Mention any organisation that has excelled in branding such as Nike, Apple or Lego and you’ll find they have much in common. Consumers understand clearly what these brands stand for, how they are different to their competitors and bring expectations on purchasing value when dealing with the brand. For each of these organisations, brand is the champion that sets them apart and drives their business growth. More importantly, brand investment sits front and centre when it comes to budgeting and business strategy. Shareholders and the C-Suite value investment in the brand. The role of the CMO and their marketing team is clearly valued as contributing to the bottom line.
Communicating the impact of brand investment on revenue and revenue growth can be a tricky task – especially if the Board or investors/shareholders are used to viewing the business through a profit/loss lens. CMOs need to work together with the C-Suite to communicate the value of the brand and how it helps build and improve the overall performance of the organisation.
A recent McKinsey study highlighted that 83% of global CEOs agree that marketing can be a major driver of growth. There are still many who believe marketing falls under discretionary expenditure and would not attribute it to growth. The report concludes that the opinion of the CEO and Board is heavily influenced by the reputation and rapport of the CMO with the C-Suite and their ability to build deep, productive relationships and win over the sceptics in the C-suite.
McKinsey divides CMOs into three categories – Unifiers, Friends and Loners. The unifiers are 1.4 times more likely to be viewed as having a clear role in driving growth, be mutually accountable in delivering on this growth and be given the right resources and tools needed to achieve this.
It is vital that CMOs ‘seize the day’ in proving the value of marketing in driving growth for the organisation. They must unify the team and leverage the CEO’s support in order to drive growth. The challenge placed on CMOs, is to ensure they can effectively showcase the value brand and marketing has on business growth.
CMOs can lead the way in creating a clear vision for the entire company. A vision that is easily adopted at all levels of the organisation and that aligns with values and brand positioning.
A clearly defined vision and brand positioning can not only help unify the organisation but also help in making informed decisions, understanding where the company is heading and setting a clear path on how to get there together. An effective brand positioning will not only provide a guiding light for the team – it will should also clearly differentiate a business from its competitors.
How does this directly impact the bottom line? There are some clear-cut examples. The recent Nike campaign which, as reported by CNBC, created a surge firstly in shares, likes, followers and fans across social media – followed by a surge in sales and stock prices. The campaign initially prompted a boycott from some consumers, but the values behind the brand and the campaign proved more positive than polarising with their customers and the general public. An increase in sales followed in the immediate days after the campaign release.
In this commoditised world, brand is often the only factor that differentiates an organisation from its competitors. A well-articulated brand story and brand identity can set a brand apart and build an affinity with your customers. It takes time, investment and patience to build a strong brand. A commitment from the C-Suite and shareholders to this process is vital.
When an organisation commits to building their brand in a consistent and authentic way, brand awareness will grow, consumers will develop an understanding of the brand, which in turn builds trust and loyalty. Subsequently, awareness and trust positively impact overall profitability. A CEO or business owner who understands this will accept the fact that investment in brand, especially in the early days, will lead to long term profitability and a reduction in the marketing spend, once the brand is well established.
Unfortunately, only a small number of board members or CEO’s (McKinsey noted only 3%) have a marketing background. This does not, however, stop them from having an opinion on marketing. CMOs need to bring real data and evidence to the table – start talking the language of CEOs and CFOs to ensure their message is taken seriously above simply ‘opinions and gut feelings’.
Bring data to the table. Evidencing results such as the volume of traffic, engagement rates, search engine rankings and organic search queries for your brand name can be proof that investment into your brand strategy is resulting in growth in sales. Proof of your brand being selected over your competitors and other examples of quantitative data can prove the importance and performance of your brand.
Other research, such as survey results on your customer sentiment, or using social listening tools to track how a brand is being perceived by potential customers, or alternatively engaging in brand tracking research on a consistent basis, are all ways that you can incorporate results into your quarterly or annual reports. In this way, investors start to get used to seeing these results and beginning to understand them.
Demand generation is probably the most resourced area of the marketing team – an effective marketing campaign should result in instant gratification in the form of sales, leads and brand awareness – all of which can be measured.
Providing the C-suite with a clear understanding of the specific objectives of each marketing tactic and where it sits within the buyer journey is also extremely important. Not every dollar spent is about sales – consumers need to know you first before they will be willing to purchase from you – so an element of your marketing investment needs to focus on brand awareness.
According to Gartner, 80% of the buying process will occur without any human interaction. The challenge for brands is to position themselves with brand strength and understand the role of marketing in the lead nurture process. The marketing activation strategy needs to ensure the right message is targeted to the right consumer at the right stage of their buyer journey.
The Pareto Principle, or “80/20 rule” as it is frequently called today, is often used to point out that 80% of a company’s revenue is generated by 20% of its customers.
Put simply, if customers are happy, you will find them coming back to you as well as sharing their experience with others. Consistently high retention has a twofold effect on the bottom line via increased sales and reduced cost per sale.
Relationship marketing, customer retention, loyalty programs – these strategies all sit squarely with the CMO. Consistently high retention can create a strong competitive advantage.
Brand loyalty, and its effect on the bottom line, is one aspect of brand where business owners and investors can also track and measure performance. It is evident that shareholders, investors and business owners are well aware of the positive impact of brand loyalty, hence loyalty programs and other reward strategies that have been put into place to retain existing customers. It is hard to ignore the scale of the cost differences in acquiring versus retaining customers. It costs 6 times more to gain a new customer versus keeping an existing one. The value in retaining existing satisfied, loyal customers is hard for anyone to ignore.
Brand loyalty and retention of customers can not only increase profit, but it can also decrease costs through referral and advocacy. Building great relationships with your customers means that when prompted (and sometimes unprompted) they will refer you to others without hesitation.
CFOs and CEOs are increasingly accustomed to reading and interpreting the Net Promoter Score (NPS) therefore it has become an extremely efficient tool for CMOs. Sharing this information within your quarterly or annual reporting will also be extremely beneficial in helping financial investors understand the importance of customer satisfaction and brand loyalty to the overall picture.
At BrandMatters, we have seen the evidence of the positive growth results of our clients who have made significant investments in their brand. Research and data underpin all our recommendations and provides the much needed demonstrable proof.
For CMOs to become unifiers – they need to ensure they effectively collaborate and earn the respect of the C-suite and key stakeholders. We can also help facilitate this, through depth interviews and stakeholder workshops and track subsequent campaign effectiveness through brand tracking research.
All of these strategic brand measures should be considered when analysing an organisation’s results. As outlined, brand can positively impact sales, help you increase profit margins and reduce costs in the long term through loyalty and advocacy.