Under the Covers of Brand and Demand: A Love Story
Learn how marketing leaders can break down silos and turn their departments into growth machines.
58 min
Summary
Marketers are under intense pressure to make every dollar count, prove return and drive impact. That pressure can create competition between brand marketing and demand generation efforts for prioritization and funding, undercutting growth and harming performance.
This led us to wonder: How can companies rewrite that rivalry and turn it into a love story where everyone wins?
Prophet’s Marketing and Sales Practice leaders join executives from T. Rowe Price, Trane Commercial Americas, and Salesforce to discuss the results of our latest global research report, Brand and Demand Marketing: A Love Story.
We asked 500+ global marketing and advertising leaders how they are breaking down silos and balancing brand and demand marketing within their organizations. Watch the webinar to learn how to build agile marketing organizations that are customer-centric, aligned to business objectives and how to balance brand and demand marketing.
Key Takeaways
Marketers are under intense pressure to make every dollar count, prove return and drive impact. That pressure can create competition between brand marketing and demand generation efforts for prioritization and funding, undercutting growth and harming performance.
Through our research we learned the most effective marketers follow four common principles:
Anchor Marketing Investment in Business Objectives
Experiment to Win
Build a Modern Marketing Organization
Put the Customer at the Center
Hosts and Panelists
David Novak, Former Senior Partner, Prophet
Mat Zucker, Senior Partner, Prophet
Theresa McLaughlin, Head of Global Marketing & Digital Solutions, T. Rowe Price
Portia Mount, VP of Marketing at Trane Commercial Americas
Paul Stoddart, Chief Marketing Officer Customer Success, Salesforce
Contact us to learn how Prophet can help you overcome common challenges while integrating brand and demand marketing capabilities.
How Financial Services Brands Can Position Themselves for the Next Growth Cycle
When charting your next growth move, here are three ways smart financial services brands are already preparing for what comes next.
So far, this economic cycle is so loaded with 1970s throwbacks like soaring gasoline prices, inflation, and interest rates that we half expect to see a resurgence of the Burt Reynolds mustache and tie-dye ponchos. Whether we are at the beginning of the next Great Recession or just a minor downturn, history tells us that when brands scale back investments in growth, they typically end up with regrets. This is because when the next growth cycle begins, they tend to trail the field as competitors capture significant opportunities.
For financial services companies, the current times seem particularly dire. CMOs in this industry are increasingly less optimistic, with 44% of those in banking, insurance and finance saying they are less upbeat about the U.S. economy compared to 39% of all CMOs. No one is happy about saying goodbye to the sizzling stock market, red-hot housing sales or consumer spending swagger.
Scary? Maybe. Time to invest in growth? History resoundingly says yes.
Research shows that companies who double down on defensive plays tend to limp out of recessions. But those that fare best invest in new markets, products and services. A “Harvard Business Review” analysis of companies in the Great Recession of 2008 to 2010 found that 17% of the 4,700 public companies studied fared quite poorly, either becoming bankrupt, private or acquired.
Though the majority muddled through, 9% emerged from the downturn as elite success stories, outperforming competitors by at least 10% in sales and profits growth. Why? In simple terms, they stayed focused and invested in areas of relatively lower opportunity costs.
“You cannot overtake 15 cars in sunny weather… but you can when it’s raining.”
– Ayrton Senna, Formula One Champion
This is a lesson in how firms build resiliency in uncertain times. They evolve and make intelligent choices, ultimately emerging stronger than competitors.
So what should you do now? We believe those financial services brands that lean into these three areas are more likely to tap into uncommon growth once the economic engines reverse course.
Below is a summary of each of the three areas. In future articles, we will dive deeper into each to provide actionable recommendations to set your organization up for uncommon growth.
Align Everything You Do to Your Customer’s Values
“Three classes of factors affect what an organization can and cannot do: its resources, its processes and its values.”
The importance of a company’s purpose has changed dramatically in the last several years. It is no longer enough to establish purpose-driven brand messaging.Companies need to align everything they do to their customer’s values. The growing demands for progress on racial justice, climate concern and social issues no longer come just from consumers. Investors, employees and other stakeholders expect purpose-led thinking too.
But how do you make your purpose part of your organization’s DNA? Part of the operating model that is core to how stakeholders hear, see and feel the business? Prophet’s Human-Centered Transformation Model serves as a framework for effectively aligning the way your purpose and values are integrated throughout your organization.
Customers and stakeholders want to see corporate purpose defined in a more meaningful sense. They expect products, services and experiences that align with what matters most. It has become a core component of a brand’s reputation and relevance.
Example Winning Strategy: Define your purpose-driven operating model
Financial services brands that are leaning into driving purpose throughout the organization are positioning for the future. Some firms are beginning to build purpose-driven operating models, incorporating purpose into project charters and establishing “Purpose Teams” into the project management structure.
ESG commitments continue to be a focus of a brand’s purpose, promise and principles. Aspiration, an online financial services company and Certified B Corp, is a favorite example. Its “Leave your bank, save the planet” positioning allows customers to decide how much they will pay for services. It has even built a mobile tool to help customers assess their overall impact on climate change based on where they shop and how they invest.
While ESG was once about compliance and risk mitigation, we believe it is now a requirement for unlocking uncommon growth. And the companies having the greatest success with their ESG strategies are the ones who have created authentic changes in the culture of their full stakeholder ecosystem.
Financial services firms can maximize their impact by choosing ESG-driven growth strategies that are specific, ownable, applicable and measurable.
Invest in Humans Over Technology
Today, companies have more technology at their disposal than they could ever use in a coherent customer journey. It takes a combination of sensibilities and methods to create value. Humans–not digital tools– are better at building these interactions.
Humans–the roster of employees and all stakeholders–matter more than equipment. That being said, in no way should we diminish the importance of the continued digital transformation across the industry. At its recent Investor Day, for example, JP Morgan revealed it would spend a staggering $14.1 billion on technology this year. However, the firms that will win in the future are those that can also build an organizational focus on the humans using the technology.
Example Winning Strategy: Build a compelling employee value proposition – develop an EVP that:
1. Articulates what makes your company an awesome place to work and to grow a career
2. Improves how your company wins in today’s talent marketplace
3. Develops an enhanced foundation to support future talent needs and can evolve in line with future business and brand strategy
Leading companies are using technology to focus on pattern recognition, then inviting humans to understand it and put the relevant insights in context. Technology is great. Human capital is greater.
These companies are also actively working to decentralize, freeing human capital by shaking up organizational structures. Decentralized companies emerge from recessions with higher levels of innovation and more resilience, adapting better to changing conditions.
Prophet’s research has shown that this human-centered approach leads to greater levels of innovation, especially in the financial services industry. The key to it all? Finding ways to heighten avenues of cross-organizational collaboration.
Define Your Brand’s Role in Embedded Finance Era
Customers need financial services, but they do not need the current legacy construct of delivering those services. Whether you use Affirm to buy a mattress, the Starbucks app to buy a latte or a Lyft for your transportation needs, embedded finance is all around us and presents an opportunity for financial services brands to extend into other industries, such as healthcare and retail. According to recent research, the U.S. embedded finance industry is expected to grow at a CAGR of 23.5% from 2022 through 2029, reaching $212 billion by 2029.
Long viewed as a transactional element of the customer journey, we are now seeing an expansion of use cases. Take DriveWealth as an example. It is working with healthcare companies to offer comprehensive investment advice as part of healthcare savings accounts. And with the emergence of companies such as Column, billed as the “only nationally chartered bank built to enable developers and builders to create new financial products,” we are poised to see an exponential increase in use cases that cut across all industries.
What does each of these companies have in common? They have defined the next market battleground using a combination of platform and design thinking, focusing on the value of activating ecosystems. So, it is easy to understand why incumbent banks, insurers and investment managers feel threatened. However, they should not.
As the industry moves from linear finance to embedded finance, understanding your organization’s role in the new value chain created by this disruption is the first step.
Will you play the platform-creator role? How should you think about the allocation jobs-to-be-done? How will you control the experience customers have with your brand?
The faster financial services leaders realize the value of delivering an omnipresent financial services experience in people’s daily lives, the faster that value can be achieved for both the customer and the enterprise. The concept of Time to Value (TTV) will play a critical role in the embedded finance era.
By positioning an organization’s brand and core capabilities around its aspirational role in the evolving value chain, companies can embrace the embedded finance era.
If you are a senior financial services leader and have not yet embraced the implications of the pivot from linear finance to the embedded finance era, you are putting your organization at risk of lagging behind in the next growth curve.
Just as “buying the dip” can produce above average returns in your stock portfolio, financial services brands can prepare themselves for turbulent markets by committing to an offensive strategy through this current economic downturn. Finding new and uncommon ways to build embedded finance era strategies, aligning more closely with customers’ values and investing in human-centered transformation – even as investments in technology continue – will help accelerate growth as we move into the next economic cycle.
Hosted by Jeff Gourdji and Priya Aneja, Prophet’s Healthcare Changemakers podcast is where healthcare leaders who are driving change in their organizations, as well as today’s healthcare experience, share their stories. In this podcast, you’ll hear from industry-leading healthcare professionals about their personal transformation journeys and what organizations can do to create the next wave of growth today and in the future.
Episodes
18. What We’ve Learned About Changemakers
Jeff, Lindsey, Priya and senior editor Anna Kuno look back at 2022 and look ahead at what’s next, including a new name for the podcast. The hosts reflect on topics that have stood out, lessons they have learned, and things that have surprised them, as well as why the show is now called Healthcare Changemakers.
Dr. Thomas Cornwell, National Medical Director of Village Medical at Home, has made more than 34,000 house calls. That’s astounding considering that home-based visits haven’t traditionally been considered to be a profitable service line. Nothing has been shown to reduce hospitalizations on the sickest patients in society as much as home-based primary care, but the economics haven’t added up until players like Village Medical have found a place for it in their value-based care models. Take a detailed look at the economic engine behind “doing the right thing” and how aligning incentives has transformed the state of home-based care.
Dan Liljenquist, Senior Vice President and Chief Strategy Officer for Intermountain Healthcare, discusses physician shortages, the economics of drug development and distribution, and his career path with and before Intermountain Healthcare. Value-based care isn’t a destination; it’s an evolution. Learn where Dan sees that evolution going next and how it has led to the creation of the nonprofit generic drug manufacturing company Civica Rx.
A. J. Loiacono, CEO of Capital Rx, believes in unlocking the power of the pharmacist in the healthcare value equation. If we can stop fighting over drug pricing and just let buyers and sellers freely communicate, it would free up pharmacists to be more innovative. Learn how Capital Rx is challenging the traditional PBM (pharmacy benefit manager) space and transforming drug pricing once and for all.
Jamey Edwards, Chief Platform Officer at StartUp Health, sees transformation through the eyes of hundreds of entrepreneurs that he supports. Their collective efforts are making progress in key areas such as improving access, reducing bias, and addressing health equity. Learn how StartUp Health’s portfolio companies are gaining traction and overcoming blockers of innovation that have limited the industry’s progress until now.
Snezana Mahon, Chief Operating Officer at Transcarent, shares how transparency, care, and empowerment are vital components of a transformation. An empowered healthcare consumer understands the choices that they need to make and has the right information at their fingertips to make those choices. Learn how Transcarent is focusing on the longitudinal experience of care in oncology, behavioral health, and more.
Dr. Shoshana Ungerleider, founder and president of End Well, shares how the practice of medicine is changing to better serve end-of-life needs. Without the proper training and education, it can be challenging for healthcare professionals to know where palliative care fits in their patients’ treatment. Learn how End Well is working to transform the dialogue about end-of-life care and honor the needs of patients and their loves ones.
Tony Ambrozie, Senior Vice President and Chief Digital and Information Officer at Baptist Health South Florida, shares how he represents consumers’ digital needs in their personal health journeys. Clinicians are heroes for the most important part of a patient’s journey – providing their care – but it isn’t the only part of the journey. Learn how Tony employs lessons he learned from his time at The Walt Disney Company, why communications preferences are considered table stakes, and how empathy for the operations team goes a long way.
Dr. Joneigh Khaldun, Vice President and Chief Health Equity Officer at CVS Health, shares the impact when organizations move beyond buzzwords and embark on a health equity transformation. Disparities aren’t inevitable, and there’s no gene that says that you should have a lower quality of life because of the color of your skin. Learn how to recognize the existence of implicit bias, collect data at scale, and use that data to address disparities in care.
Dr. Alistair Erskine, Chief Digital Health Officer at Mass General Brigham, breaks down what’s coming next as major medical institutions embrace the next phase of their digital transformation. While data is currency in managing patient care, it hasn’t been fully unlocked at scale yet. Learn how Mass General Brigham is aligning key digital components of their business model, operations, clinical workforce, and more, to provide a more satisfying patient experience.
Tamara Ward, SVP of Insurance Business Operations at Oscar Health, shares what happens when you put empathy at the center of the transformation equation. Sometimes starting and failing at transformation is still better than never trying it at all because of what you learn along the way. Learn how Tam has learned to align transformation with the core competencies of the business and not get distracted by the hot topics of the moment.
Michelle Lockyer knows that the pace of transformation can affect the ultimate result in large, established organizations. The longer that a transformation continues, the more challenging it can become for leaders to keep up the momentum and for team members to stay engaged. Learn the myths and realities of transformation in the biotech space, including the three steps on Michelle’s 90-day checklist, her tips for constructing a strong purpose statement, and the attributes she looks for in leaders to drive long-term change.
Myoung Cha, President of Omnichannel Care & Chief Strategy Officer at Carbon Health, knows that behavior change takes more than just sharing information. Human beings are wired to act on short-term outcomes rather than longer-term habits where behavior problems often occur. Learn how Carbon Health is creating a new kind of primary care by filling care gaps, creating tighter feedback loops, and leaning into ambiguity.
Dr. Nick Patel, chief digital officer at Prisma Health, shares what the 2025 version of a holistic experience strategy looks like, and what he’s working on today to get there. Shifting from fragmented care to connected ecosystems requires governance and alignment so that IT, informatics and medical groups can all look in the same direction. Learn the types of personas and data sources that Dr. Patel’s team uses to complete the patient picture and help physicians to provide more personalized, effective care.
Stella Sanchez, VP of consumer marketing at Teladoc Health, shares how building loyalty with consumers makes it easier to drive behavior change. Transformation requires inspiration, and that inspiration needs to come from a clear vision. Learn how Stella’s team uses a B2B2C marketing model to clearly articulate their vision not just for their client partners, but for the consumers whom they serve.
Matt Gove, chief marketing officer at Summit Health, discusses what health system leaders can learn from the transformation story of merging brands and growing relentlessly during the pandemic. Matt shares lessons about providing access to all the right care, developing the right type of relationships with consumers and the need to bring operations into patient experience work much earlier in the process. Learn more about Summit Health’s ongoing transformation work that has continued since their merger with CityMD, the leading urgent care provider in New York.
Mary Varghese Presti, SVP & GM of Dragon Medical, shares her experience setting the pace and direction for innovation at the same time. She explains the need for having not just a vision and inspiration for transformation, but also the execution and sweat equity to drive it to the destination.
Nishi Rawat MD, chief clinical officer of Bamboo Health, shares her experience in addressing whole-person health by attacking the twin epidemics of opioid abuse and mental health. There is an expectation for transformation in healthcare to happen quickly, but Nishi sees it happening incrementally, and it’s almost unnoticeable at times. Learn more about the work that their team at Bamboo Health is doing to make a difference.
Organizing Brand-Demand Marketing Teams for Success
In the fifth and final installment from our Brand-Demand Love series, informed by our conversations with marketing leaders across industries, we’ve outlined the steps to integrating brand and demand marketing capabilities to win in a complex and dynamic landscape.
If we think of marketing organizations as households, they are often not very harmonious, thanks to the common tension between brand and demand generation teams. Our blog series has described why these two marketing disciplines struggle to work together to achieve mutual success. To attain productive and peaceful integration, brand and demand teams must define the best ways to organize people and teams, collaborate productively and deploy the right capabilities and tech.
Overcoming Fragmentation
In our discussions with marketing leaders, the brand-demand split in organizational structures was a common challenge. “One of the big barriers for marketing in our industry is how we’re structured,” a technology CMO told us. “There’s the performance marketing team on one side and then there’s everyone else, including brand people, on the other.”
In many businesses, brand and demand are viewed as unrelated capabilities, run by disparate teams with little to no insight into each other’s activities or results. Other common symptoms of unhealthy brand-demand organizational structures include:
Separate planning cycles and budgeting exercises
Distinct KPIs that often do not align with broader business objectives
Lack of knowledge sharing
Talent deployed to standalone channels or capabilities, with little cross-functional collaboration or rotational assignments
When marketing teams are organized this way, it’s impossible for brand and demand teams to communicate openly, share data freely, or collaborate productively – much less fall in love again.
A manufacturing vice president of marketing told us that fragmentation is largely down to leadership:
“If your teams are fractured and chaotic, that’s because your leadership is fractured and chaotic.”
This speaks to the importance of leadership in ensuring different functions work together toward shared, big-picture goals.
Rethinking the Marketing Organization Chart
There’s no single ideal structure for a marketing organization, but certainly, brand and demand should not be managed as separate entities. Some top performers organize their teams around customer type, while others use product line, channel or functional discipline. Again, there’s no definitive best practice. A B2B manufacturer that restructured its marketing operation around how customers buy, rather than product lines, became more responsive to business needs.
Marketing at 7-Eleven is organized by discipline, according to CMO Marissa Jarratt, but with a recognition that no one works in isolation. For instance, the company established a customer analytics and insights team to inform business decisions. “Then came the responsibility to socialize those learnings across the organization in a thoughtful way,” she said. “You can have really smart people, but it has to be a team sport.”
Fostering Collaboration
No matter the organizational model companies choose, collaboration is key. Collaboration can take many forms:
Joint strategic planning sessions
Monthly knowledge-sharing sessions
Flexible campaign planning exercises and roles, including metrics definition and budget allocation
Integrated campaign performance readouts
All of these activities can – and should – include external agencies, consultancies and other third-party providers, as well as in-house agency capabilities where relevant. “We need holistic collaboration from our partners to help us work through our evolution,” said Shelley Haus, CMO of Ulta Beauty. Indeed, several marketing leaders who we interviewed considered external partners to be part of the marketing organization and capable of helping bridge the brand-demand divide.
Collaboration can also help solve tactical issues. For instance, brand and demand teams both want efficient and effective content marketing capabilities, which require coordination and asset sharing. “We need atomized content approvals and integrated digital asset management flows so content and images can be reused quickly and easily by many teams,” said a senior marketer at a large financial services firm. “Otherwise, teams can’t streamline timing or use a ‘test-and-learn’ approach based on integrated results from everywhere.”
Boosting Brand-Demand Integration Through Capabilities, Talent and Tech
Several marketing leaders we interviewed talked about the pressing need for new talent. Everyone is looking for data scientists, business analysts and digital strategists; thus, brand and demand teams should look to share in-demand specialist resources.
More than one marketing leader described the need for more communication and training across disciplines to promote better understanding. Job shadowing and rotational assignments can help in these areas. Another challenge involves varying experience and backgrounds: “Brand marketers run the show and they all went to the same business school, while performance marketers all come from DTC brands,” said Ashley LaPorte, ex-CMO at Seventh Generation. Organizational design and cultures that emphasize collaboration and shared goals can help overcome these barriers.
Compensation models and incentives are other effective levers for driving integration between brand and demand. Defining joint performance goals tied to overall business performance may facilitate the shift away from time and expense cost models to more incentive-based pay models, which would encourage brand and demand marketing teams to collaborate more frequently.
Technology has a role to play as well. A strong MarTech stack can successfully integrate data across disparate sources and promote connectivity among different functional areas. Adopting content personalization at scale requires integration across brand and demand teams – and their corresponding tech stacks. Performance marketing functionality can also be embedded directly into tech platforms to give brand teams more access to relevant insights and tools.
The new research report, “Brand and Demand: A Love Story” is here! Learn how today’s Brand and Demand Generation leaders are bringing their functions together to drive greater impact. Download today!
We believe the most successful and productive relationships – in business and in life – involve shared goals and commitments. Achieving these goals requires collaboration, communication and an effective division of labor. For brand and demand teams to deliver optimal performance in line with their shared goals, they must organize their “home” in ways that reflect and support these principles. Because brand and demand must live together, we’d recommend they aim to do so with utmost harmony and respect for each other’s unique genius and power. That’s how they can reignite the love in their relationship.
Do you need help breaking down the silos separating your brand and demand marketing teams? Our Marketing & Sales practice can integrate your teams to achieve mutual success. Get in touch.
Teladoc Health: Building Purpose-Led Consumer and Employee Experiences
Every year, Prophet surveys thousands of consumers and asks, “Which brands play an important role in your life at why?” And every year we crunch the numbers, synthesize their feedback and produce a ranking and insight-rich report for business leaders to leverage as they transform and grow their businesses through innovative customer and employee experiences.
This year’s survey focused on questions about the “head” and “heart” of consumers. While companies that won over the “heads” of consumers brought pragmatism and convenience, “heart” winners found ways to connect with them on an emotional level. The top brands – aka relentlessly relevant all-stars – did both.
In the 2022 Prophet Brand Relevance Index® (BRI) leading healthcare entities—pharma, providers, suppliers—gained traction and awareness for bringing innovative solutions during the COVID-19 pandemic. Pharma giants like Pfizer, Moderna and Johnson & Johnson grew in name recognition and brand value as they stepped up to the world stage with life-saving vaccines. Non-traditional care platforms also gained traction as consumers opted for telemedicine experiences.
But which healthcare organization was the most relevant to the lives of 13,500 U.S. consumers? Teladoc Health, the multinational telemedicine and virtual care healthcare company, ranked as the #1 healthcare organization and #21 overall.
The pandemic forced the adoption of virtual care and Teladoc Health’s newly transformed experience was there to meet the moment – providing whole-person digital-first solutions to patients. And with gaining momentum, more and more consumers have begun to embrace digital native health platforms. These platforms are rapidly scaling to become not only the digital care continuum for patients but the care continuum. Traditional sectors of healthcare are drawing inspiration from modern digital healthcare players like Teladoc Health who are taking center stage (and top spots in rankings).
Stephany Verstraete, chief marketing and engagement officer at Teladoc Health, joined Prophet’s brand leadership team in the Prophet BRI webinar to share her take on the organization’s rise in consumer relevancy.
What was the focus of Teladoc Health’s brand in 2021 and is that changing as we step further into 2022?
The pandemic created this unique moment where Teladoc became relentlessly relevant – hitting both on the needs of the ‘head’ and the ‘heart.’
We’ve reached an inflection in the adoption curve of virtual care. Which is something that is pretty rare in the world of healthcare. And I think that really stemmed from being there in the moment of people’s needs. In 2020, suddenly something they had taken for granted – access to a doctor – was compromised. And fundamentally, it transformed the relationship they had with our brand, from being largely “head” dominated, focused on convenience and value, to increasingly meeting those needs of the “heart” side as we became a place that they could safely turn to, speak to, without leaving their home.
How do you ensure brand relevance is at the core of building the brand and customer experiences?
We have been digesting our recognition on the list for the first time and are using the brand relevance construct to put a framework around what we are focused on this year.
People naturally gravitate to Teladoc for the “head” needs – like simplification and transparency – and how it can provide individuals in system-centric environments with experiences that are more “person-centric.” As we think about moving forward, we want to focus on how to make those deeper focuses on the “heart” as we deliver innovative experiences. We want to change the way people think about the Teladoc Health experience – from just sick care to healthcare. This brand thinking is transformative for how we go to market, from a marketing perspective, all the way through how we infuse it in our experiences.
Outside of marketing, what do you do to drive relevance in other aspects of the business? How do you inspire the rest of your organization around a brand?
Getting your employees to be power users makes them your greatest brand evangelists. They are the first line of feedback that we incorporate into our experience.
Fundamentally, the Teladoc Health team is inspired by our mission of enabling all people everywhere to live their healthiest lives. Our 5,000 global employees are really the power users of our services. And I would tell you, as a marketer, who has not spent a career in healthcare, this is unique.
We are very intentional about keeping consumers front and center in all of our strategic conversations. For a lot of our DTC marketers, this would seem like an obvious statement but as you get into a healthcare context, it’s really important. For example, we start every strategic meeting with a story from one of our members. It really has a powerful impact on how to keep us grounded in our company’s true north. That is the experience we are delivering and the people we are helping. We are defining a category and something for consumers that is new. When I talk about the brand, it is critical because our brand relevance is still being formed for a lot of consumers.
It is rare to see a study of this kind that can parse out innovative and traditional brands in a way that is relevant and meaningful for all of them. That’s something that we’ve really appreciated.
The Prophet BRI serves as a roadmap for building relevance with consumers, the type of relevance that leads to business growth. Contact our team to learn how to apply the insights from the 2022 Index to your organization.
Brand-Demand Love: Achieving Success and Satisfaction Together
Informed by the conversations we’ve had with CMOs across industries, this fourth installment from our Brand-Demand Love blog series explores how to integrate brand and demand marketing capabilities to win in a complex and dynamic landscape.
Even in the most complimentary relationships, financial matters are often a source of significant stress. For brand and demand-gen marketing teams to achieve the fully integrated and highly productive marriage we have been describing so far in our series, they must address the potential friction points involving budgeting, investment and performance measurement.
Agreeing on big-picture goals and investment priorities is the first step, followed by defining metrics to track performance. Receptivity to new approaches and flexibility to adjust as needs change is also key. As our research with marketing leaders has made clear, these issues are critical to unleashing uncommon growth through more effective and agile marketing capabilities across the customer lifecycle. Brand and demand teams ultimately share a pocketbook and prosper (or struggle) together.
Building Balanced Budgets and Allocating Investments Equitably
Many marketing leaders confess to being “obsessed” with finding the right investment mix. There is no shortage of conventional wisdom on how to allocate budgets and balance the investment mix. One common industry standard is the 60/40 rule, an investment recommendation proposed by Binet & Field’s 2013 study. The thesis: Allocating 60% to brand and 40% to demand yields the most effective balance of near-term acquisition and long-term performance.
Such rules of thumb seem to offer quick, evidence-based solutions. They also help defend brand investments, as many marketers want—and feel an urgent need to do—as e-commerce and digital have gained the upper hand in budget battles. However, this may not fully account for the variables of consumer behavior, broader market trends or the unique business contexts faced by different organizations. Modeling investment and measurement decisions against product lifecycle stages (e.g., product launches, mature offerings) can help marketers track progress toward specific goals.
Marissa Jarratt, chief marketing officer of retailer 7-Eleven, seeks to manage marketing investments like a portfolio. She balances higher-risk bets that offer big potential upside while also making safer plays that bring more predictable returns. “This is becoming more of a science,” said Jarratt. “We’ll take risks if we think it can drive a target downstream impact or outcome.” Such a balanced view of risks and rewards helps optimize the media mix across funnel stages and seasons.
Sudden market shifts put a premium on agile planning and budgeting. As Ashley Laporte, director at communications firm RALLY, told us:
“It’s not about finding the perfect proportions to balance brand and demand but finding a flexible framework that understands how everything connects.”
Mastering the Metrics and Digging into the Data
Performance metrics and attribution models continue to proliferate and evolve. There has been a pronounced shift away from brand surveys toward more agile measurement approaches. The leaders we interviewed expressed uncertainty about which metrics and KPIs are the most accurate and how to enable insight-based decision making.
Even firms that can transcend traditional difficulties in measuring brand performance face challenges. As Jennifer Warren, VP of global brand marketing at Indeed, told us, “Business and finance leaders want to know how a 2% lift in consideration translates to sales and revenue.” Such visibility is difficult to achieve, as is determining ROI on long-term, multi-year brand investments. Marketers are now being asked to develop KPIs to measure the effectiveness of purpose-driven strategies around sustainability, for example, or diversity and inclusion efforts.
Despite the challenges, being data-driven enables marketers to speak the language of the business. As Portia Mount, VP of marketing, commercial HVAC Americas at Trane Technologies, put it, “When financial leaders say, ‘let’s cut all the brand stuff and just do demand,’ our job as marketers is explaining what the impact will be if we shut something down.” Better performance data and stronger customer insights make for more productive conversations in explaining that choosing between brand and demand is not a zero-sum game.
“I don’t think that there is a silver bullet for measurement,” said Tyrell Schmidt, U.S. chief marketing officer, TD Bank. “We are really careful not to oversell performance, which is easy to do because it always drives the fastest results.”
A Shared View Builds a Shared Stake
Demand-gen leaders also face challenges in tracking performance as major tech companies like Google and Apple work to shift away from the use of cookies. Consumer goods firms struggle to get point-of-sale performance data from partners (e.g., e-commerce platforms and big-box retailers) and look to fill the gap with third-party data (e.g., credit card records, basket analysis). The bottom line: as much data as marketing leaders have, they are always looking to attain the most relevant data.
The lack of alignment between brand and demand adds another layer of complexity. Today’s “incongruent” KPIs result from a lack of incentives to “play nice,” according to one CMO. Ideally, rich data and aligned KPIs are used within an agile budgeting and forecasting model that incorporates multiple time horizons (annually, quarterly, daily) and enables opportunistic, real-time adjustment.
Integrated performance dashboards accessible by both brand and demand teams have enabled some firms to generate holistic insights by combining both short-term (e.g., search data) and long-term (e.g., Net Promoter Scores) metrics. These efforts reflect the need for marketers to experiment and innovate in their approach to financial matters. At Prophet, we recently partnered with a health services client to develop an integrated performance dashboard across brand, demand and customer experience teams, enabling a cross-functional understanding of campaign performance.
Summarizing the Questions You Need to Ask
Looking ahead, brand and demand teams must commit to open communication and engagement to achieve a strong and harmonious relationship. When it comes to financial matters, flexibility is also key. In order to pave the way to a household of shared finances, you need to ask the right questions and the following are worth considering in setting the right investment priorities and measuring the effectiveness of collective efforts:
How much impact does brand marketing have on conversion?
What impact do customer acquisition efforts have on brand perception?
What’s the appropriate level of investment across brand and demand without sacrificing overall performance?
What do specific metrics tell us? Which metrics are most meaningful and why?
Are we measuring campaign performance holistically and across the funnel?
Do we have a shared view of brand and demand and how they connect to the business in the short and long term?
Are key measurements used to inform annual planning cycles?
The new research report, “Brand and Demand: A Love Story” is here! Learn how today’s Brand and Demand Generation leaders are bringing their functions together to drive greater impact. Download today!
In our next post, we’ll look more closely at how to set up a “happy household” – that is, organizing teams and building the right capabilities so brand and demand can have a comfortable nest for their life together.
If you’d like to learn more about how your organization can overcome common challenges while integrating brand and demand marketing capabilities then get in touch here.
The state and success of digital transformation varies considerably around the world, with some distinct disparities between the digital “haves and have-nots.” The latest global research report from Altimeter, a Prophet company, provides not only detailed insights on the differences between individual markets but also some key learnings.
The U.S. market, for instance, is largely looking past digital transformation, having invested heavily during the last 10 years to replace legacy infrastructure and migrate more operations to the cloud. U.S.-based firms today are focused on strategic innovations (e.g., greater customer-centricity, digital product development). However, China, which never had to contend with outdated systems, was able to leapfrog ahead to advanced apps and immersive digital experiences.
In Europe, there is a wide variance of digital maturity. The U.K. market looks more like the U.S., but Germany is not quite as far along on its digital transformation journey. It’s also important to note that the most advanced firms in Europe have reached the same level of digital maturity as digital leaders in China and the U.S., but average firms generally lag compared to their global peers.
Europe is Catching Up in Its Digital Transformation Efforts – Quickly Enough Though?
Taking a closer look at Altimeter’s data in terms of C-level sponsorship of digital transformation initiatives, the U.K. has the highest tendency to appoint a CDO or CIO to own and/or sponsor digital transformation. However, Germany and the U.S. tend to rely marginally more on the CIO or CEO. At the same time, more American and Chinese firms report excellent results from their digital transformation programs, but most European companies report that they only have good or fair results.
A potential reason for this is that European firms are somewhat more conservative in their approaches to transformation overall. For instance, German firms prioritize employee engagement, digital literacy and operational efficiencies in their digital transformation agendas as much as they do growth. Innovation, on the other hand, is a much lower priority.
U.S. firms are notably more focused on profitability and revenue in their digital transformation programs than their European counterparts. It seems that many European firms are focused on keeping in step with their peers and competitors and that’s especially true in Germany. The implication is that many established European companies are still building a digital foundation for the future.
“more American and Chinese firms report excellent results from their digital transformation programs, but most European companies report that they only have good or fair results”
U.K. organizations are the most likely (69%) to cite using digital technology as an opportunity to become more efficient, perhaps partially reflecting the need to improve their lagging productivity rate versus the U.S. (46%), Germany (42%) and China (52%).
German organizations (58%) are the most likely to view digital technology as a priority investment to replace outdated or obsolete technology, as compared to the U.K. (40%), U.S. (39%) and China (18%).
Europe Invests Long-Term and the U.K. Adopts Agile Working Methods
Compared to U.S. firms, European firms also have longer-term expectations for their transformation investments. At least 40% of surveyed companies in Germany and the U.K. expect it will take at least two years to see positive results from transformation investments, versus 31% of U.S. firms. One reason for the longer time horizon is the relative lack of sufficiently digitally trained staff, which is a bigger challenge in the U.K. and Germany than it is in China or the U.S.
Of course, Europe cannot be considered a monolithic market. There are substantial differences between the U.K. and Germany. The U.K. firms surveyed have adapted better to digital transformation by, for example, adopting agile working to a greater extent than those organizations in Germany, which are more likely to have process-driven cultures. Additionally, data silos are a much bigger problem in Germany compared to the U.K., which shows more leadership in data science.
In Germany, digital marketing is still mainly viewed in terms of ad campaigns. And in both the U.K. and Germany, digital marketing is generally below average in owning the customer experience. There are also varying priorities for the future: U.K. firms put less focus on hiring and training in digital transformation and as a result, business model changes are less likely to happen in Germany. Also, cybersecurity and cloud adoption are important priorities in the U.K., while cross-functional collaboration platforms are of less relevance in Germany.
Don’t Focus on Infrastructure, Focus on Creating an Agile Organization
Our digital transformation research, as well as our market experience, suggests that firms are better served by focusing on organizational changes and improved agility rather than updating infrastructure. After all, infrastructure is constantly advancing so that’s a job that will never be completed. But increased organizational adaptability and agility will help organizations adjust to ongoing change and proactively drive it.
Approaching these challenges in the right way is key. To do so, companies should follow a three-step approach:
Digital Benchmarking: Conduct a rapid heatmap assessment of your organization’s (enterprise-wide) digital transformation maturity. Identify where the opportunities for improvement are, and how your business benchmarks against best-in-class digital maturity (both in your market(s) and globally).
Digital Immersion: Run a digital innovation workshop with key stakeholders across your organization to share the latest digital trends (not just specific to your industry, but also apply learnings from other industries) and explore the digital art-of-the-possible to identify opportunities for augmenting your own digital transformation journey.
Digital Mobilization: Build (or revisit your existing) digital transformation vision and roadmap, ensure all roadmap initiatives are tied to commercial value and make certain tracking mechanisms are in place to guarantee the realization of this value.
Looking ahead, companies in Europe, particularly in Germany, must address many of the same challenges that U.S. firms (and the more digitally mature companies in Europe) have started overcoming already. That means breaking down data silos, converting raw data into actionable insights and adopting more agile ways of working.
How does your company stack up in the digital transformation stakes? Get in touch today if you’d like to benchmark, excite, transform, and unleash the full power of your business.
How Brand-Demand Love Wins Across the Marketing Lifecycle
The second post of a series about integrating brand and demand marketing capabilities to win in a complex and dynamic landscape, based on our conversations with CMOs across industries.
As we highlighted in the first post in our Brand-Demand Love series, we think it’s time for a more integrated and complementary relationship between brand and demand-gen marketing. Why? Because the current separation isn’t aligned to the dynamic purchase behaviors of consumers across an increasingly complex landscape. As Karla Davis, VP of Marketing at Ulta Beauty, told us:
“What is brand, and what is demand? That’s a little gray now.”
Karla Davis, VP of Marketing at Ulta Beauty
When accomplished senior marketers question the validity and usefulness of the traditional brand-demand paradigm – and many do – then surely, it’s time for a new model. After all, the effective coordination of brand and demand-gen activation strategies represents an integrated and agile marketing capability – the gold standard amongst marketing pros.
Feeling the Brand-Demand Love Across the Marketing Lifecycle
Brand and demand-gen activation cannot be viewed as separate or competing functions, but rather as interdependent and mutually reinforcing capabilities that comprise the core of the overall customer experience.
Each set of tactics has a significant role in attracting buyers and strengthening relationships at every step of the customer journey and across the entire lifecycle. But, taking the perspective of marketers, it’s easy to see why the brand-demand balance is fluid. When considering marketing activation investments, companies might adjust their orientation as:
Brand-led
Demand-led
Balanced
As business objectives evolve and companies navigate distinct phases of maturity, the optimal marketing approach will vary. For instance, a brand needing to differentiate from a competitive pack may need to be brand-led to generate awareness and consideration, while a business undergoing a portfolio launch, expansion or refresh may have more balanced brand-demand priorities.
For businesses focused on customer acquisition or market share gains, demand-led models will serve their immediate priorities in tandem with brand campaigns. Many direct-to-consumer brands, unique in their offerings, initially focused on acquisition only to shift towards brand marketing as their category became crowded. Mature organizations that find themselves at a point of market saturation and businesses without fully defined offers will both rely on brand-led marketing efforts to develop, sustain and enhance customer relationships.
Learning from Airbnb
Airbnb’s decision to cease all demand generation activities coming out of the pandemic suggests just how much the brand-demand pendulum can swing. When the pandemic shut down all travel, the company eliminated its marketing activation spend, which totaled $1.62 billion in 2019. As lockdown restrictions eased, Airbnb saw most of its traffic return to pre-pandemic levels, prior to re-investing in marketing activation campaigns.
“I don’t anticipate doing a lot of incentives because we have a huge amount of demand for the service already,” Airbnb CEO Brian Chesky told CNBC. “We are never going to spend the amount of money on [demand] marketing as a percentage of revenue as we did before the pandemic [because] our brand’s incredibly strong.”
Not every brand is Airbnb, of course, and it’s far more common for brand marketing spending to get in the crosshairs of budget cutters. The brand-demand mix is fluid for large and small marketing organizations. Other companies will find they need a different balance at different moments within their growth curves and maturity cycles.
External factors also play a role in defining the right balance at the right time. Social issues, including diversity and inclusion and climate change, are leading some companies to deploy brand spending to align with important causes. Ashley Laporte, director at the communications firm RALLY explained her company’s approach as “Less about cause marketing, and more about helping companies take part in driving systemic change.” Taking positions that consumers support may lead to some increase in demand, but it will be hard to attribute sales directly to, say, thought leadership regarding a company’s commitment to net-zero admissions.
Another CMO in the manufacturing industry said she wanted “credit from business leaders, the board and institutional investors” for effectively positioning the brand relative to these issues, especially since it made the business more attractive to rising generations of workers. An industry analyst told us, “Brands are being tortured with the cultural and societal unrest that’s out there,” and not just because investments related to these tricky issues are extraordinarily hard to measure.
What’s Love Got to Do With It?
Mastering the brand-demand mix means being flexible and committing to making necessary adjustments over time, like those that take place across the course of loving relationships. One partner’s needs may take precedence during a certain phase of life, but afterward, things rebalance as conditions change. It’s never exactly 50-50 (or 60-40 as in the famous Binet & Field model for budget allocation, which we’ll explore in more detail in a future post). Such a rigid formula may cause opportunities to be missed and doesn’t match the real world, where marketers must continuously adjust based on changing market conditions and business needs.
The new research report, “Brand and Demand: A Love Story” is here! Learn how today’s Brand and Demand Generation leaders are bringing their functions together to drive greater impact. Download today!
We suggest speaking the “language of love” to business leaders and other stakeholders who struggle to see beyond the numbers in evaluating the merits of brand investments. The key is to connect business objectives to the power and resonance of brand. Marketers that can bring empathy and emotional intelligence to these conversations will be more likely to find supportive partners – and isn’t that what we’re all looking for?
In our next post, we look more closely at proven principles for shaping effective go-to-market strategies – the “vows of the brand-demand marriage.”
Get in touch today if you’d like to learn how to bring brand and demand together to win across the full marketing lifecycle.
For a crash course in what to do first, plan your listening tour and ask the right questions.
Are you in a new role as chief marketer, or perhaps new to your category? This simple guide offers straightforward ideas and insights that can help you succeed.
To start, think about what you need to do in your first 100 days. It is important to consider:
Do I need to develop a transformation agenda?
Can I create a more compelling go-to-market strategy?
How can I make our brand more relevant to customers?
Are there foundational tools to put in place, such as a documented customer journey or a marketing plan?
Given the rapid change in marketing and the greater need to prove immediate impact, we help new CMOs flex the most impactful levers including content, data and digital marketing, as well as reimagine their marketing organization for the modern era of growth engine marketing.
Here’s a quick guide of what to ask, what to do and where to look in the first 100 days.
What to Ask
Asking the right questions up front can help craft the right agenda, identify potential initiatives and create an actionable roadmap. Below are six questions you should explore with your team, colleagues, and agency partners.
How relevant is/are your brand(s) to your most important customers and stakeholders? How relentlessly focused on the customer are insights, strategies and tactics?
Is the marketing strategy aligned to the business strategy? What is marketing’s contribution to the enterprise? How do the rest of the C-suite and the board see marketing’s role?
Are brand and demand priorities clear and integrated—or in competition and at odds? Is there a portfolio marketing strategy in place or is the strategy purely product-focused?
How are you going to engage and empower the sales, communications and product teams? Is there a shared end-to-end customer journey? What culture of collaboration exists or doesn’t exist?
What is the maturity level within the marketing organization for key digital capabilities such as customer data, content, personalization and attribution?
Is your marketing team organized in the most efficient way possible and around your business priorities? How might you set up your operating model?
What to Do
Here are some recommended actions passed on from other leaders, proven to get you on solid footing and off to a smart start.
1. Schedule your listening tour
Meet with your direct reports and colleagues across the organization, and ask these questions: What do you want me to create? What do you need me to protect? What do you need me to prioritize? Be sure to share back the results and your plan.
2. Create these CMO assets
Introduce Yourself Presentation: Prepare a “top 10 list” presentation that addresses these questions: Who are you? Why are you here? What kind of change initiative are you leading? What do you believe about marketing? What do you value? How do you like to work with others? What are your top priorities? What are key milestones for your first six months? What do you expect from your team? What can they expect from you?
Vision, Agenda and Roadmap: These are often created in a workshop over a few weeks with a suite of collaborations They should include a description in which the brand can fulfill the business potential, and the springboards, or starting places, that exist now. One key artifact to create is a dashboard to help track progress.
Growth Era Marketing Plan: This plan is a modern replacement for the integrated marketing plan and has many of the conventional elements updated for marketing’s new role as a growth engine for the enterprise. Topics include business vision, opportunities, strategies and tactics, customer data strategy, calendar, investment, and key enablers (e.g. content, technology, people, partners).
3. Work in outcomes
Translate your priority initiatives from marketing objectives to business impact. For example:
Reducing cost: Investing in a content strategy that leads to search engine optimization will, for the business, reduce the cost of digital marketing that may need to be done.
Increasing revenue: Engaging in brand and marketing campaigns that increase customer loyalty can, for the business, increase the share of wallet and customer lifetime value.
Improving efficiency: Improving digital experiences can be a reason for a prospective client to work with you, therefore improving the volume of incoming leads, lead quality, conversion rates and retention.
Product innovation: Customer insights gleaned from marketing activities and shared with product management can optimize product performance and uncover new opportunities.
Ask your teams to quantify and report their work against broader business impact, not only marketing KPIs. A dashboard that integrates marketing KPIs and business performance can help sustain that conversation and connection.
“When asked business questions (e.g. what have you delivered for the business?), don’t give marketing answers (e.g. NPS).”
Raja Rajamannar, Chief Marketing & Communications Officer, Mastercard
Where to Look
Prophet helps new and tenured CMOs set an agenda and transform their marketing inside and out. Talk to David Novak, Mat Zucker, Marisa Mulvihill and our brand and marketing strategy teams. Here are some additional resources which might be helpful:
Books
The Next CMO: A Guide to Marketing Operational Excellence, Peter Mahoney, Scott Todaro and Dan Faulkner (2020)
Lies, Damned Lies and Marketing: Separating Fact from Fiction and Drive Growth, Atul Minocha (2021)
Chief Marketing Officers at Work, Josh Steimle (2016)
CMO Manifesto, John Ellett (2012)
Owning Game-Changing Sub-Categories, David Aaker (2020)
The Chief Marketing Officer is a C-suite role that can lead, shape, and help deliver uncommon growth for the organization. Marketing is evolving fast, and every leader—new or tenured—needs the mindset and toolset to stay in front.
Reach out to our brand and marketing experts for advice and support on getting started with your agenda. Have a resource we should mention? Let us know.
Marketing has always been shaped by shifts in consumer behavior, expectations and technology advancements, as well as its contribution to the enterprise. As the scope and speed of such changes expand and accelerate, it is more difficult for brands to know which types of campaigns and media work best, and the growth to which marketing can contribute.
They must make hard tradeoffs in deciding where to invest finite resources, how to differentiate amongst competitors and how ambitious they need to be as a growth engine. Are the tradeoffs—and competition between forces—helpful or harmful?
Today’s marketing industry feels different, according to our recent candid conversations with a dozen senior marketing leaders across industries. Customers are harder to reach and engage, even though we have vastly more data and insights about them and stronger personalization tools. Budgets are tighter and internal stakeholders more demanding. Tried-and-true best practices no longer apply. There’s a sense that rules are being rewritten in real-time. The once useful “marketing funnel” concept seems less relevant given that consumer behavior changes constantly and paths to purchase are increasingly non-linear.
As a result, many marketing organizations experience significant tension between brand marketing and demand generation – a tension we believe undercuts growth and harms performance. Brand marketing typically describes long-term efforts to drive awareness of and preference for a company, product or service, while demand marketing seeks to get audiences to take action immediately (e.g., click on an offer, sign up for a newsletter).
“This topic is one of the things that we’ve [been] trying to understand – where in the funnel do we need to spend our dollars in order to really drive business results and drive growth.”
– TD Bank, CMO
As the CMO of a challenger consumer goods brand told us, “Brand is about growing awareness and affinity over time,” while the primary objective for demand, or performance marketing, is “driving short-term conversion.”
The “either-or” bifurcation of marketing into these categories presents huge challenges as marketers seek to optimize budget allocation, track performance and structure their teams and operations to drive uncommon growth. The worst part, the split between brand and demand generation isn’t aligned with consumers’ consumption patterns in today’s world.
As a senior industry analyst told us, “Consumers have zero separation between the brand being communicated and their experience. In finding the right investment for brand and demand, it’s both, not versus.”
Stop the fighting and find the love.
This article, the first in a series, is based on our recent market research with senior marketing executives and focused on the specific internal and external challenges CMOs face today related to brand and demand. These marketers also highlighted the levers they have at their disposal to create effective and integrated brand and demand strategies.
Every marketing executive we talked to confirmed the importance of finding the right balance between brand and demand. We also heard repeatedly what a difficult balance it is to strike; everyone agrees that brand and demand efforts must be coordinated and synchronized. However, how to do this is much less clear. Despite the interdependence of brand and demand marketing, many tricky questions remain:
How much impact does brand marketing have on conversion?
How does customer acquisition efforts influence brand perception?
What’s the optimal level of investment across brand and demand?
How can brand and demand show up most effectively across channels?
“This topic comes up all the time, in the B2B context, the brand piece is a hard sell because our team doesn’t understand why it’s important.”
– Trane Technologies, SVP of Marketing
In our brand and demand blog series, we explore this important conversation with a modern lens, examining how marketers can embrace the brand-demand love. Specifically, we’ll cover:
The seasons of love: Understand why brand and demand are meant to be together and how they can overcome obstacles to love across the marketing lifecycle – we’re playing a long game
Writing the vows: Set a strong strategic foundation, because every brand-demand marriage needs a rock-solid foundation of what it stands for and how it will approach the market – when to say “I do” and when “I don’t”
Shared finances: Create shared goals and an investment agenda, define smarter metrics for allocating the shared pocketbook, or budget, and track the performance of those shared investments – brand and demand should not fight about money
Setting up the household: Determine how to organize teams and build the right capabilities – brand and demand need a comfortable nest
The new research report, “Brand and Demand: A Love Story” is here! Learn how today’s Brand and Demand Generation leaders are bringing their functions together to drive greater impact. Download today!
We think it’s time for brand and demand to stop thinking of themselves as competing interests fighting for the same precious resources. Rather, they must be complementary companions with a shared agenda and intertwined goals. We believe it’s time for brand and demand to fall in love because together, they are the ultimate power couple to build relevance and unlock uncommon growth.
Get in touch today if you’d like to learn how to bring brand and demand together to unleash the full power of your business.
Nine Digital Shifts to Sustain B2B Companies During Trying Times Trends in Digital Innovation
Supply chains and alternative channels take on outsized importance.
The biggest challenge for today’s businesses is to consistently produce personalized content at a large scale, deliver it at breakneck speed, and credibly have an impact on revenue. The businesses that are successful in this endeavor have invested in an innovative set of capabilities that make up an “Agile Content System”.
Digital transformation in normal times is usually considered a growth opportunity – and it is. B2B companies coping with the pandemic are also demonstrating that shifting to digital can provide important benefits in sustaining the business through:
Alternative channels for customer engagement – the use of Zoom, Teams, Slack, and other forms of collaboration and meeting apps have skyrocketed
Keep parts of the supply chain operating – ecommerce has proven less vulnerable to disruption than call center or face to face channels
Lower costs – by using data analysis to uncover and target expense reduction
Preserve cash flow through business model redesign – SaaS business models are providing a valuable cash flow buffer in the face of decelerating demand.
These benefits are crucially important in this unsettled period, but they will also be valuable once the crisis recedes. Digital marketing and selling, digital experience innovation and digital operating model renovation stand out as three digital transformation shifts that leaders can use to sustain their business as much as possible during this crisis as well as to accelerate customer demand once the economy rebounds.
Identifying and pursuing quick digital wins that can also elevate future performance has become an immediate imperative for B2B leaders. The purpose of this article is to provide guidance on where to look and what to prioritize in each of the three transformational shifts. Our recommendations are based on the discussions with B2B leaders and examination of successful cases of B2B digital transformation we conducted for our forthcoming book The Definitive Guide to B2B Digital Transformation
Digital Selling and Marketing:
In such uncertain times, the best customer for most B2B businesses is the customer they already have. Current customers are much more likely than new prospects to buy, have a lower cost to serve and will be more willing to endure the delays and interruptions their current suppliers encounter. Using collaboration and virtual meeting tools to enable sales teams and intermediaries to connect with buyers who are working from home is only a first step. Customers have a need to be connected to a bigger picture about what’s going on in the market, in the supply chain and even in different parts of their own company. They may require frequent updates on even small issues that previously wouldn’t garner their attention but are crucial to keeping their business afloat. And, customers need help to figure out new paths forward and rapidly find alternatives as business conditions change. There are several use cases to increase the use of digital to focus on existing buyers:
Account-Based Marketing (ABM) has never been more important. It is a superior way to coordinate the efforts of sales, digital marketing and service to meet the information and relationship needs of the full set of stakeholders, influencers and decision-makers in current accounts. ABM can be set up in the basic form in a matter of weeks and then can expand and grow. When the economy improves it can take on the added task of improving prospecting and new customer acquisition.
Digital customer insights and analytics become essential when the routine ways of monitoring a category through face-to-face interactions among industry ecosystem participants break down. Consider opening up an industry “war room” to buyers who can join virtually or receive insights through an email or online feed. Enable the war room with social listening, digital surveys, scouring the internet for news and monitoring key data sources. Once the current crisis is over the war room can become a source of insights for innovation or a value-added service that can build a competitive advantage.
Direct Ecommerce may be the only way to keep the parts, accessories and supplies flowing that keep customers in business. For service providers, it may take the form of shifting in-person services to digital channels. Barriers put up by intermediaries such as agents, distributors, and systems integrators can prevent suppliers from undertaking commerce directly with their customers. In times of crisis, these barriers will come down; enabling both supplier and customer to sustain a revenue stream while establishing a direct connection that will be very valuable, and hard to turn off, when conditions improve.
Digital Experience Innovation:
Most mid-size and large corporate customers have a built-in divide between the purchasing department and the user of the supplier’s goods and services. In situations like the pandemic, operations become more siloed and day-to-day connections between the buyer, supplier and user can fray. Users can feel isolated and unserved. Digital experience innovation plays a valuable role by meeting the needs of the user around the clock with less human intervention from the purchasing team or the supplier. The use cases for user support span the entire customer experience. They include:
Virtual Technical Support can be the lifeblood for corporate users struggling to find new ways of working and encountering new or unexpected bottlenecks as they try to patch together approaches to keep doing their jobs. B2B suppliers should consider ways to open up their expertise online. Can training guides, specification sheets, and other materials intended for the technical support team be made available to customers online? How about setting up a Virtual Technical Support SWAT team that can swoop in after an initial online meeting and use collaboration tools to solve complicated problems (systems integration challenges, supply chain workarounds, etc.) more quickly than normal? The service may be essential during the pandemic but could save travel and speed problem resolution when times return to normal. Collecting data on problems and their resolution can later enable AI-driven systems to automate the service in the future.
Online Learning becomes a necessity when there is no readily available source for corporate users to learn how to work with new components, become familiar with a crucial application, or manage a novel service because a supply chain disruption changed their normal routine. Avoid becoming entangled in long lead times to develop a new curriculum by setting up an online listening function to understand what challenges customers are facing. Then, empower sprint teams to create videos and audio-assisted documents to fill the need. The production flaws will be forgiven in a time when help will be so appreciated. Later on, the content can improve the larger curriculum and responsive listening can inform technical support and solution innovation.
A Digital Bulletin Board is an excellent and inexpensive way to keep customers informed of what’s going on from a supplier and industry point of view. It can span multiple topics from immediate steps to mitigate health challenges, to information about shortages or substitute offers to information about how others in the industry are coping with important challenges. It can be a tool for employees to stay informed as well as customers. At a time when many in an industry are looking inward, it can elevate the presence of the supplier within the customer as a source of information and expertise and provide a platform for continued use once the pandemic has receded.
“Digital marketing and selling, digital experience innovation and digital operating model renovation stand out as three digital transformation shifts that leaders can use to sustain their business as much as possible during this crisis as well as to accelerate customer demand once the economy rebounds.”
Digital Operating Model Renovation:
Many of the world’s companies may be heading for a cash crunch and resource imbalances over the next few months. Now may not be the time for thinking about how the operating model can be redesigned, pursue new customers, or enter new markets. It is time to consider important, and significant moves to improve the effectiveness and efficiency of the business in ways that will be sustainable for the next few years.
Subscription Revenue Models provide a more sustainable revenue stream in times of uncertainty and in normal times. They also lower the initial outlay customers must make for important purchases. A shift that can be extremely valuable for cash conserving customers. There is usually a huge timing hurdle to overcome when converting transactional purchases to subscriptions because large initial revenues must be given up by the supplier in favor of a revenue stream that is spread over months or years. This period of economic pause may be an ideal time to move to subscription because demand is already depressed, interest rates are low, and investors may be willing to endorse any move that sustains revenue. The long-term benefits will be substantial, and the normal short-term barriers may be easier to overcome.
Cost to Serve Reconfiguration is a topic, that although very sensitive, cannot be overlooked. In normal times it includes thinking through how automating processes or investing in new digital platforms can reduce labor costs and generate bottom-line savings. However, this is not the time to install major new systems or make uncertain employees fear for their jobs even more than they already do. It is the time to collect data, measure, and evaluate whether the new selling, marketing, technical support, online education and digital communication approaches can be optimized and scaled after the crisis has subsided to lower cost to serve, boost employee work-life balance and improve customer service. Treating the crisis as a series of pilots and experiences requires collecting data and measuring impact. The benefits for ongoing operations can be as profound as the short-term gains these changes produce.
Agile Process Redesign is at the heart of going faster and incorporating customers into the design process for many organizations. The importance of quickly bringing new solutions to market or rapidly adapting current solutions has been made abundantly clear in the past several weeks. Most corporate leaders have dramatically stepped up their planning but are struggling to accelerate the pace of the work that actually gets done. This is an ideal time to introduce agile teaming methods to the workforce. There is no shortage of projects that need rapid attention, the case for change is apparent to employees and these methods can be deployed quickly with fairly low investment. Agile methods have numerous additional benefits in driving leadership accountability, clarifying project status and ensuring that projects remain customer-focused even when moving rapidly. The payoff is immediate and the benefits for the organization when things improve are substantial.
The nine digital shifts described in this article are a starting point for thinking through moves to make to sustain B2B businesses in an unprecedented time while laying the groundwork for future success when this crisis recedes. We have tried to be pragmatic by recommending moves that can be implemented in the short term and will be valuable to customers, employees and the business for the future. This is not the time to wait. Leaders who act now can strengthen their options and improve their chances for success.
If you need help figuring out what path to take now, in the next 6-8 months, or beyond, please don’t hesitate to reach out. We’re happy to have a conversation. Also, if you have any questions you’d like answered by our experts, drop them into the comments below or reach out directly here.
Webinar Replay: The 2021 State of Digital Transformation (Asia Edition)
Some firms just want to become more digital at what they do. Others want to transform their entire business.
57 min
Omar Akhtar, Senior Analyst and Research Director at Altimeter, Chan Suh, Chief Growth Officer at Prophet, and Jacqueline Alexis Thng, Partner and ASEAN Lead at Prophet, present key takeaways from Altimeter, a Prophet company’s flagship report, The State of Digital Transformation – which surveyed nearly 600 executives from the U.S., Europe and China.
Our expert speakers discuss key trends in transformation, as well as how companies in China approach digital transformation differently compared to other countries, providing important insights for businesses in Asia.
If you’d like to learn more about Prophet’s approach to digital transformation, get in touch today.
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