Building a marketing organization that drives growth today
Technologies
and customer expectations have changed faster than marketing organizations.
Here’s how to fix that.
From the rise of online
shopping channels to ad campaigns created for an audience of one,
consumer marketing has changed more in the past ten years than it did in the
previous 30. Despite that level of change and disruption, if you had put a few
typical marketers from the 1980s into a time machine and sent them into the
marketing departments of today, they would probably feel right at home. There
might be a new IT department and a few other changes, but the job titles,
structures, approach to performance management—even the vocabulary—would be remarkably
familiar.
That’s not a good thing. The truth is, while the
proliferation of new channels and technologies has dramatically changed the
environment in which marketers operate, the way they organize and approach
their tasks has stayed more or less the same. Most marketing functions still
develop and roll out large and infrequent campaigns, rely on agencies to make
the same old media purchases, and are organized by geography or product.
As a result, few marketing organizations are able to
take full advantage of new digital and advanced analytics tools that would
enable them to be more agile, engaging, and effective. They are also missing
out on growth. A recent McKinsey survey of executives found that 81 percent of
high-growth companies outperformed in data and
analytics.
But capturing that advantage requires a new way of
working. Some 71 percent of high-growth companies in that same survey have
adopted agile processes such as scrum, cross-functional collaboration, and
colocated teams. Another report found that top-performing
marketers were more likely than their peers to be part of a
networked organization (51 percent vs. 18 percent) and met more frequently with
other parts of the business to create and deliver customer experience journeys.
Extensive experience working with dozens of companies to
improve their organizational models has shown that marketing organizations need
to change in three ways. First, they need to shift their organizational model
away from “boxes and lines” to a fluid ecosystem of internal and external
partners. Second, they must scale agile ways of working. And third, they need
to build out a set of supporting capabilities that can deliver great customer
experiences.
Orchestrating the
marketing ecosystem
The digital age has made the old agency model redundant
with the emergence of an array of narrower, more specialized services . Making
effective use of these capabilities requires new management approaches and ways
of working:
Managing partnerships—inside and outside the
organization:
The traditional notion of managing a roster of a single
media agency and one or two creative agencies of record seems like a relic from
ancient marketing history. Today’s world features multiple channels and
capabilities, such as search, social, programmatic, and content management, all
of which need to be closely coordinated to be effective.
The teams that deliver these services—whether internal
or external—need to function as an interconnected ‘ecosystem.’ An early
decision is figuring out what to handle internally and what to outsource to an
external partner. Core competencies such as strategy are best handled by the
brand, while execution functions and experimenting with new media or channels
can be handled by external partners. Over time, as the brand has a clearer
sense of the value of the new capabilities, many activities will shift to
internal teams.
The real complexity comes in orchestrating all the
teams. For this model to work, agencies can no
longer be simple inputs in a linear process.
Instead, they need to be partners collaborating with
brands and each other to create campaigns and assets. Brand managers need to
set clearly aligned targets and establish clear deliverables and metrics. Some
companies are already creating incentives that reward teams for their ability
to work together, not just for their individual contributions. Marketers are
investing in tools that coordinate internal teams and external agencies,
creating greater transparency in tracking progress.
Supporting this model requires the role of the
traditional brand manager to shift from leader to orchestrator. Brand managers
need to understand enough of each specialist’s area to work with all of them
effectively. Most of all, they need to be adept at working within a networked
organization in which they sit in the middle of a web of internal teams,
agencies, customers, and suppliers. To do this effectively, brand managers need
to put in place shared KPIs, communicate clear accountability to each partner,
develop a “rapid reaction” governance structure, and create flexible guidelines
so that partners can make decisions on the front lines quickly.
Build brand tribes:
Brands have long been managed by global teams that
design global campaigns and local teams that execute those campaigns as well as
manage local ones. This often results in frustration in both directions: Local
teams think global doesn’t understand their market, and global thinks that
local isn’t using collective assets. To combat this issue, we have seen
marketers start to build “brand tribes”—informal, globally dispersed networks
of marketers, who collectively identify and share their best assets.
Instead of top-down direction, the tribes have community
managers who foster global collaboration, post insights, promote assets for
particular markets, and discourage off-brand execution. They put in place
internal social platforms such as Slack to make it easy for people to share and
find relevant content. This gives local managers access to assets that have
been recommended by peers and approved by global managers and also provides
recognition for those responsible for successful campaigns. Once adopted and
embedded into the culture, brand tribes also become a way to reinforce brand
standards.
One global CPG is instituting a brand-tribes strategy as
part of an overall marketing transformation. Led by the CMO, the effort was
piloted in brands with strong leadership before being cascaded more broadly
across the organization by the global brand heads. The global heads still
decide on the major global campaigns and set the guidelines for local
campaigns, but the local managers have more freedom to innovate—and to share
those innovations with other brand managers on the tribe’s social platform.
Marketing assets can be voted up or down by peers, so that the most popular and
successful campaigns rise to the most prominent positions on the platform.
Assets are also promoted by the community managers,
making the platform a source of proven, high-quality assets for use anywhere.
To encourage participation, a compensation system rewards brand managers for
sharing and participating in the community. Recognition by peers and executives
has also become an effective participation incentive.
Nurture new ventures:
Companies are under continuous pressure to find new
sources of growth, both inside and outside the core business. Recent research
has shown, in fact, that companies that are able to create new products or
services while maintaining a baseline of other capabilities are the fastest
growers. For many companies, however, developing potentially disruptive
businesses and business models that threaten the core business is
understandably a challenge. Change takes time, and many people are invested in
established products and ways of working. For this reason, we have found that
companies can be successful nurturing digital ventures by creating new entities
for that purpose.
One way to do this is to create a dedicated new-ventures
unit inside the organization to develop new products and business models. This
group not only gets the resources they need to prove themselves but are also
freed from slow and inefficient processes that often weigh down larger
companies. The second way is to partner with start-ups or incubators, which can
give companies access to a larger pool of emerging innovations and
technologies.
Recently, L’Oréal took the latter route by investing in
Founders Factory, a global digital accelerator and incubator based in London.
As part of the agreement, L’Oréal and Founders Factory will invest in and scale
five early-stage beauty-related start-ups and cocreate two new companies from
scratch every year. The in-house team of experts at Founders Factory, many of
whom are successful entrepreneurs themselves, will provide hands-on support and
advice to participating start-ups. The strategy provides an early look at innovative
technologies and business models that relate to L’Oréal’s core business.
Applying agile ways
of working at scale
The capability to test new ideas fast, refine them, and
bring them rapidly to market has become essential. Creating new products and
experiences in real time, however, requires new ways of working. Old,
hierarchical reporting structures and approval-driven corporate cultures run
counter to the speed and test-and-learn logic that underlie fast growth.
Build an agile operating model:
The concepts of agile and scrum—a specific form of agile
that relies on small, self-organizing, cross-functional teams that work toward
specific goals or “sprints” by breaking down tasks into smaller parts,
assigning responsibility to team members, and reviewing progress
frequently—originated in software development but have begun to reshape the way
consumer companies innovate and operate. With agile, companies use data and
analytics to continuously identify promising opportunities or solutions in real
time, deploying tests quickly, evaluating the results, and rapidly iterating.
Scaling agile across
the business requires building credibility. For each test that generates
promising results, for example, the team can forecast the impact at scale and
provide guidelines and rules to the marketing organization to apply the finding
more broadly. As companies add new teams, it’s important that each one be
tightly focused on a specific goal, product, service, customer segment, or
juncture in the customer journey. We recommend adding agile teams one at a
time, waiting until they begin to operate effectively before adding the next. At
scale, a high-functioning agile marketing
organization can run hundreds of campaigns simultaneously and
test multiple new ideas every week. These new ways of working enable
continuous, data-driven improvements to campaigns and assets, while also
providing increased transparency and accountability.
One online travel agency moved from a quarterly pace for
development priorities to a rapid cadence of weekly—sometimes
daily—improvements, live tests, and code releases. Up to five variants of each
design improvement are now live-tested, first for impact on conversion and then
against financial and marketing metrics, and improved. The weekly cadence means
faster release, quicker reprioritization of tasks, and better performance. In
one simple but telling example, the agency was able to move its search position
to the top of the results page through a series of rapid cycles of learning how
to best optimize its landing pages over six months. The company also reaped a
cultural benefit, becoming more open to change and quicker to respond to
customers.
This agile mind-set has a bias for action and favors
testing ideas quickly in a real market environment. For example, rather than
testing a new snack with a focus group, an agile marketer quickly develops the
snack, stocks it in a few retail outlets, and measures how it does with real
customers. This approach relies on small, dedicated teams with the right mix of
design and logistics skills, technical capabilities that include advanced
marketing ROI tools to measure performance in real time rather than every six
months, and advanced testing architectures to test multiple versions of
websites or offers at once.
Netflix has built testing into the core of its culture,
continuously A/B testing hundreds of variants of its website and apps, and
measuring their impact on viewing hours. To support this, each product team has
its own embedded analytics team.
Maintain a stable backbone for routine processes:
Agile test-and-learn approaches are critical for dynamic
processes in which the outcome is unknown, such as product development or user
experience. Other more static processes, such as budgeting, procurement,
performance management, customer analytics, and data management, are critical
to have in place when scaling new processes. For that reason, they need to be
stable and repeatable. Yes, they can be improved over time, but they do not
require experimentation or wholesale reinvention. This stable backbone provides
a competitive advantage for established companies over start-ups.
Adapting your
marketing capabilities for the new world
Describing the agile workplace is one thing; making it
happen is another. Marketers need to build or acquire specific new
capabilities:
Advanced analytics / big data:
To make sense of all the data marketers can now amass,
marketing functions need to acquire or build significant new analytics
capability. Analytics is what powers a test-and-learn culture in which results
can be rapidly scanned, analyzed, and acted on. Advanced analytics systems can
help manage the tremendous complexity involved in delivering tailored
offers—and even more, in personalizing those offers and predicting what
customers will want next. Getting
personalization right and scaling it across the organization can reduce
acquisition costs by as much as 50 percent, lift revenues by 5 to 15 percent,
and increase the efficiency of marketing spend by 10 to 30 percent.
Williams Sonoma leads in multibrand, multichannel CRM by
maintaining a central repository for customer information from both internal
and external sources, amounting to 30 years of data for up to 60 million
households. This gives the group, which includes Pottery Barn, West Elm, and
others, an enormous resource for personalized marketing, including tailored
emails and landing pages for new and existing customers. Indeed, 50 to 80
percent of new customers are acquired through personalized marketing messages
that rely on this centralized database.
User experience (UX):
While most companies understand the importance of a
positive customer experience to the bottom line—done well, it can boost revenue
5 to 10 percent and reduce costs 15 to 20 percent—few excel at designing or
delivering it. We have found that the starting point for delivering a
great customer experience is an understanding of customer
journeys, the series of interactions a customer has with a brand or peer to
complete a task, such as opening an account or buying a product. Crucially,
this isn’t about just improving existing journeys but often reinventing
them—with the help of digital technologies—to meet and beat customer
expectations. Since these journeys touch so many parts of the organization
(customer care, sales), marketers need to take the lead in building working
relationships with other functions and in establishing agile, cross-functional
teams that have accountability for a single journey.
Content publishing:
For brands to maintain a tight relationship with
consumers, they need to develop always-on capabilities that allow for
continuous communication across many channels and formats. Getting the
communications flow right requires an editorial team and a content supply chain
that continuously creates and delivers high-quality and relevant information or
entertainment that can be shared.
While many organizations have made progress in the
dimensions highlighted in this piece, none, in our experience, has mastered all
three. That’s because it’s difficult, and each situation is unique. But there
is a path forward. It starts with looking outside your own walls for
inspiration and forming a clear view of where you can excel. Then it requires
combining full commitment and unity of purpose, from the executive suite to the
teams empowered to create the change.
By
Raphael Buck, Biljana Cvetanovski, Alex Harper, and Björn Timelin
August
2017
http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/building-a-marketing-organization-that-drives-growth-today?cid=other-eml-alt-mip-mck-oth-1708&hlkid=3b7ec6942574476e9df4b7f9f9596756&hctky=1627601&hdpid=b7d68b3d-c9e3-47c8-bfbf-46c90f903cd9
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