Prophet's State of Marketing Survey

It’s the best of times, and the worst of times for marketing executives. On one hand, the economy has recovered, many businesses are growing, and senior marketers are enjoying new clout in the executive suite. But on the other, marketers also face stronger competition, larger, more complex brand portfolios, an increased range of media choices, and reduced resources–not to mention the heightened expectations of senior management looking to quantify their marketing ROI.

“Now is not the time to rest on laurels,” says Scott Davis, senior partner at Prophet, a consultancy specializing in the integration of marketing, brand, and business strategies. “It’s getting harder to maintain superiority and, frankly, live up to the expectations of senior management.” Worse, Davis points out, these obstacles continue to push marketing’s sphere of influence further and further away from the customer experience, begging the question: Do senior marketers have the tools and internal clout to rise to the challenge and address CEO mandates for growth? Prophet and IDG Research teamed up to answer this question, contacting senior-ranking marketers across organizations with annual revenues exceeding $500 million and more than 1,000 employees.

The Results: Optimism and Obstacles

Survey results suggest considerable optimism from marketing executives. And it appears this optimism is warranted: roughly half of the companies surveyed report growth in market share. Marketers are excited about their growth trajectory, too; roughly three-quarters of the companies expect to grow in the near future.

Yet, even marketers are reticent to attribute market share growth to brand and marketing activities. It’s one of several areas, according to Davis, where the survey uncovered significant opportunities for improvement. “These include better alignment with senior management, deeper integration with other functional areas and, most importantly, greater influence over the customer experience,” says Davis. “Marketers obviously understand the importance of customer insight in the overall scheme of business growth. But what’s really surprising is the fact that many marketers play absolutely no role in the key business functions that touch customers.”

The survey results are explored in more detail below.

Continuing Misalignment Between CEOs and Senior Marketers

One of the fundamentals of good marketing is to work toward clear, agreed-upon objectives that reflect the goals of the organization–and the mandates of the CEO. Survey results suggest that objectives are indeed clear, but “agreed-upon” is more elusive.

A majority of the respondents define business growth as top-line revenues and bottom-line profits with the former singled out as marketing management’s top priority. Yet when asked to name the priorities of CEOs, nearly 50% of the respondents indicate that bottom-line profits rank highest on the CEO’s agenda, followed more distantly by top-line revenues (25%).

These results indicate a worrisome misalignment between the CEO’s and senior marketer’s priorities that if left unchecked, could lead to disaster. As Davis points out, marketing executives are often quick–rightly so–to develop brand portfolio strategies that generate revenue. Yet, senior management could argue that cutting costs and reducing investments in marketing offer a faster track to bottom-line profitability. “To succeed, marketers need to wear both hats,” says Davis. “By taking a customer-centric approach to assessing growth opportunities, marketers can enhance revenue and return on marketing investment.”

Some survey respondents echo Davis’ thoughts. “Many marketing professionals forgot along the way that the goal has always been about creating revenue profitably,” says one senior marketer. This individual’s solution: Marketers must acknowledge that financial goals don’t kill creativity; they enhance it.

Other growth-related highlights include:

1) Companies Banking on New Customers

Growth statistics are promising, with a healthy 75% of respondents expecting market share growth over the next 12-18 months. More than half the growth experienced by respondent companies over the past 12 months came from existing customers, and one-quarter came from new customers. Looking ahead, respondents most often expect future growth to come in equal parts from existing and new customers (45%). 

This suggests new customers are expected to deliver more growth than in the past; a typical–and tricky expectation, says Davis. “Marketers should beware of chasing new customer growth as a matter of habit,” he says. “Rather, insightful marketers first pursue the most profitable, actionable segments within their current customer base.”

2) New Products, Improved Marketing are Drivers

When it comes to growth drivers, respondents most often identify existing products/services and new products/services as primary contributors during the past 12 months. Going forward 12-18 months, almost two thirds of respondents see new products/services along with improved branding/marketing as key growth drivers. Interestingly, when queried about drivers during the past 12 months, only 38% of respondents cite improved branding/marketing. Davis says this statistic points to increased confidence in marketing as a prominent growth driver. Also noteworthy, over 90% of the respondents whose market share is shrinking believe cost-cutting is by far the greatest driver of business results.

To solidify the customer relationship, marketing must help propel innovation, both in the product/service portfolio and in brand/marketing activities. “It’s not just about bells, whistles, and fanfare,” Davis says. “Marketers must better understand customers and own the thinking around break-through programs, products, and services that will drive the business forward.”Marketing can do this successfully by becoming the arbiter of customer relevance and collaborating with others in the organization to influence the customer experience.

3) Customer Service, Experience are Critical

More than two-thirds of the respondents rate marketing strategy as critical to achieving their companies’ growth goals over the next 12-18 months, followed closely by customer service and delivery, customer experience, business strategy, and sales force. But when asked to identify the most critical aspect, respondents definitely have customer-centric issues on their minds; nearly one third of respondents cite customer service and delivery and customer experience, followed distantly by business strategy and marketing strategy. Surprisingly, advertising and promotions barely register, garnering 1% each.

“Clearly, senior marketers recognize the significance of the customer-centric aspects of marketing,” Davis says. “This reflects the increasing power of the customer and the importance of touchpoints that extend beyond marketing communications.” “After all, it’s not just about creating the best advertisement or promotion,” says Davis. “Marketers need to know what motivates customer behavior and understand how to develop profitable relationships with customers over time.”

And survey respondents agree. As one states: “Products and services are becoming increasingly commoditized, and one of the only remaining ways to distinguish yourself is in the relationship you have with your customer.”

How Marketers Influence Growth–and How Customers Should Influence Marketers

A senior marketer’s ability to drive growth is rooted in organizational influence and relationships with key functional disciplines. As decision makers, some marketers have more power than others. It’s not surprising that most respondents claim decision-making authority for marketing (74%) and brand (60%) matters. These same respondents play a noticeably smaller decision-making role in business strategy, with fewer than one third serving as primary or joint decision makers.

“This is a huge opportunity for marketers,” Davis says. “Simply being invited to the table gives marketers a voice in business strategy, but now they need to leverage that voice to effect change and impact the customer experience.” On the downside, a significant percentage of marketers play absolutely no role in functions close to the customer, such as customer experience (18%), customer service (33%), pricing (43%), and the sales force (45%).

“The fact that a significant percentage of marketers play no role in levers that reach the customer is a huge red flag,” says Davis. “Senior marketers have to get closer to the customer if they want to drive the material impact that is expected of them.”

Internal Relationships Are Strong

A majority of the respondents rate collaboration with other functions within their company as either very or moderately successful. They cite factors contributing to successful relationships including shared objectives, understanding the other’s role, and respect. Factors contributing to unsuccessful relationships include silos/cultural norms, lack of shared objectives, and a lack of understanding.

In addition, 86% of the respondents indicate that the collaboration between corporate and business unit marketing is successful, while corporate marketers are more likely than business unit marketers to describe the relationship as highly successful (30% vs. 21%). Marketing’s collaboration with HR and IT appears more problematic, with over 20% of respondents describing the relationship as below average or not at all successful.

While this may seem insignificant at face value, the gap is troubling given HR and ITs’ ability to equip employees to deliver on the brand promise and capture key customer insights. Successful collaboration with these functions can have a dramatic impact on marketing’s ability to drive growth and warrants special attention.

Virtually all of the respondents believe that “it is important for their companies to integrate business, brand, and marketing strategies,” with 99% specifying very/somewhat important. But Davis points out, “This flies in the face of their rating of relationships and influence over touchpoints–such as product development, customer service and delivery, distribution, pricing, and the sales force–and success in business integration.” Notably, only 11% of respondents rate their organization as very successful when it actually comes to integrating business, brand, and marketing strategies.

All in all, however, collaboration between marketers and other functional areas of the business appears to be generally positive, which again suggests that marketers value cross-functional, company-wide collaboration. “With so much riding on this collaboration, marketers must make the most of their relationships,” adds Davis.

Obstacles to Growth: Competition Is King

Growth always comes with hurdles. Respondents believe that strong competition was the leading obstacle to business growth over the past 12 months and will continue to be over the coming 12-18 months. “But marketers should be careful not to ascribe everything that ails their organization to strong competition,” Davis warns. “This external focus prevents marketers from appropriately attending to internal issues.”

Davis believes marketers can influence many of the obstacles that were cited including: inconsistent customer experience, as well as barriers like lack of internal alignment, insufficient investment in marketing and advertising, and ineffective allocation of marketing investment. “Budgets are smaller and accountability is greater, so marketers must invest more wisely, rather than investing more,” Davis cautions. “By investing in the levers that most influence customers, and taking advantage of existing synergies, marketers can simultaneously impact both top- and bottom-line growth–which is, after all, the ultimate objective of senior marketers in the know.”