidance and the case for change. © Copyright IBM Corporation 2012About the authors IBM CorporationDerek Franks, Consultant at the IBM Center for Applied New Orchard Road Armonk, NY 10504Insights, focuses on research that provides insight intoemerging business and technology trends. Prior to joining Produced in the United States of America September 2012the Center he was part of IBM Retail Store Solutions group,where his work centered on how enterprises can use IBM, the IBM logo and are trademarks of International Business Machines Corporation in the United States, other countries or both. Iftechnology to drive improved business results. He has been these and other IBM trademarked terms are marked on their firsta speaker at global conferences and collaborated with top occurrence in this information with a trademark symbol (® or TM), thesecompanies from around the world. Derek can be reached at symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may be registered or common law trademarks in other countries. Other product, company or service names may be trademarks or service marks of others.Elana Anderson, Executive Director of IBM Cross-Channel A current list of IBM trademarks is available on the web at “Copyright and trademark information” at Solutions, is responsible for developing productstrategies and guiding product development, as well as This document is current as of the initial date of publication and may bego-to-market activities for these solutions. Prior to her changed by IBM at any time. Not all offerings are available in every country in which IBM operates.current role, Elana was vice president of products at UnicaCorporation. She also previously served as vice president THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS ORand research director of the marketing practice at Forrester IMPLIED, INCLUDING WITHOUT ANY WARRANTIESResearch. Elana can be reached at OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON- INFRINGEMENT. IBM products are warranted according to the termsSpecial acknowledgements and conditions of the agreements under which they are provided.We’d like to acknowledge the special contributions from ourcore team without whose gracious contribution of time andexpertise this work would not have been completed. More specifically, to be classified as a leading marketer, a surveyed 1 respondent had to meet one of the following “engage” criteria: have a high-level responsibility for creating and managing one-to-one marketingChris Wright Stephen Rogers across all channels, or be a proactive leader that owns the customerAngie Casey Kevin Thompson experience across business functions. In addition, leading marketers must “invest” using one of these approaches: collaborate with the rest of theJay Henderson Ellen Cornillon company to determine appropriate increases/decreases based on last year’sAmanda Felbab Caroline Day spending, or conduct extensive marketing mix analyses to determine optimal spend allocations. Lands’ End implements customer-centric strategies. IBM case study. 2 June 2011. ZZC03007USEN.PDF Telef ó nica | Vivo nets a 30 percent increase in marketing revenue with 3 IBM Unica. IBM case study. January 2012. success/cssdb.nsf/cs/SBAT-8UCTFB?OpenDocument&Site=default&cty=en_us Seton Hall achieves lift of 18 percent in enrollment through Facebook. IBM 4 case study. September 2011. zzc03052usen/ZZC03052USEN.PDF Please Recycle SWE14003-USEN-02