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Marketers are far too self-critical and apologetic in the discussion of accountability and measurement. The oft repeated critique of marketing’s lack of accountability is exaggerated and potentially inhibits the effectiveness of strategic investments for growth.
Marketers, in my experience, are amongst the most numerate and bottom-line focused managers. It is just that we are dealing with the most uncertain part of the business model – how many will buy and at what price? Mostly, the cost to serve customers, the cost to produce goods can be estimated within a reasonable range, but demand is normally much more volatile as is response to our sales and marketing investments.
An excessive focus on producing ever better cash flow projections can lead to perverse decision making. Consider investments in modern technology designed to improve customer insight. Before we have even engaged with customers to understand their needs or their responsiveness to potential new offers, the capital budgeting process forces us to pre-determine the outcome of that learning process in order to generate a discounted cash flow. So, we make assumptions about how customers will behave framed by the investment we wish to support, and those assumptions become our customer strategy. We set our strategy even before learning about customer needs and wants. Clearly, in this case, a more sophisticated approach to financial modelling is required: perhaps real options pricing rather than discounted cash flows.
So, we need to consider the strategic implications of being accountable. Being accountable is not merely a technical challenge of predicting cash flow, it is part of a strategic context where we evaluate different investments with appropriate financial models so as not to compromise our strategic objectives. Marketing leaders need to lead a more nuanced and sophisticated discussion at the Board about what it means to be accountable and its strategic impact. This is part and parcel of marketing leadership today.
Cranfield’s marketing executive programmes take experienced executives through the strategic management of marketing within your organisation. How you can ensure that as you transform digitally, being customer centric guides your policies and decisions. We explore the cycle of learning, responding, configuring solutions and implementation in a modern digitalised environment and the implications of creating a customer centric organisation.
Blog produced by: Professor Stan Maklan, Professor of Marketing and Technology and Programme Director of the Marketing Directors’ Programme, Marketing Strategy and Planning, and Customer Experience Strategy programmes at Cranfield School of Management.
