Sustained, profitable growth is increasingly uncommon for B2B companies as they face changing market dynamics and the threat of digital disruption. This book guides B2B leaders along a step-by-step path to uncommon growth through three transformative shifts:
The Digital Selling Shift to digital demand generation
The Digital Experience Makeover to digital customer engagement
The Digital Proposition Pivot to data-powered, digital solutions
Prioritizing customers over technology is the key to success.
The current paradigm of technology-led transformation is a recipe for failure. Successful digital transformation puts technology at the service of customers.
Rich case studies from Maersk, Michelin, Adobe and Air Liquide with best practices from IBM, Salesforce.com, Johnson & Johnson, ThyssenKrupp, and scores of leading B2B companies to illustrate in this book how putting customers at the heart of digital transformation drives uncommon growth.
“This book illuminates the secret sauce of digital transformation in the B2B space: the thrust should come from customers and how digital could improve their experience and relationship with the brand.”
Dr. Lars Brzoska Chairman of the Board of Management, Jungheinrich AG
“This is a great guide to applying best practices to the formidable challenge of digital transformation in complex markets and supply chains. It provides the tools leaders need to move ahead.”
Lindy Hood Chief Customer Experience Officer, Zurich Financial North America
“By providing case examples and step by step assistance in determining where to play, how to win, what to do and who to win, this book fulfilled my need for inspiring and pragmatic transformation guidance.”
About the Authors
Fred Geyer is a senior partner at Prophet. He has helped B2B clients in the financial services, healthcare, and technology industries – including Zurich Financial, AXA, Johnson & Johnson Medical Devices, Medtronic, and Avery Dennison – undertake customer-first transformations and address the challenges of digital disruption. Fred’s prior experience as president of Crayola Canada and chief marketing officer, North America, of Electrolux Floor Care, enables him to bring a practitioner’s perspective to making digital transformation work in the real world.
Joerg Niessing is a member of the faculty at INSEAD and is a globally recognized expert and strategic advisor on digital transformation, digital strategy, customer-centricity, and data analytics. He is the program director of INSEAD’s flagship programs “B2B Marketing Strategies” and “Leading Digital Marketing Strategy.” Over the past five years, Joerg has engaged with more than 3,000 executives from a wide range of companies in Europe, the Americas, the Middle East, and Asia, including Google, Kone, Roche, Maersk, Michelin, IBM, Thales, PwC, and Kion. Joerg’s prior experience as head of Prophet’s Insight and Analytics practice, along with his previous work as a marketing data scientist, inform his insights on ensuring that digital transformations are data-driven, customer-centric, and drive sustainable growth.
Connect
Want to speak to Fred about how to become more consumer-centric and implement the essential shifts needed to unlock growth? Contact us today. And if you’re a leader looking for more insights into the B2B sector then visit the B2B Digital Transformation resource hub here.
Adjusting Your Marketing Priorities: Levers You Can Pull
Targeting, messaging, content and sharper value propositions can all trigger growth.
This is a time for every organization to re-examine its priorities for the next few weeks and even the next few quarters. Your customers’ needs, your partners, your employees, the world overall. Marketers, in particular, may choose to shift messaging, spend or delay initiatives, but it doesn’t mean to stop communicating—or to stop leading. Now’s the time to find your voice, demonstrate empathy and reinforce relationships you’ve worked hard to build. This is marketing’s time, so let’s take a look at how to adjust your marketing priorities.
Every Choice Should Flow from How You Can Help
Take this time to reflect on how you can help, and then take action. Help both your customers and employees acknowledge and manage their primary fear: staying healthy and keeping loved ones safe. Support them by providing structure and ways to fill time. Encourage them to connect to one another. Provide ways to practice gratitude for those guiding us through this. And finally, help people remember we will persevere.
Tapping Your Existing Marketing Skillset
While we haven’t experienced a moment exactly like this before, through our work helping clients transform their marketing strategies we can identify at least eight levers every marketer has, and shifts one might make now:
Value Prop: Revisit what you offer and supplement with a service, incentive and channel distribution that could make a difference and be relevant in this moment. Universal shifted distribution channels, accelerating shift of in-theatre releases to online rentals.
Pricing:Sensitive to customer needs, you might cut prices, waive fees, or offer rebates. Seamless removed delivery fees, instead giving them to drivers. CreativeLive made streaming health and wellness classes free. Burger King is offering free kids meals with purchase via its app. It’s promotional, but one can argue it helps parents joyously feed their kids.
Targeting: While your plan may have had a customer acquisition posture, this might be a better time to refocus on your core: existing customers who know you and need you more than ever. Is there a special group of people or need state you can demonstratively help?
Messaging: Refresh your messaging to focus on relevance, perhaps with customer updates on what the brand (and your people) are doing during the crisis. Ford replaced national product advertising with a coronavirus-response campaign, which includes mention of payment relief.
Content: Information, entertainment and utility all can be powerful levers. How can you serve the primary need of staying healthy, while managing anxieties about finances, need for everyday supplies, and many other general uncertainties that will be with us in the coming months? Many brands are shifting their services and are offering up support in open, honest – ultimately very helpful – ways. Zola, a go-to resource for wedding planning has provided updates and resources for couples whose weddings will potentially be affected as well as set up a hotline. Is there a timely video, article series or ebook that will help solve a customer need?
Spend: Pressured for cost savings or for an inappropriate context, you may drastically cut media or sales promotion spend. What will you do with those funds? We also expect to see shifts in media buys to reaching people at home including digital display, social, direct mail, TV, and video including OTT.
Measurement: Re-evaluate what matters and what success will look like. Put raw revenue and profit in context with human costs, reputation and relationship metrics. What you do for customers and employees has the potential for amplification via media and social more than ever.
Team Organization: Is your marketing team set up for this situation? How is the relationship and coordination with corporate communications, service, sales and product? Do quick pivots need to be made? Notice any skill gaps and needs to shift roles towards better listening and faster servicing.
“Now’s the time to find your voice, demonstrate empathy and reinforce relationships you’ve worked hard to build.”
Whether you are re-evaluating your marketing across one, five, or all of the above measures, remember this is a shifting situation. It’s important to be agile yet calm. Steadfast and strategic.
If you need help prioritizing which levers to pull, and what your moves might be? We’re here to help. Drop your questions, or ideas, into the comments or reach out directly here.
How Dove Real Beauty Uses Digital Marketing to Stay Relevant
This long-running campaign has converted an authentic and inspiring purpose into tens of millions of shares.
In 2004, Dove provocatively widened the definition of beauty through its landmark Real Beauty campaign, challenging airbrushed stereotypes established by the personal care industry and rallying around the “real beauty” of women everywhere. Originally positioned as a functional soap brand, Dove’s campaign leveraged digital marketing to provide a new opportunity for social discourse and community building, elevating the brand beyond the product line. Dove didn’t just sell beauty, but self-esteem and acceptance, becoming a brand grounded more in social and emotional benefits than functional ones.
How Far Dove Real Beauty Has Come
A primary reason for the success and resonance of theReal Beauty message was its deep rooting in digital activation at a time before digital marketing was commonplace. For example, Dove used compelling and provocative videos to provide energy around the campaign, including its 2006 “Evolution” video – one of the earliest viral brand videos on YouTube. Its “Real Beauty Sketches” video also became one of the most-watched videos of all time. It also launched the Dove Self Esteem Project, a web portal intended to improve the self-esteem of young people by engaging viewers in forums, workshops, articles and videos that educate on topics like body positivity and bullying.
“Digital engagement has become table stakes, audience touchpoints and expectations are changing in profound ways”
Now, nearly 15 years after the initial Real Beauty effort, Dove exists in a digital world that looks very different from the original. Digital engagement has become table stakes, audience touchpoints and expectations are changing in profound ways and the “cause marketing” space has become increasingly crowded and noisy. It would have been fair to question whether Dove’s brand message was at risk of fatigue. However, Dove has continued to maintain energy around its brand and sustain relevance as we enter 2020 – using digital to continue to power its message and positioning.
Improving Brand Relevance Through Digital Transformation
The numbers back this up. In the Prophet Brand Relevance Index® (BRI), Dove remains the most relevant brand in the Household & Personal category – a position it’s held since reclaiming the top spot from Crest in 2017. Additionally, the gap between Dove and its category is growing, with a 2019 Brand Relevance score that is 35 percent higher than the category average, compared to 32 percent higher in 2016. Dove’s score for “Customer Obsession” puts it in the top 10 percent of all brands and above noted customer-obsessed stalwarts such as Chick-fil-A and Southwest Airlines, validating the continued strength of the brand’s emotional connection with its audience. The brand has also seen a steady increase in purchase consideration from 2014 to 20191, and as more and more brands position themselves more explicitly around a cause, Dove has managed to stand out, with the highest association with a social cause among all brands2.
Examining the moves Dove has made the last few years, it’s clear that it has accomplished this in part by investing in unique, thoughtful and more sophisticated digital marketing strategies. These digital marketing campaigns – which range from stunt marketing to larger content creation strategies and partnerships – continue to reinforce Dove’s brand positioning, while leveraging more digital touchpoints that audiences interact with. The approach allows the brand to build off of its earlier momentum by broadening and deepening its exposure with audiences.
Some of Dove’s Best Digital Marketing Strategies
In 2015, Dove partnered with Twitter to identify negative tweets about beauty and body image, and then respond to these tweets in real-time as part of the #SpeakBeautiful campaign. This was coupled with a creative advertisement about the ramifications of body shaming during the Academy Awards pre-show.
In 2017, Dove teamed up with award-winning photographers to take striking pictures of “real women” – pictures that spotlighted women’s strength, grit and talent. Through a digital back door, these pictures were uploaded to Shutterstock with a search tag of “beautiful” that flooded results for a search term that historically had yielded photoshopped, airbrushed pictures. Dove then encouraged other photographers and brands to join the cause, and in turn, created a host of informal ambassadors for the Dove message.
In 2018, Dove introduced its “No Digital Distortion” mark – a symbol indicating that a picture hasn’t been digitally altered. This symbol runs across all branded content – digital advertisements, social media content and print – and serves as a consistent reminder of the Dove message across both digital and non-digital channels.
In 2019, in partnership with Getty Images, Dove collected over 5,000 images on the Getty website that featured 179 different women, all of which were women from a variety of underrepresented backgrounds. These images were made available for public use, and like the Shutterstock stunt marketing campaign from 2017, created a sense of ambassadorship for users of the pictures.
1 YouGov
2 Do Something Strategic: A Social Impact Consultancy
Dove originally built strong brand equity by repositioning around social and emotional benefits, capturing topical consumer concerns and executing on an integrated marketing approach with a distinguished digital strategy and content.
Now, Dove has broadened its digital footprint through multi-channel campaigns, new-age content creation strategies and partnerships and crowd-sourced stunt marketing, all while maintaining its singular focus around its support of “real beauty” in an increasingly loud “cause marketing” space.
These strategies have been flanked by its legacy digital marketing touchpoints like viral YouTube content and the Dove Self Esteem Project web portal, creating a rich, layered marketing strategy.
Looking ahead to a new decade of digital possibility, Prophet’s team of digital marketing experts will be keeping a close eye on how Dove and others continue to build relentlessly relevant brands through excellence in digital marketing. And we’re excited to see what 2020 will bring.
In the last few years, marketers have had to adapt to the increasing demands of their businesses and customers alike. Customers now demand compelling, personalized content and experiences to be delivered to them on an ever-increasing list of digital channels, while CEOs now expect marketers to deliver results that go beyond brand awareness and ring the cash register. As a result, marketers, especially digital marketers have had to learn new skills, adopt innovative new technologies, and fundamentally reassess the role they play in driving the business.
While learning new skills and deploying sophisticated technology are key drivers of digital marketing excellence, their effectiveness is limited if the digital marketing teams aren’t structured or organized in the best way possible. Many businesses struggle with this crucial step as it could mean breaking legacy hierarchies and defying embedded cultures.
In our research report, we’ve defined four essential steps to help marketing leaders understand the key elements of a modern digital marketing organization and the choices they have in positioning them to best deliver on the needs of the business and its customers.
In this report, you will find:
A four-step process for organizing your digital marketing team
Three organizational models, with accompanying case examples
Recommendations for building out the core functions of your digital marketing team
A list of key questions to help you begin evaluating how your digital marketing team is organized
There’s a lot of focus in our industry on those already at the top, but change is driven at all levels.
Rising highlights the builders, the shapers and the doers across marketing, media, and innovation — the ones tagged to be our future leaders. Each episode showcases a leader rising up and what they see ahead. Hosted by Prophet Partner Mat Zucker and Direct Agents’ Josh Boaz. Zucker and Boaz talk to guests about career trajectory, the people who helped them, skills gained along the way and the trends they’re watching.
Binge-watching has revolutionized entertainment. But only the platforms with the best content will survive.
Prophet is obsessed with helping our clients win with their customers. We are a global consulting firm, helping our clients unlock uncommon growth in this digital age. Contact us to learn more about what we are doing in all things direct-to-consumer.
Digital Marketing Priorities in Financial Services for 2019
Our research shows that lead generation and customer experience top the list. And hiring is a major headache.
It’s clear that emerging Fintech and Insuretech entrants are shaking up financial services. Across the board – from large to small-scale companies – we’re observing an accelerated need for more digitally fluent marketing organizations to tackle new challenges in an evolving market.
To understand the challenges and priorities impacting the insurance and banking industries today, we turned to Prophet’s digital analyst group Altimeter surveyed 68 global financial services executives as part of their industry-wide 2019 State of Digital Marketing report that spoke to over 500 executives in North America, Europe and China.
“Altimeter surveyed 68 global financial services executives as part of their industry-wide 2019 State of Digital Marketing report.”
The report surfaced three primary digital marketing insights specific to where financial services executives are betting their marketing investments to address business challenges:
Lead generation and customer experience are the top digital marketing priorities.
Scaling marketing innovation, the right talent and proving impact are the greatest challenges.
Data analysis, marketing automation and UX design are the most sought after skills.
Let’s dive into the results.
1. Lead generation and customer experience are the top digital marketing priorities.
Lead generation and customer experience came out on top (see Figure 1) – ranked higher than brand awareness and brand health – a top priority across other industries.
To measure digital marketing success, financial services companies are placing greater emphasis on customer loyalty/customer lifetime value (CLTV) – even before direct revenue (see Figure 2).
We see these forces working within financial services companies that are investing more to acquire customers through digital demand-building activities. Specifically, with the increases in the promotion of banking, investment and insurance products going more digitally direct-to-consumer. We also see loyalty as a rising metric to diagnose and resolve potential attrition challenges before being confronted.
2. Scaling marketing innovation, the right talent and proving impact are the greatest challenges.
Financial services marketing organizations are navigating several challenges with their focus on lead generation and CX development, particularly around scaling, hiring and proving business impact (see Figure 3).
In addition, we learn that compared to other industries, financial services companies are experiencing a much greater challenge in seeing a return on investment for their marketing technology spend with 32 percent saying that it took a long time before they saw any return. Consequently, it is now considered to be their top Martech challenge.
3. Data analysis, marketing automation and UX design are the most sought-after skills.
Financial services companies are now focused on building capabilities in data analysis, marketing automation, and user experience design (see Figure 4) to enable the scaling of marketing innovation across the full enterprise and ultimately to prove business impact.
Financial services companies as a consequence are finding the need for capabilities to apply digital marketing in new ways previously not considered.
These evolving digital marketing priorities are making way for the future
What’s clear from the findings of Altimeter’s 2019 State of Digital Marketing report is that as financial services companies place greater emphasis on driving customer acquisition and shaping customer experiences, marketing must bring in new capabilities formally nascent within the organization, invest in the right marketing technology, and prove business impact on a small – yet scalable – way.
At Prophet, we help our clients drive uncommon growth through transformation. We work with leaders across the insurance and banking categories to understand where to play and how to win to unlock the full potential of the brand and customer relationships. Learn more with our guide to digital marketing excellence here or get in touch today.
Customer expectations of branded content have changed, and companies must evolve their strategies to meet them. Today’s customers demand personalized, relevant content and they want a consistent experience across all a brand’s digital content channels. In our research, we found that companies who were doing the best job of meeting these customer expectations shared six common traits:
Leadership supported content efforts
Content strategy that extended beyond marketing
Content creation is based on customer data
Multiple teams created content, but shared a common vision
Content was personalized and delivered in real-time
Content was expected to impact the business
To achieve these indicators of maturity, companies must go through a series of sequential changes across their entire content operation. We found that companies progress through five stages on their way to digital content maturity:
Non-Strategic Stage: No expectations for digital content
Testing Stage: Initial experiments begin
Scaling Stage: Focus on scaling production and delivery
Strategic Stage: Recognition of content beyond marketing
Sophisticated Stage: Content serves customer needs across the organization
By identifying which stage most closely describes their current state, companies can prioritize the steps they need to take to reach the next stage of digital content maturity. Companies can use this maturity model to benchmark how far they have progressed across each pillar of the content-producing operation, including leadership, strategy, governance, creation, delivery and measurement.
Read the full report to gain a better understanding of your organization’s digital content maturity.
Altimeter’s 2019 State of Digital Marketing report gives marketers the latest data on how companies are using digital marketing to drive business results. It identifies and quantifies the key practices being used by companies to achieve digital marketing excellence.
Based on a survey of 500 senior digital marketers across North America, Europe and China, the report provides key insights into what strategies, channels and practices perform best, including how these vary across industries and regions. It also identifies trends in innovation, current technology adoption and key metrics for measuring digital marketing success.
Key Findings From the Report
Brand awareness (37%) was cited as the top goal of digital marketing, followed by lead generation (26%) and customer experience (20%).
Acquiring the right skills (55%) and scaling innovation (54%) are the biggest challenges for marketing organizations.
Data analysis (41%) and tech expertise (38%) are the most-desired skills in new hires.
Sixty-one percent of marketers said customer loyalty and Customer Lifetime Value (CLV) are their top metrics for measuring digital marketing success.
Over 60% of respondents said their companies have mapped a digital customer journey, content customization rules, and testing points across all digital touchpoints.
Websites (56%) and social media (69%) are the best-performing channels for digital marketing.
Salesforce (26%) and Adobe (22%) are the most popular “primary” digital marketing platform vendors.
From driving demand to enabling sales, new tech solutions make buying easier for business customers.
We’re now several decades into the digital age and yet transformation is still profoundly changing how we work. Until recently, the most disruptive elements have been those that empower consumers, giving rise to entirely new brands and industries like Airbnb, Uber and Spotify. B2B sales organizations–and most B2B sellers–have been several steps removed from the biggest changes. Certainly, B2B companies have deployed digital technologies to enhance business performance. But, in B2B industries such as medical devices, insurance, agriculture and business software, disruption has been less evident.
That’s changing fast, as smart B2B companies race to rethink their selling strategies. Access to data, information and channel alternatives has arrived in B2B and it’s changing the selling landscape. Intermediaries– hospitals, farm cooperatives and brokers, for example–no longer have a monopoly on data. The ability to collect customer data, store it centrally via the cloud and migrate it with orchestration across platforms is quickly breaking down legacy system silos. Data aggregators are emerging, providing a more complete view of the customer. For the first time, end-to-end customer data is a reality in B2B.
The impact of these relatively new changes is transformational. The most evolved B2B companies are reinventing the way they sell and finding ways to increase growth dramatically. But many B2B companies are still struggling to find the best path to modernize selling to accelerate growth.
The Five Digital Shifts Impacting B2B Selling
At Prophet, we see the impact of digital in B2B selling in five selling shifts:
Digital sales enablement
Digital outsourcing
Digital relationship development
Data-driven solutions
Digital demand generation
We’re working with clients to tap into each of these shifts more effectively, leveraging these future-proofing strategies to achieve uncommon growth:
Digital Sales Enablement:
This is the shift where many B2B companies have already made substantial progress by using digital tools and data to enable sellers to become more effective. Sales enablement tools, including Salesforce, Oracle and SAP are so well embedded that they are expected to be a $5 billion market within three years[1]. These platforms, networks and apps help individual salespeople achieve more and help sales teams work more effectively.
In the past few years, these platforms have shifted from customer relationship management to helping customer teams more fully engage the entire customer decision-making team. The advantages are immediate: Better equipped and coordinated salespeople accomplish more. They increase revenues, strengthen customer relationships and stay with companies longer.
Digital Outsourcing:
Companies are shifting more of selling’s routine chores to digital functions because studies of sales time utilization indicate two-thirds of a typical sales person’s day is spent on non-selling tasks[2]. Outsourcing frees-up sellers to focus on what they do best: building and expanding human relationships.
Many early efforts included more precise targeting, better sales resource planning and automating routine order-taking functions. More advanced B2B companies are also successfully making it easy to order spare parts or accessories online and handling problem resolution with advanced AI bots and call centers. These new tools make freeing up the sales persons’ time to develop relationships while increasing team efficiency and effectiveness through improved resource deployment.
Deepening Relationships:
The combination of new, more targeted vehicles such as LinkedIn advertising to reach B2B decision-makers with compelling content like video and virtual reality has opened up a shift called account-based marketing (ABM).
ABM is more personalized and tailored to the needs and criteria of individual decision-makers than traditional push email and digital advertising campaigns. It is also an integrated effort that coordinates the use of salesperson interaction and digital engagement for maximum impact and efficiency. The digital components also extend engagement into an anytime, anywhere experience through the 24/7 advantages of online and mobile vehicles.
“While the full impact of digital transformation on the sales process is still evolving, it’s clear that the classical model–where marketing and communications generated interest while the sales team closed the deal and expanded relationships–is dead.”
Data-Driven Solutions:
Oceans of data flooding the B2B value chain are shifting what sellers sell as well as how they sell. As suppliers gain greater access to data about their customers–and their customers’ customers–they have expanded the playing field for moving from selling products and services to providing data-driven solutions.
Infused with analytics and insights, solution-sellers can more readily mix the elements of the customer value proposition including pricing, value realization, value-added services, experiences and core offer innovation to suit the customers’ particular needs. In a data-driven world, they are better able to extend solutions into partnerships with other providers and make them interoperable with the customers’ systems and the ecosystem of the industry. These strategic decisions are also blurring the lines between sales, R&D, marketing and operations and demanding better leadership and teaming behaviors from sales team members and other functions.
Demand generation:
This may be one of the most exciting and rapidly evolving areas of B2B selling, particularly in intermediated businesses. The explosion of data and a rapidly expanding set of vehicles to reach B2B decision-makers among the customers’ customer is making it possible to create direct relationships with them. These channel and content alternatives are enabling established sellers to generate demand in three principal ways:
Bypassing the intermediary to sell directly
Generating sales pull through the intermediary
Hybrids of 1 and 2 where smaller size customers or certain offerings go direct, and larger size customers or parts of the portfolio are sold via intermediaries.
The Organization Imperative
All five of these B2B selling shifts spark the need to rethink the organization, redefine the roles of sales, marketing, e-commerce, data analysis and customer research and build new, often agile ways, for these teams to work together. It also requires rethinking the digital stack of how platforms and data work together in a way that can support the shifts and adapt to future changes.
Generally, we see a blurring of the roles of sales and marketing as digital investments that were previously the domain of communication-oriented marketers are redeployed to accelerate selling momentum. While the full impact of digital transformation on the sales process is still evolving, it’s clear that the classical model–where marketing and communications generated interest while the sales team closed the deal and expanded relationships–is dead.
And while we realize that B2B selling in many companies may never be fully automated, it’s essential to acknowledge how much digital can do to make it more efficient, not just more effective. Research consistently shows that the top 20 percent of a sales team is truly productive, while the bottom half often has a neutral or even negative impact on revenue growth. Hiring and training humans gets more expensive all the time, while the cost of using digital tools to find, target, serve and support customers in routine areas is plummeting.
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[1] Jim Lundy, Lead Analyst, Aragon Research, 2017 “Aragon expects the worldwide sales engagement platform market to grow from U.S. $1.57 billion in 2017 to $5.59 billion by 2023.”
[2] Salesforce.com, Top Productivity Trends, Salesforce Blog, 2019
We don’t expect many B2B companies to be able to modernize selling without bumps and hiccups. The key to tackling these bumps is to think through the shifts and build momentum while in parallel developing and enhancing the organization’s capabilities to handle these shifts.
Our marketing and sales consulting practice helps B2B companies around the world overcome disruption and identify paths to achieving uncommon growth. Contact us to learn how we can help you.
Is Your Value Proposition Clear and Customer-Informed?
Cigna, Starbucks and JP Morgan all offer lessons on discovering what customers really want.
Companies seeking to accelerate growth by improving their value proposition may be stopping short by solely focusing on identifying the total addressable market (TAM). While identifying attractive market spaces is the right first step, a market-led growth approach alone is insufficient. It can lead to false assumptions that make a business vulnerable. Successful value propositions require a deep exploration of target customer needs, not just market size, to inform how to unlock growth.
The Limitations of a Market-Led Growth Approach: Starbucks’ Expansion
To see the limitations of using only a market-led growth approach, recall in 2008 when Starbucks announced the closure of 600 US stores. At the time, Starbucks was confronted with the challenge of continuing to drive same-store sales while rapidly expanding its footprint. The brand created new offers around wi-fi services, music and an expanding menu of food and drinks while opening stores at a rapid pace.
However, Starbucks’ customers were starting to seek out other coffee chains. Companies like McDonald’s and Dunkin Donuts were improving their value propositions around coffee to regain forfeited shares. In the process, Starbucks diverted investments in delivering a great coffee experience in favor of investing in near market adjacencies with little success.
“Successful value propositions require a deep exploration of target customer needs, not just market size, to inform how to unlock growth.”
This led Starbucks to deliberately rethink its value proposition and develop a focused set of customer-led growth moves to turn around the business. And where did Howard Schultz start? With the customer. Starbucks launched a series of new moves including the introduction of a Pike Place blend, delivering whole bean coffee to stores and purchasing new machines designed for better coffee brewing. Starbucks later continued with one of the most engaging loyalty programs in retail to continue to drive same-store sales. They have continued to evolve their value proposition in countries against customer needs, with frappuccino beverages ranging from red bean green tea in China to dulce de leche in Argentina. Starbucks has even created uniqueness in its more than 30,000 stores around the world.
Why Value Propositions Should Be Aligned with Customer Needs: An Example From Cigna
Sharpening one’s value proposition against target customer needs and supporting it with market-shaping moves can become an essential motivator on “why buy from us”. But it’s not just retailers who seek out developing strong customer-led, value propositions. We see categories like health insurance and financial services driving massive transformations in their market-facing propositions and investing greatly to understand customer needs.
Take the health insurance challenge of continued cost pressure, rising cost burdens, and trying to create engagement and value beyond the policy. To combat this, global health services company Cigna has made significant investments to truly understand its customers, recently completing a three-year study of 200,000 consumers on health incentives. The company has been on a journey to strengthen its value proposition with a focus on integrated capabilities and connected, personalized solutions that advance whole-person health.
Cigna started this proposition development through a thoughtful augmentation of value-added services for employers and employees built around customer needs. Cigna services support a range of issues employers care about for employees such as life assistance, financial wellness, health advocacy, wellness and travel. The company is taking these services to the next step piloting Cigna Health Today™, an Amazon Alexa voice skill aimed at proactive health engagement.
In 2018, Cigna distributed more than $255 million in cost savings back to customers for completing 2.5 million health goals. Further, in December 2018 Cigna announced a $67 billion acquisition of Express Scripts Holding as a move to strengthen the company’s position as a one-stop-shop for health needs. Core to Cigna’s value proposition is finding a more complete way to engage and support customers beyond just insurance.
A Customer-Informed Value Proposition to Drive Uncommon Growth: JP Morgan Chase
In financial services, a lot of focus has been placed to thwart off emerging FinTech and BigTech (e.g., Alibaba, Apple, Amazon) and winning with the next generation of affluent millennial consumers. JP Morgan Chase shocked audiences during a time of industry-wide increased operational cost pressure by offering 100K point consumer signup bonuses on its new millennial-focused Sapphire Reserve card. The card hit its annual acquisition goal in two weeks and Chase even ran out of the signature metal cards.
JP Morgan estimated quarterly losses at the end of 2016 at over $300 million. This did not come absent of a strategy than invested heavily on deeply understanding millennial consumer financial services and spending needs down to the “plunk” factor of dropping the metal card. JP Morgan Chase was seeking to build one of the strongest value propositions behind Sapphire and extend the offer well beyond credit cards.
JP Morgan Chase, CEO Jamie Dimon shared that despite acquisition costs expensed over 12 months, the benefits would come over several years. Fast-forward just over 2 years since the launch and the results are impressive. The average Sapphire Reserve cardholder income is ~$180K and the average sales volume of $39K, a true “top of wallet” card. What’s more impressive is that 96% of cardholders actively use their cards and annual renewal rates are >90%. The company does 2X the industry average in merchant processing volume over $1.2 trillion and has raised its credit card Net Promoter Score with customers 18 points since 2012. JP Morgan Chase hasn’t stopped there, the company continues to find meaningful ways to deliver customer value (new “moves”). Evolving its Premier Platinum checking accounts to launch Sapphire Banking, with new perks like no ATM, foreign exchange, or wire transfer fees. Sapphire Banking also includes free online stock and ETF trades along with access to special experiences. Sapphire is giving valued customers an ever-widening list of perks and services to keep people locked into the ecosystem.
What can we learn from Starbucks, Cigna, and JP Morgan Chase? That true value proposition development is a customer-led effort (not just a market-led one) and requires focused, deliberate, multi-stage investments in moves to deliver growth.
Ask the following questions to assess if your organization is headed in the right direction to strengthen its value proposition with customers:
Do you have a clear articulation of why customers should choose you and stay with you vs. your competitors?
Is your growth agenda fueled by deep customer insights on “how to win”?
Have you validated and mapped the series of customer demand-generating “moves” your company will pursue over the next 1-3 years to build your value proposition?
Learn how Prophet is strategically helping evolved enterprises across the globe transform their marketing and sales for uncommon growth.
Now’s the Time to Create Your CMO Transformation Agenda
Marketing leaders need clear ambitions for change–and concrete moves for each ambition.
Victim or Victor?
That’s a choice all CMOs face today in responding to the multitude of changes rocking the marketing landscape. If CMOs let change put them on the defensive, marketing’s role at their companies (and their job tenure) may shrink. But if they get in front of change, the role that marketing plays at the company can become more strategic than ever, with the CMO’s role on the c-suite team more critical.
The average CMO tenure remains short, just 44 months. In many cases careers are brief because CMOs struggle to master a confluence of changes:
The businesses that marketing supports are changing, including key aspects of their go to market / commercialization
The behavior of customers served by those businesses is changing
The way marketing gets done is changing
The role that marketing needs to play in the company is changing
The talent that marketing must inspire to join and stay with the company is changing
This presents CMO’s with a pivotal question, every Monday morning. Is that marketing leadership hill that I’m climbing a mountain that I’m going to stand atop? Or is it a volcano that’s going to erupt?
The answer depends in large part on the existence and quality of the CMO’s transformation agenda. It also depends on CMO success in linking their marketing transformation agenda to the company’s overall transformation plan.
“Once developed, refined and socialized, the agenda serves as a guiding light that CMOs use to inspire their workforce and company leadership to invest in new impact.”
Creating a CMO Transformation Agenda
What is a CMO transformation agenda? Very simply, it’s a CMO’s game plan for how a marketing organization undergoing transformation can better serve a company that’s undergoing transformation. Every good agenda includes three elements:
Clear ambitions for change
Concrete moves per ambition in a roadmap
A headline theme that captures the agenda’s overall impact.
Once developed, refined and socialized, the agenda serves as a guiding light that CMOs use to inspire their workforce and company leadership to invest in new impact. Five steps will help CMO’s to effectively develop their agenda.
1. Gather a brain trust who will walk through the agenda development journey together.
The marketing transformation leadership team should be large enough to look at the business and its marketing function from multiple angles, but small enough to keep discussions confidential and minimize politics so that free-thinking ideas can be generated. A team that can be counted on one hand is optimal.
If resources are available, it helps to supplement the effort with an outside advisor in touch with marketing transformation trends across multiple industries to stimulate creative thinking. A good advisor will also provide a helpful sounding board and help synthesize team inputs and outputs into effective communication documents.
2. Prepare the team with common inputs to enable everyone to brainstorm effectively.
The agenda needs to address the underlying forces that are compelling marketing to undergo a transformation. A CMO and team should identify those forces to craft a vision that is on-target for impact.
Start by studying the company’s current corporate strategy and business plans, and compare them to their 3-5-year-old versions. How are the roles of marketing and go-to-market channels changing? Is there leadership talk today of even more change over the horizon? If so what are the implications? Repeat this thought process BU by BU, region-by-region, customer type by customer type, always looking for major patterns (vs. niche instances) of how marketing needs to show up differently.
Key questions to answer in this exercise include:
How are customer behaviors, priorities, and segments changing?
How are business models and offer value propositions changing?
How are routes to market and post-purchase relationship opportunities changing?
Keep bringing these questions back to the implications for marketing:
What new market-facing capabilities does the business need?
Which of those capabilities might marketing provide, including new roles?
How will marketing need to redefine and shift emphasis from its current capabilities?
Beyond taking inspiration from the company’s business requirements, explore changes occurring in the world of marketing, not only in your industry but in other industries that may prove insightful. This exploration will help identify opportunities for marketing to add value in ways that company strategists and peer executives don’t yet know about.
What are key trends in marketing? Our next blog post is devoted to that topic – we’ll share a handful of marketing trend themes that we’ve observed, each one in its own right a combination of 3 to 4 trends.
As you review external marketing trends, ask yourself:
Which trends obviously apply to our situation? Why?
What factors underly other trends? Might those factors apply to our situation?
Do some trends link to our corporate strategy choices? What are dependencies?
Will key trends be easily understood and received by the company’s leadership team? If not, how much socialization is involved?
3. Over the course of several meetings, brainstorm 3 to 5 transformational ambitions, several moves per ambition, and a unifying vision.
We find the brainstorming process is best served by starting first with ambitions, then moves, and finally vision. That’s because most teams don’t have a clear vision in mind when the process starts. The vision will be more powerful as a “golden thread” expression of what the ambitions have in common rather than a “beacon” that serves as a guiding light throughout for the ambitions.
What does a CMO transformation/change agenda look like? Here’s a hypothetical example inspired by several CMOs who have gone through this process:
Note that the vision statement addresses the “why”, the ambition statements address the “what” and the move statements address the “how.” It’s at the move level that a management team can sequence investment, focus management attention, and harness organizational energy to bring ambitions and vision to life over time.
4. Socialize the Agenda with senior management, the board, and marketing leadership.
When a strong draft of the transformation agenda exists, socialize it with the CEO and other key executives in private. Once their feedback has been incorporated, it’s time to socialize the agenda with the senior management team together.
If possible, strengthen support by presenting an up-leveled version of the agenda to the company’s board of directors. If the CEO arranges for such a presentation, it’s a good sign that the CEO views the CMO’s agenda as a core part of corporate transformation.
After getting buy-in from company leadership, share the plan with the extended marketing leadership team. More times than not, transformation agendas will involve top-down shifts that can be unsettling – a shift in resourcing, a change in skillsets, a re-organization – so become a relentless source of inspiration and encouragement around the agenda to top marketing talent. With leadership, a transformation agenda can mobilize and unite that talent.
5. Build the Foundation for Successful Implementation.
Execution of the change agenda will take several years (vs. months). The team will go farther faster if the CMO builds a strong foundation for change prior to implementing. Depending on the situation this might include steps such as:
Re-organize to enable new competencies to emerge
Shift resourcing levels from legacy capability teams to future-focused teams
Promote new cultural values for new capabilities
Request extra investments to make needed transitions
Nurture peer relationships to expand marketing’s role in the company – often in white spaces involving data, digital monetization, and/or digital CX
Institute agile change processes and pilots to make change happen quickly
Design enterprise-level programs that change the company, not just marketing
Find a way to measure and monitor impact with a keen eye on ROI
Common Ambitions in CMO Agendas
Every CMO transformation agenda we’ve seen has a few key elements in common. The most frequent ambitions that we have seen adopted include:
Digital marketing excellence:
Digital marketing is the greatest zone of disruption and innovation in marketing. Unsurprisingly, digital marketing excellence is the most frequently mentioned transformation ambition. Goals might include expanding the number of business use cases that digital marketing empowers (e.g. adding cross-sell and up-sell marketing to new customer acquisition), improving specific capabilities (e.g. real-time personalization) or marketing through new engagement channels (e.g. a conversational commerce platform). Identifying key initiatives on each of these three dimensions is the first step for driving digital marketing transformation.
Data responsibilities:
Thanks to digital touchpoints, customers generate exponentially more data than they ever have before. Data about location, segmentation, digital journey stage, browsing behavior, preference indicators, physical factors, distribution channels, and purchase triggers are all critical for companies to use in their best-move rules. Yet most companies still struggle with capturing, storing, and acting on this data. Will the CMO Transformation Agenda convincingly offer to step up and take responsibility for 360° customer journey data? If not, new executive roles such as chief digital officer or chief customer officer will emerge, narrowing marketing’s role.
New monetization:
Digital enables marketing to create or enhance 1:1 relationships with customers in a way that used to be the sole domain of the sales force or channel partners. Thanks to new digital relationships, marketing can extend its role to help drive growth through monetization techniques never used at scale before. This use of marketing’s competencies for new growth can take several forms:
Direct sales to fragmented, long-tail end users (e-commerce, AI advisory, etc.)
Direct management of small channel partners (vs. multi-tiered distribution)
Next-best-move support to account leaders, sales reps and customer service reps
Varying Ambitions in CMO Agendas
Despite the common patterns above, every CMO’s agenda is unique, reflecting the fact that no two companies and marketing departments are alike. There are dozens of potential ambitions to adopt – here are 20 to help jumpstart your reflection.
Category Reframing: redefining the company’s value context, proposition and edge
Launch Re-invention: from launching single products to holistic product line updates
Influence Scaling: developing a systematic influencer cascade
Pricing Sophistication: dynamic pricing systems and new value capture approaches
Solutions Innovation: customer-focused design and partner ecosystem enablement
AI Integration: enriching marketing and CX through AI / machine learning use cases
Intelligence Branding: updating Brand Portfolio and Architecture for intelligence
Re-segmentation: blending best of online and offline information insight sources
Content Re-invention: redesigning content for personalization and digital touchpoints
AR/VR Adoption: engaging customers through immersive experiences
Digital Customer Experience: improving CX monitoring and analytics
Customer Re-connection: building digital buyer relationships after channel sales
Social and Experimental Listening: gathering customer insights via digital feedback
Account Based Marketing: collaborating closely with sales to grow top accounts
E-Commerce: developing a new channel for customer convenience and lower cost
Channel-partner Data Sharing: collaborating for win-win business growth
In-Use Marketing: messaging inside cloud hosted applications and digital services
Global-Local Role Shifts: centralizing and decentralizing tasks for flexibility and cost
Silo-spanning: agile funding of integrated marketing initiatives across budget owners
Impact analytics: calculating return on marketing spend in new and better ways
Tactically there might be an optimal time of year to carry out the work of agenda-setting: 3-4 months before annual planning and budgeting begin. That enables the CMO and marketing leadership team to head into planning season with a new strategic imperative, a transformation game plan, and a linked funding request.
Strategically, any CMO who hasn’t yet developed a transformation agenda is running late and should start now. Change in the market won’t wait; neither should the leader of marketing.
