CMOs: Share Gain is Only One Aspect of Your Job
The marketing forum comprises hundreds of marketing execs, and the agency folk that would sell services to them, immersed in an intense, three-day, speed-dating ritual on a cruise liner. The close quarters, fast-formed friendships and sea legs combine with a casino, late-night bars and a battery of interesting speakers to make for a fun, useful-if sometimes surreal-event.
This year's trip was no different. Many found inspiring Sir Ken Robinson, whose message-the importance of infusing all businesses with creativity-was stunningly delivered. Others raved about the charm of Michael Kassan, ad-world attorney at large; the messianic passion of Energy Brands' Rohan Oza or the relationship-building techniques of Keith Ferrazzi, author of "Never Eat Alone."
But most fascinating to me was Michael Treacy's address-and the reaction it drew. Treacy is ridiculously accomplished, has a real track record for transforming corporations with his strategies and innovations (Crest Whitestrips), and mapped out in his speech the most broadly applicable and compelling marketing manifesto I've heard.
The speech lasted an hour, and the book from which it was derived, "Double-Digit Growth: How Great Companies Achieve It No Matter What," is 214 dense pages in paperback, but here's the Cliffs Notes.
Substantive business growth in Western corporations is rare-since '97 Intel has grown slower than inflation and even P&G has managed only average growth of 2.4% in that period-but entirely achievable. Not because there is a magic bullet (we all know bullets are bullshit), but because 10% or more can be eked out through discipline, hard work and attention to a handful of potential growth areas.
Those areas include: "share gain," grabbing a percentage point or two at the expense of a competitor; "base retention," stemming the loss of existing customers to the point where your churn rates fall below the average; "market positioning," also known as showing up where the growth is going to happen; and "adjacent markets," whereby a marketer moves into a related business. Treacy's research has shown proper attention to any one of these will contribute a few percentage points of growth. Put them together and what do you have? Yep, double digits.
A great overview and an encouraging message. But the audience seemed disheartened; several told me they found the speech "depressing." Confused, I quizzed a few, until one solved the riddle for me: "He said marketing is a difficult way to grow a business."
The penny dropped. By "marketing" this executive meant the focus on "share gain," which Treacy did, indeed, say was by far the "toughest way to grow." In other words, the marketers interpreted their roles so narrowly -- as people who hawk for new business -- that Treacy's message seemed to say they faced nothing but an uphill battle. His optimism about growth through customer retention, innovation and the identification of growth markets was lost on them.
This is a problem. A Spencer Stuart study showed CEOs expect the marketing department to drive growth, but many marketers are focused on only one growth avenue: customer acquisition. (And, worse still, on one tool to achieve that: purchasing, approving and post-justifying advertising).
Had Treacy encountered this issue? "Oh yes," he said. "Look at Detroit. They give away an average of $4,000 on every car trying to find new buyers, not to mention the billions they spend on ads. How much do they spend on base retention tactics? Almost nothing. Despite the fact that with a two-thirds churn rate, a small improvement would yield major growth. The marketing department doesn't think that's their job."
At the risk of getting thrown overboard next year, it seems to me there are a lot of marketers who simply don't get the full scope of their jobs. Time to wake up, folks. Don't be zeros, be double-digit heroes.