When asked, too many CEOs believe that their marketing teams fail to deliver the real value the business needs.
They view marketers as simply being too disconnected from the financial realities of their companies (whether this is over the short- or long-term). Recent research found that, according to the CEOs questioned, just 53% of CMOs understand the P&L and balance sheet of their businesses. The same study found that just 49% of CMOs understand CEO-level accountability. And just 49% of CMOs have the personal trust of the CEO.
We could claim that CEOs are probably just untrusting by nature. However very few say they feel the same about their CFOs and CIOs.
The reason is both clear and stark: CEOs often believe marketers have simply lost sight of what they are in the business to do, namely generate greater demand for products and services in a way the company can measure. This goes a long way to explaining why CMOs tend to be the shortest-tenured out of the entire c-suite.
Let’s be absolutely clear: Fixing this is job number one for B2B marketing today.
If there is insurmountable friction between business strategy and marketing strategy, nothing else will work as it should. Nothing. It is simply doomed to failure.
There is a lot of concern in B2B about the lack of alignment between sales and marketing. While this is an issue, it is dwarfed by the mismatch between business strategy and marketing.
Of course, to be fair, senior management is not always that great at being clear about business strategy. In fact, in our own research, lack of clarity from management was cited as the #1 barrier to B2B marketers hitting their revenue and pipeline targets.
What we have here is a failure to communicate effectively.
So you’ve got your CEO or CFO in a room and have carved out some time in their diaries. What should you ask?
Here are some starters…
Five years is a long time in business. Initiatives will come and go, the economy is likely to progress a fair way through an up-down/down-up cycle. People will be hired, fired and leave of their own accord.
However, focusing on this kind of timescale will help you gain perspective. The average tenure for a CEO is around eight years, CFOs just over five years. So unless your CEO is on the way out, chances are they’ll be able to take the longer view.
Importantly, don’t simply focus on the financials (eg we want to become a $100m organisation), talk about the business in its widest sense.
Have them paint a picture of what success looks like:
Putting your B2B marketing hat on, think about this as creating a persona for the business. One that includes its hopes, dreams and worldview.
Again, this is not a marketing question, it’s a business one.
Let’s think of a business, say in the market for automated warehouse equipment. The overall ambition is that the business becomes the worldwide number one in the market.
More than this, it aims to help the market become 10x the size it is right now.
A number of things may need to happen:
The list goes on.
While some of these are squarely in the traditional realm of B2B marketing (leads, brand, reputation) many will be seen as the domain of business leadership.
As marketers, we may be encouraged not to worry our pretty little heads about such things. But to do so would be a critical error.
The reality is, marketing can have a valuable, positive impact on virtually every one of these challenges. In fact, the impact it could have may be far more valuable than the tactical lead generation and sales support that it might be pigeonholed into.
But it will never get the opportunity if marketers cannot have a business-level conversation with senior management. Without this, they may be forever characterised as the colouring-in-department, the people you go to for brochures, events, that web stuff.
What a waste.
So we know where we want to go, what will stop us getting there? What will we need to overcome along the way?
Chances are that this will not revolve around whether we can deliver a new corporate brochure in time for the start of Q4.
Some of the barriers are likely to be the flipside of the questions listed above – a failure to attract the right talent, an inability to expand etc.
Some may be more market-oriented – a slowdown in the economy in general, protectionist tariffs etc.
All the objectives above are just words and dreams if they can’t be put into action. Let’s face it, obstacles are a certainty. And if an insurmountable obstacle stands in our way, that objective is not going to happen.
Once you understand these obstacles, have the CEO/CFO rank them in order of importance to the business. What is the #1 thing that may negatively affect the chances of success? What’s #2, #3 etc?
This will be an important component in determining where marketing can deliver the most value.
Now, of course you will also probably have to do all the tactical things you’ve already been doing – that website isn’t going to create itself. But, armed with answers about the business’s ambitions, objectives and challenges, you’ll begin to have the foundations for adopting a more strategic approach that places marketing at the heart of business success.
And simply having this kind of conversation with senior management will show that you get it. That you’re not one of those B2B marketers who’ve lost sight of what really matters.
Not all growth is created equal.
Revenue and profit are not the same thing. You may have current sales that make up 80% of the company’s revenue yet only yield 20% of the profit.
Worse than this, you may be chasing targets to ‘keep the lights on’ which have an opportunity cost that means the business as a whole will be unable to meet its longer-term ambitions.
Say, for example, at present you are a product-focused business with a significant salesforce that drives revenue. Your average sale is in the $50k range and closes in 56 days on average. Profit on each sale is $20k. But the products themselves are somewhat undifferentiated and you already have a reasonable share of the market.
The default approach may be to try to capture more market share from competitors through demand generation activity, business development and direct sales.
However, you know from your conversations with the CEO that the ambition is to become a solutions-based business that operates at a more strategic level. This will involve moving to a more consultative sale that can lead to deals in the $250k range with a good proportion of ongoing revenue coming from professional services. Profit is significantly higher and the recurring revenue model helps lock in the customer for a longer period.
In addition, this part of the business is currently embryonic with just a couple of customers and competition from entrenched vendors. It has a small team of high-ticket consultants and sales take three times as long.
You would implement a very different strategy to help with the latter than the former.
This is where a good relationship with your CFO in particular comes in. They will have a uniquely granular perspective of what drives business success and will be able to model and map out the trajectory of the different products and solutions.
Regardless of the pressure from sales (more leads, better leads!) you will be able to gain a more valuable perspective of what really matters.
In the scenario above, it might be that you need to scale back on quarter-by-quarter lead generation in the product business and scale up long-term brand and reputation building in the solutions business.
However, as this involves a multi-quarter sales cycle, you will need the CFO and, ultimately, the CEO to support your approach as the investment they make now is unlikely to show tangible returns in the next 6 to 12 months.
Once again, arming yourself with this kind of insight offers the ability to move B2B marketing away from the purely tactical and increasingly towards the business-critical.
Let’s get personal. For all the talk about business objectives, people are people. C-suite executives will be focused on achieving their personal objectives just as much as anyone else in the business.
This may be the result of internal appraisal mechanisms or it might be within a wider context (eg shareholder and investor pressure). It may be linked to share options or profit-related pay.
Whatever the mechanics, getting to grips with this is another part of the puzzle of getting on their wavelength.
In an ideal world, the c-suite’s personal objectives and the objectives of the business as a whole will be perfectly in sync. However, we don’t tend to live in an ideal world – far from it.
Sometimes these objectives can sit at the 30,000ft level – eg turn around the business, be the public face of the organisation, model the values and standards they want to see.
Often they will revolve around areas such as owning the vision, determining where and how much to invest to meet the business’s objectives, and building and sustaining a great culture.
And, of course, no matter what, c-suite objectives are likely to involve delivering business performance that will stand scrutiny from shareholders (and the compensation committee).
While it can be difficult to have this kind of conversation, if you can get some insight into what matters personally to the CEO and the rest of the c-suite, you will be in a better position to add value. This is especially important because many of the objectives that revolve around CEOs (vision, values, culture) are home turf for marketing.
Part of the problem in the CEO:CMO mismatch in B2B comes down to differences in terminology. The concept of ‘marketing’ in one company may be very different than its meaning in another.
Heads of marketing may be solely strategic thinkers in one business and purely executional tacticians in another. And CEOs often have little or no B2B marketing experience to make the distinction themselves.
Research by the Harvard Business Review splits CMOs into three core types: those that focus primarily on growth strategy (positioning, new product development, customer insight), those that are focused on commercialisation (marketing communications, demand generation, sales support) and those that span both with an enterprise-wide remit.
It’s not an even split. HBR found that 31% focus on strategy, 46% on commercialisation and 23% enterprise-wide.
Importantly, the commercially-focused CMO is more common in businesses where marketing is not seen as core to business success. This is a typical situation in many B2B organisations which are often either sales- or engineer-led.
Understanding where senior management views marketing is key in determining how you fit into the wider business. More than this, it can present a clear picture of the opportunities to expand your role (together with the barriers to success).
Ultimately it comes down to the question: Is marketing simply about communication or can we also add value in other areas?
The possible role for marketing can encompass a wide range of value-creating activities including end-to-end demand generation, pricing, distribution, customer experience, product and service innovation, talent acquisition, investor relations, customer insight, vision and values, culture development etc.
Of course, if you are in a business where marketing is still viewed as fluffy and executional, you will have your work cut out. You may even decide that only a move elsewhere will expand the scope of what you can offer.
However, if you are beginning to have the conversations outlined in this article and are finding that senior management are receptive to marketing playing a more valuable role (and really, why wouldn’t they?) then you can at least begin to broaden your remit.
Depending on where you start from, this will take time. It is important to focus.
Do not try to boil the ocean. Pick an area you feel confident over, run a pilot programme (one where you can clearly show results), and expand from there.
It’s common for businesses to set yearly performance objectives. But in B2B it is just as common that they are run quarter-by-quarter from a sales point of view. Yet many businesses that focus on enterprise sales also have cycles that span quarters (or even whole years if we’re talking about high-risk capital investment purchases). And brand development is often a multi-year effort.
So it’s not difficult to see where tensions between the c-suite and marketing can easily blow up. If you’re focused on the long-term and the CEO is sweating over the next quarter, you could be highly successful on your terms and an abject failure in the eyes of senior management.
In reality, effective B2B marketing is not solely about the short-term or the long. It is a balance of the two (and everything in between).
Extensive research by Les Binet and Peter Field, published in The Long and the Short of It: Balancing Short and Long-Term Marketing Strategies, clearly shows that an either/or approach will never yield the success most businesses require.
The authors provide a rule of thumb that around 60% of marketing’s effort should go into long-term brand building and 40% into short-term activation. This will vary somewhat by sector – and subsequent research shows that for B2B the ratio is closer to 50:50. Whatever the specifics, the need for balance is pretty unassailable.
For our purposes, the key is being absolutely clear on what your CEO and senior management are expecting so you can either plan accordingly or else challenge their assumptions and reset expectations.
Marketing is an investment, not a cost. As such, it needs to deliver a return.
Surprisingly often, the c-suite will not have preconceived expectations of B2B marketing ROI.
They will have sales targets. They may link these to marketing in a ‘marketing-generated leads’ column. But when budgeting, they will often use a basic formula where the result is ±X% of last year’s budget.
Some B2B marketers may view this as a wholly good thing. It gives them more wriggle room to do what they want with less accountability. They are wrong.
Without the rigour that comes from accountability, you are simply left with variations on a theme of subjective opinion.
You think marketing is delivering impressive results, the CEO and CFO think it’s a significant cost. And guess what: they have all the power.
Let me take you back to the beginning of this article. Many CEOs believe marketers have simply lost sight of what they are in the business to do, namely generate greater demand for products and services in a way the company can measure.
In a way the company can measure.
It is critical that you can place what marketing does firmly in the objective value-creation side of the balance sheet. This means clearly showing that the company’s investment is a sound one.
If you are in a business where you receive ±X% of last year’s budget, it is in your own best interests to begin pushing for greater accountability. Because, if you do it right, you’ll be able to show that B2B marketing can be a major value driver for the business.
Regardless of how resistant many B2B marketers may be to the changes in how marketing aligns with the wider business, that change is coming anyway. Our B2C colleagues are already seeing this in the widespread adoption of zero-based budgeting. This begins each year with a marketing budget that is essentially zero. From there, the CMO must justify why they need investment and how that investment will support the business’s key objectives.
This is entirely a good thing.
It means that marketing will become deeply embedded in overall business success. It’ll help you defend against the kinds of pointless reactive requests that are the bane of many B2B marketers’ lives. It’ll make it easier to justify higher investment – because you’ll be able to show that for every pound, dollar or euro invested, the business will see a healthy multiple returned.
Now, of course, you are unlikely to be able to promise this return. There is no such thing as risk-free B2B marketing (just as there is no such thing as risk-free business). This isn’t a paint-by-numbers exercise.
However, the exercise of zero-based budgeting will tend to focus your approach. It’ll make you look for evidence and benchmarks to support your case. It’ll make you smarter about measurement and attribution. It’ll focus the discussion on investment rather than cost.
In short, it’ll make you a better B2B marketer and a better business person.