Meet your new MOM (Marketing Operating Model)
To
drive revenue growth in the digital age, new data shows that marketing leaders
are upgrading data-collection technology, collaborating closely with IT, and
focusing on test-and-learn agility.
Given their access to one-click shopping, same-day delivery, instant
search results, and ubiquitous media, consumer expectations are sky high. Their
message to businesses is paraphrased by Veruca Salt in Charlie and the
Chocolate Factory: “I want it, and I want it now.” In fact, consumer
expectations of near-real-time interactions and services jumped to number one
on the Association of National Advertisers (ANA) 2016 survey of business
disruptions,1up from sixth place in 2015.
Technology is a crucial element in
enabling marketers to meet those expectations. But technology is only a partial
answer, as any marketer whose tech spend has produced less than optimal results
can testify. To drive revenue growth and improve customer experience,
technology has to enable more efficient data collection, foster
cross-functional collaboration, and support test-and-learn agility. It needs,
in short, to underpin a new Marketing Operating Model (MOM).
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An effective MOM is the engine that drives
continual growth. One global financial-services company, for example, figured
out that by accelerating the delivery of IT-dependent functions to marketing,
the business was able to generate an extra 25 percent of revenue. That was
worth $100 million per year. Conversely, for every week delayed in deploying a
capability developed by IT, the business lost an estimated $2.8 million in
incremental revenue.
The new Marketing Operating Model (MOM)
At a high level, an effective MOM is made
up of three parts:
Integrated consumer data: Collecting data
isn’t the issue—companies have plenty of it. It’s not uncommon, for example,
for marketing, customer care, transaction/order, technology, and store
operations to all have distinct sets of data on a single consumer in multiple
databases and tables. The challenge is weaving all the available data into an
accurate and complete profile of the individual consumer. Failing at that can
blunt the impact of even the most ambitious data-collection efforts.
Decision making: With a complete customer
profile in hand, companies can “score” customers based on specific criteria of
value-creation potential, allowing marketers to prioritize which messages,
offers, and experiences to deliver at which points in the decision journey. A
set of business rules and regression models, increasingly based on machine
learning, helps to prioritize and match specific messages, offers, and
experiences to specific customer scores.
Distribution platforms:
Marketing-technology platforms are the last mile of the process. They integrate
the customer scores and use them as triggers to deliver the right message to
the right person across all addressable channels. Equally important, the
platforms track the responses, conversion, and value created so that the MOM
can learn and adjust.
The real value of the MOM comes not just
in building out these three elements but in getting them to work together. When
running effectively, the data inform the decisions on the best messages or
offers, and the customer’s feedback becomes new data, which is then fed into
the MOM.
How to
build up your MOM
The best-performing companies are
investing in marketing technology (martech) thoughtfully, working more closely
with IT in a more agile way. At the same time, some clear shortfalls are
exposing fault lines that could severely undermine how effectively businesses
can meet their customers’ expectations and build ongoing business value.
Technology:
Martech to serve the business
It isn’t a big surprise that 73 percent of
top-performing companies—those whose revenue generation outperforms the
market—have increased their martech spending an average of 16 percent in the
past year. But is all that technology really helping?
Significantly, we found that 49 percent of
companies that outperform the market feel they have the tech tools they need,
compared with only16 percent of their poorer-performing peers. This highlights
the importance of focusing a company’s technology spend on the company’s unique
goals. In our experience, marketing leaders who have a well-defined sense of
the problem they want to solve or the opportunity they want to exploit get a
better return on their technology investments.
Overall, martech—or, more specifically,
how it’s implemented—still has a long way to go until it provides the value it
promises. From the survey, we found that the top focus of martech is in informing
marketing strategies (63 percent) but then there’s a steep drop off. The
next-highest area of focus is in using automation to execute and manage
campaigns (41 percent), or to upgrade customer-relationship management (37
percent).
Collaboration:
The marketing/IT partnership
The most effective marketing and IT
collaborations are built on specific and conscious decisions and on
implementing policies to support them; making marketing a checkbox on IT’s
to-do list just doesn’t work. An astonishing 45 percent of the executives
surveyed, however, say marketing and IT are not working together at their
companies in any significant way. In the overwhelming majority of cases,
marketing is still reliant on IT to implement and configure its technology,
whether systems are used on premise or in the cloud.
Committed leadership is necessary to
create and model a culture of active collaboration, such as joint priority
lists and action in concert. Fortunately, leadership is increasingly moving in
the right direction. Almost a quarter of respondents either have a
joint-venture model or a full tech presence embedded in marketing and reporting
to the chief marketing officer (CMO).
Doing this requires specific agreements
between the CMO and CIO that delineate budget sharing, reporting structures,
and incentives. The key is removing ambiguity so that people know how to
work—and how to work together. In practice, understanding the benefit of
tighter collaboration to the bottom line is a big motivator, while putting in
place solid practices that support meaningful collaboration creates a structure
for working together.
At one large high-tech company, for
example, marketing developed an inventory of all martech assets to start a
productive discussion about which would be managed and supported by IT and
which by marketing, and who should be included in decisions on any changes. The
team then defined and prioritized business use cases and their requirements,
which made it easier to define a governance model that ensured both builders
and users of IT architecture and infrastructure clearly understood each other’s
requirements, constraints, and intended use.
Agility:
Cross-functional talent and continuous improvement
Top performers are 3 percent more likely
to be hiring new people than their peers. But it’s how new talent is used that
makes the difference. Ideally, marketing tech supports colocated teams that
work quickly and flexibly across relevant functions (e.g. legal, sales,
operations, procurement). Often called a war room, this kind of
cross-functional working group allows the right people to make decisions
quickly.
The other core tenet of agility is
devotion to a test-learn-and-iterate method of working vs. long cycles of
analysis to find a “perfect” answer. Successful MOMs apply constant
optimization to a range of business priorities, from customer acquisition to
complex site personalization or personalized marketing. Companies who do it at
scale run at least five tests per week and combine a complex range of first-
and third-party data. One team at a European bank ran a series of systematic
weekly media tests and reallocated spending based on the findings. The result
was a more than tenfold increase in conversion rates.
Marketing tech’s role in supporting this
agile approach relies on infrastructure and systems that can help marketers to
capture, aggregate, and manage data from multiple sources; make decisions based
on advanced propensity and next-best-action models; automate the delivery of
campaigns and messages across channels; and feed customer tracking and message
performance back into the system.
Many organizations will focus on the
complex data and infrastructure component, but the best ones plan ahead for
staffing. They pull together dedicated, cross-functional teams working in the
same location who take insights that analytics develop then a/b test them,
measure the results, and adapt the product or service in rapid, repeated
cycles.
Looking ahead, we find that marketers are
building up a new MOM. Marketers say the primary focus of their future
investments will be personalization or campaign-management tools (42 percent)
and content marketing platforms (41 percent). Top-performing companies are also
significantly ahead of their peers in dedicating teams to analyze possible
disruptions and their impact.
As companies build up their new MOM, they
need to keep one eye on the system and one eye on their customers in order to
be able to adapt as needed. Understanding how technology fits into the MOM and
serves the business will likely define the difference between successful and
less successful companies.
By Jason Heller and Kelsey Robinson
http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/meet-your-new-mom?cid=other-eml-alt-mip-mck-oth-1703
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