A successful marketing strategy can nudge a company onto a path to profitability.
Creating a coherent marketing strategy can be a daunting task, especially within established departments or newly formed ones. However, a successful marketing strategy follows several core principals. A well defined marketing strategy captures every part of the funnel, from acquisition to retention and takes a ruthless approach to tracking and cutting expenditure. High-performing marketing executives adopt an investor mindset to transform marketing expenses from a budgetary burden to a growth driver.
Business plan versus marketing strategy
Before defining how to formulate a successful marketing strategy, we have to distinguish the difference between a business plan and a marketing plan. These can look similar as they can cover overlapping topics, however a marketing plan is focussed around the customer for the product defined in the business plan. A business plan has a far wider scope, taking into account each aspect of the business, from the supply chain, human resources to marketing expenditure.
Business plans stretch further into the future, Jotform noted. A business plan can span several years, while marketing plans tend to cover a short time period. Jotform adds that marketing plans cover a period of 12 months to three years, which are updated or replaced over time. Business plans remain fairly static unless a sudden shift occurs that requires a strategic realignment. While these events are rare in everyday situation, some industries are forced to reevaluate their operations. Sony for example had acknowledged defeat in the streaming wars and moved to a licensing model, which generated significant returns.
Additionally, we have to make a clear distinction between a marketing strategy and a marketing plan. A marketing strategy connects the objectives formulated in the business plan to core components that need to be reached through the marketing plan. Meaning, a marketing strategy takes a macro-approach, whilst a marketing plan encapsulates a micro-approach. In practice this means that a marketing strategy includes the goals that need to be achieved which are translated into measurable objectives.
A marketing strategy includes market research, assessing which competitors operate in the space and the desired target audience, which can be created through a persona-study. Additionally, many marketers will fail to place the marketing strategy in space and time. They are overly focussed on the competitive space and not the market forces that dictate how a business operates. Having a firm understanding of the market and its dynamics will not only empower the marketing team, but also allows business leaders to understand why certain messages to channels are being favored over the other.
Capturing the entire journey
In the field, many business leaders or executives will think that a marketing strategy is a selection of channels to reach the defined target audience. A simple output of putting a dollar in and two dollars comes out. However, while in essence this is true, losing sight of the entire customer journey will result in poor or negative ROI and diminish the credibility of the defined market strategy.
In February 2021, consultants at McKinsey urged that marketing should capture the entire funnel and not siloed into a campaign strategy. Jacob Ader and his team open by stating that traditional brand building through television and other offline mass media is safeguarded by older marketers, whilst younger generations move in performance marketing with a strong focus on measurability. While these marketing efforts can work together, both defend their strategies, from short term measurable success to sustainable brand building for long term revenue growth.
This brings an odd dynamic at the executive suite, where marketing representatives struggle to quantify which part of their strategies has contributed to the overall bottom line. In conversation with marketing executives, McKinsey found that executives have difficulty measuring the impact of brand campaigns. This is especially important when 83 percent of CEOs point to marketing as the primary revenue driver for their businesses. This leads to an overemphasis on so-called bottom of the funnel campaigns that display immediate results, making them easily defendable in board rooms.
Overemphasizing on short-term gains erodes a brand’s customer loyalty over time, McKinsey commented based on data from three large marketers in apparel retail and media. Customers with an emotional connection to the brand showed more loyalty over time, compared to those acquired through social media ads or generic keyword searches.
Companies who want to offset this development, the consultancy firm noted, are building ‘full-funnel’ marketing strategies, which link different teams and measurement tools together. Efforts are harmonized through Key Performance Indicators (KPIs), ensuring solid measurement for all select channels.
Recruitment website Indeed saw it was unable to attract enough customers for its operations in Germany. During its early days it had little brand recognition and marketers at the company acknowledged that in order to obtain a dominant market share, it needed a greater brand awareness than its competitors. Indeed launched an aggressive brand campaign which led to exponential growth in leads for its local sales representatives.
By adopting an integrated marketing strategy, the value of each medium in the acquisition and retention phase can be actively measured. However, it must be said that on the surface this is easier said than done. An overload of data can lead to analysis paralysis, a phenomenon where an abundance of data can lead to inaction. Metric selection is a critical component of properly tracking performance. In turn, targets set by marketing executives should be realistic and presented in an easy to digest format.
Improving marketing efficiency
There stands a lot to gain to assess and redirect current marketing strategies. Oftentimes, when entering a new position, may it be within the same company or a new one, the groundworks have been laid down and running their course for several years. While a marketing strategy, in an ideal situation, is reassessed every two to three years, the reality is far less glamorous. Therefore an internal assessment of the marketing’s effectiveness is an important addition to a marketing strategy.
In June 2017 McKinsey spoke with Chief Strategy, Product and Marketing Officer at Western Union, Libby Chambers about how growth leaders should carefully look at their marketing programs and re-allocate funding to channels that drive revenue. Chambers opens by saying that marketers should think like investors, who have a clear overview where the money is flowing to, ranging from countries, channels, products and customer segments. By thinking as a CFO, markets remain vigilant on the numbers.
A critical component is mapping the ROI of marketing campaigns. Chambers explained that Western Union launched a marketing ROI project, an effort that span eight to nine months, where all facets of the marketing strategy was assessed based on efficiency and effectiveness. This included reviewing its agency setup, which in turn led to a consolidation, helping to reduce RFP lead up times and negotiating better deals for media buying, creative and research projects.
Thinking like an investor
In October 2023, Senior Partner at McKinsey, Kelsey Robinson, revisited the investor mindset with cohost and editorial director, Roberta Fusaro and the benefits of adopting the investor approach as a marketing executive. Robison stresses the need to invest in high-growth marketing channels as the marketing department is the first to see budget cuts. Continuing that business leaders downscale marketing when they feel that demand is waning.
Marketers therefore will oftentimes face much resistance. In 2019, Biljana Cvetanovski and Jason Heller at McKinsey collected the sentiment from 200 leading C-suite executives about their views on marketing. CMOs in particular pointed out the poor view of marketing within their organizations. A CMO at an insurance company said the C-suite never saw marketing as a serious topic, having little trust in its effectiveness. Another CMO at a financial service organization felt left out compared to other C-suite executives within the company.
A common sentiment is the praise sales teams receive when a campaign is successful, while failures are attributed to marketing. A former retail CMO explained that marketers will have to be able to adapt office politics, otherwise they will fail within their role. Marketers will have to garner support from the chairman or CEO, which will dramatically improve their marketing output and attract the right marketing people. Profitable growth should be a marketers top priority, a CFO at a food-service company explained.
Successful marketers can change this dynamic by reframing marketing expenses as a revenue driver and not a loss making endeavor. In order to achieve this, marketing executives should think like CFOs, a point brought forward back several years ago by Chambers at Western Union. Having a firm understanding of the financials across the different marketing channels and their impact on the company’s overall performance will help alleviate some of the tension that surrounds marketing expenditure. High-performing marketers, Robinson adds, leverage the potential of next-generation growth channels to capture the entire funnel.
Robinson highlights a travel company who increased their efforts on branding during times of uncertainty. Additionally they critically looked at every marketing expense and re-assessed underperforming channels. As the market was undergoing a slow down, the travel company launched its largest campaign in a decade, Robinson continued, helping it outperform all its peers. The question that arises, is how to keep track of all the marketing expenditure flowing across a department.
Depictions from series such as Mad Men, Robison noted, painted a picture of marketing and advertising as a craft solely dedicated to creating exposure, while omitting the subtle intricacies of profit generation. A CFO mindset is something of the modern era, but required to find growth drivers across the marketing portfolio. This isn’t limited to channels, marketing has a far greater reach than just media selection. Marketing executives can select new markets as growth opportunities to maximize revenue and retreat out of markets that don’t deliver revenue. Adopting a CFO mindset can result in 10 to 20 percent savings in spending, Robison pointed out.
Savings can only be achieved by assessing the entire marketing funnel, as the funnel is not only an acquisition channel, but also a cost center that needs to be evaluated on a regular basis. However, overemphasizing efficiency for the sake of cost savings can result in an overreliance on performance based channels, rather than driving traffic into the funnel through brand campaigns, which on the surface don’t generate a positive ROI. Robison explains that a measurement ecosystem should be created. This is best achieved by creating the necessary dashboards that capture the different channels.
Marketing expenses dashboard
Keeping track of marketing expenses across a marketing department can be a daunting task, especially within larger teams. Smaller departments will have lower expenses, meaning there can be more direct lines of communication or campaigns are run from a more pre-paid approach. For example, a total budget of $1,000 to run a Google Ads Search campaign for 1 month, with no other actively running expenses or campaigns spanning multiple channels consecutively. At larger organizations, keeping track of marketing expenses is more complicated.
There are many planning and dashboard solutions out there, but my recommendation would be to start simple with a Google Spreadsheet that can be linked to Google Looker Studio, which can serve as an easy tool to access for stakeholders across the company. Google Spreadsheets is versatile enough to track most marketing budgets and expenditures. A spreadsheet can be best divided into several categories; always on campaigns, one-off campaigns, tooling costs and license fees and agency costs. In order to calculate the cost per acquisition, add the monthly sales, new subscriptions or newly registered customers.
The key performance metric you want to track will vary, but in your marketing plan, a clearly defined KPI will help you assess your efforts on a high level. This metric is far from accurate and won’t allow for per channel analysis, but having this basic structure in place already gives you an edge over most marketing departments. Complementary financial dashboards should be created per channel, such as a dedicated Google Ads dashboard, Social Media dashboard and Influencer dashboard. Ensure you maintain the same structure for easy comparison and Looker Studio integration.
Failing marketing strategy
Failing marketing strategies can become costly mistakes. Nintendo launched its Wii U, hoping it could simultaneously bank on the success of its predecessor, the Wii, which sold in record volumes, while creating a device that would appeal to hardcore gamers through high performance specs. Furthermore, it saw the success of tablets, hence creating a controller with an embedded screen. Nintendo wanted to target too many audiences at once, losing sight of its core values. The toy maker’s unique proposition focusses on delivering unparalleled entertainment without the need for powerful hardware.
By taking an alternative route for the Wii U, Nintendo’s marketing materials were unable to appeal to any of its audiences, resulting in one of the largest hardware flops in the company’s history. Executives at the company learned from their mistakes and through the Switch were able to recover. However, a lot could’ve been prevented when Nintendo stayed true to its core principles, instead of trying to assume a role it could not fulfill. A lot of these stumbles could be mitigated by surveying its current customer base and assessing how well their newly envisioned console would thrive among their core audience. Customer surveys won’t deliver definitive proof, but they can prevent a lot of costly mistakes.
Sony, while having unprecedented success in its gaming division, was forced to almost entirely retreat from the smartphone market altogether. The Japanese conglomerate reigned supreme during the cell phone era, but was caught off guard by the sudden appearance of the iPhone which resulted in shockwaves that brought giants like Nokia, LG and Blackberry to its knees. Sony had a strong following, but due to poor deals with U.S. carriers, combined with delayed releases, caused it to lose market share in one of its core markets at an accelerated pace.
The electronics giant could’ve mitigated much of the damage by conducting better market research, allowing it to learn what customers were actually looking for in their handheld devices. The smartphones it delivered weren’t part of a vibrant ecosystem. While Sony’s smartphones excelled in terms of technical performance, they were operating in a vacuum. Sony would have enjoyed success much earlier by welcoming Google’s operating system through the Nexus product line. Instead it tried to overcome the odds alone. In hindsight, even manufacturing phones for Google, couldn’t save titans like LG from succumbing to the weight of changing consumer demand.
Cognitive bias
This phenomenon is not limited to hardware manufacturers. Disney’s streaming service Disney+ started out strong, but as with the aforementioned brands, executives became convinced their products were so desired, they could raise prices or create offerings that didn’t align with consumer demand. Disney decided to increase the monthly subscription fee, convinced new and current customers would see the value of its service. However, it miscalculated the position of Disney+ amongst its competitors. The executives that envisioned Disney+ never saw it as a rivaling product, rather complementary.
Thanks to its low price point, it could maintain steady growth in the streaming wars, where giants like Apple, Netflix and Amazon were pouring billions to create the most compelling offering. Newly appointed Disney executives miscalculated the value of their product and started to market it as a product worthy of a higher price point, while not delivering a strong offering. A lot of the missteps were preventable by Disney sticking to the proposition envisioned at launch, a complementary service marketed a lower price point. As with the previous examples, market research would reveal the service’s standing within the market.
Executives at General Electric for long believed their products would market themselves, Beth Comstock commented in the Harvard Business Review in October 2010. General Electric (GE), once an industrial behemoth, became a shadow of its former self due to poor management decisions. In order to regain some of its lost glory, they had to acknowledge that GE had to do more than just releasing novel technologies, which faced tougher competition as time progressed. Former CEO at GE, Jeff Immelt, ordered that marketing should be an integral part of operations and the growth driver for organic growth.
A market framework was developed that would create a common language and standards, with people being moved to the positions and performance indicators were formulated to assess marketing effectiveness, Comstock explained. Marketers were coupled with technologists so they would have a better understanding of the processes that led to the innovative products developed at GE. Customers’ needs and market developments were mapped so the manufacturer could adjust course in time and deliver solutions for better product market fit.
An important caveat is that while marketing strategies might look poorly on the outside, they can result in tremendous gains. Spirit Airlines, often regarded as the most hated airline in the United States, has turned its tainted reputation into a marketing asset. By stripping down its offering to deliver the lowest ticket fares, it was able to solidify its position as the primary budget airline, attracting new customers in doing so. Its revenue meanwhile grew steadily as it was able to increase ticket prices through additional fees.
Spirit Airlines geared its communication and marketing assets to promote its cheap fares, going as far as to change its entire brand. Whether this strategy will work in the long run is debatable, as there are signs that the airline’s business is slowing down. However, the once struggling airline had re-positioned itself onto a path to profitability. The strategy outlined by executives at Spirit proves that negative sentiment can be an asset and not a burden. Instead of spending vast sums to repair the brand, marketers flipped the script.
A winning marketing strategy
Marketing is as much an art as a science. The modern era has shifted the dynamic away from spending relentlessly on traditional media to questioning its mere existence in the face of real-time dashboards that display ROI across every channel. This puts increased pressure on marketers to show their budgets are well spent and not downsized at the yearly financial review. A great deal of these discussions can be omitted by creating a solid marketing strategy that evaluates every part of the business. From external forces to internal inefficiencies.
