Marketing in a ‘Market-driven’ company

This is the fifth post in the series about marketing considerations relative to company culture drivers. Being market-driven means that everything done by everyone in the company is driven by the needs of the target market(s) you serve. Easy to say, makes sense to most people, many agree with the proposition, but truly market-driven companies are in the minority, particularly in B2B.

The following are key characteristics of market-driven companies (in no particular order):

1. Strategically selecting the market(s) and segments you serve
2. Understanding the problems, challenges and opportunities prospective buyers in your market are dealing with
3. Knowing the trends and future issues prospective buyers in your target market(s) will face in the next 1-3 years
4. Listening to and understanding what your customers are telling you about what’s really going on in their business, not just what new feature/function enhancements they want
5. Using reliable fact-based research data and industry/market analysis amongst several inputs for making strategic go-to-market decisions
6. Making strategic decisions across all areas of the company for which market(s) you’re going to serve and the key value propositions your company drives to market
7. Always using the ‘outside-in’ perspective
8. Your solutions genuinely create value for your customers
9. Focusing on where and how your company can excel in selected markets rather than just having a presence in many markets
10. Developing a corporate mindset of being a trusted advisor for customers and prospects rather than just another vendor of stuff and/or services
11. All functional areas in the company are aligned around the same go-to-market strategy
12. Understanding and responding to the buyer’s process while sales retain control of moving the buyer to a decision
13. Developing long-term customers who want to do business with your company
14. Using a balanced scorecard approach to measure marketing performance across multiple dimensions
15. Marketing is the strategic leader in the company and central to the success of the business

The above is not intended to be an exhaustive, scientifically researched list, but IMO represents the key attributes that I would look for to determine whether a company is market-driven.

Marketing has a significantly more strategic and pervasive role in a market-driven company. Performance expectations from marketing are higher and the risk of making wrong go-to-market decisions will derail the company.

“Business has only two functions--marketing and innovation.” – Peter Drucker

An article about the ROI of Being Market-Driven by Pragmatic Marketing cites various sources that market-driven companies are 31% more profitable, twice as fast in getting new products to market, and have 10-20% higher customer satisfaction levels. Seems that the benefits of being market-driven are tremendous, but my anecdotal view is that it may be the least frequent of the four company cultural models discussed in this series of blog posts, particularly in B2B companies.

Do you work in a market-driven company – how does it work in your company?
(use the comment link below to share your thoughts on this topic)
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Marketing in a ‘Customer-driven’ company

Following on from my previous three posts on company culture drivers; this post looks at the ‘customer-driven’ company and how Marketing functions in this type of environment.

This is not about being customer focused, providing great customer service, creating value for your customers, listening to customers and all the other good things related to taking excellent care of your customers. This context of customer-driven is about companies who are slavishly dedicated to serving their customers to the extent that their business strategy and culture is driven by their customers.

The customer-driven company culture is prevalent in smaller companies where the founder started the company with a contract for the first customer, added more customers, grew the business, but essentially does what the customers want. There are however a surprising number of large and public companies who are basically customer-driven. A key characteristic is that the company is dependent on a relatively small number of customers for the vast majority of its revenue. So, while customers get ultimate service and attention, the company has limited scalability, high risk exposure to various changes in customer companies and limited control over product and go-to-market strategy.

“You can't just ask customers what they want and then try to give that to them.
By the time you get it built, they'll want something new.” Steve Jobs

These companies are likely to have a collection of ‘markets of one’ – i.e. each customer (or small sub-group of customers) is essentially its own market segment. While there is usually a common thread across these customers, they don’t comprise a market in the usual manner. These ‘markets of one’ and lack of the usual market scalability, heavily influence marketing options and approaches.

Marketing in these companies seems to be focused on two main areas:

1. Retention – while customer retention should be a high priority for all companies, it is particularly critical for companies that depend on a relative small number of customers. Marketing programs such as newsletters, free educational events, customer conferences, satisfaction surveys and featuring customers in trade publication articles appear to be most common. If customers pay recurring support or maintenance or other types of retainer fees, then marketing must run programs that emphasize the value customers receive from these fees.
2. Cross-Selling – marketing campaigns to sell more products and/or services to existing customers. The key is to focus on complementary or additive solutions relevant to each customer’s situation.
   

New customer acquisitions tend to be more opportunistic and generally not driven by a significant marketing campaign.

A good approach for improving marketing effectiveness in customer-driven companies is to reach more people in different roles in customer companies. But you shouldn’t just send the same stuff to more people – it should be personalized and/or role-based materials that connect to each individual’s responsibilities. This will enable developing greater exposure, more customer advocates, more buyers and ultimately better retention and more sales from existing customers.

Do you work in a customer-driven company as defined here – what’s your marketing approach?
(use the comment link below to share your thoughts on this topic)

Next post, a look at marketing in a market-driven company.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Marketing in a ‘Sales-driven’ company

Following on from my previous posts How is your company ‘driven’? and Marketing in a Competitor-driven company – this post looks at the ‘sales-driven’ company and how Marketing functions in this type of company culture.

The message and emphasis from the chief person(s) who establish the sales-driven culture is that Sales are in charge and they need to get out and sell something and have marketing support them. That means that the sales teams are generally empowered to pursue whatever business they can and sign deals for just about any products and potential customers.

Salespeople typically do what they’re comfortable with and done for years – they sell in the same way that worked before. Markets shift, demand dries up, customers move on, but Sales keeps plugging away doing what they’ve always done. Marketing is viewed as supporting sales, to provide collateral, generate leads, help respond to RFPs, and other tactical functions.

“More great Americans were failures than they were successes. They mostly spent
their lives in not having a buyer for what they had for sale.” Gertrude Stein

I think sales-driven is the most challenging environment for Marketing. In many cases, the head of Marketing reports to the COO who in many organizations is really the head of sales. While the marketing operational activities to generate leads are understood and mostly appreciated by Sales in a sales-driven company, it is the positioning, messaging, value propositions and other strategic direction that is challenging for marketing to get buy-in from sales.

Marketing should and usually wants to provide direction on what to sell, where to sell it, who to sell it to, how to sell it, why customers would buy, and other strategies to be more effective and productive, by directing and enabling Sales to pursue the right opportunities in a manner that connects with current market circumstances. However, sales-driven companies are more inclined to rather add channel capacity to drive more sales even though it’s less effective long term. I cringe when marketing runs a campaign for a very specific value proposition, prospects raise their hands, marketing cultivates the leads, and then the salesperson engages a prospect with “so, you’re interested in buying our super-duper (or whatever) product…”.

The other challenge is that product direction is often driven by the needs of current prospects to get a sale – not a good direction for long-term business success.

Don’t get me wrong, Marketing is there to drive sales revenue and new opportunities for the company and enable Sales be successful. However, a sales-driven culture obstructs and constrains Marketing from being a truly effective and valuable contributor to the long-term company success – more on this in an upcoming post on being market-driven.

Seems to me that sales-driven is the default way to go for many companies?

Do you work in a sales-driven company – what’s your marketing approach, how do you deal with these challenges?
(use the comments link below to share your thoughts on this topic)

Next post, a look at marketing in a customer-driven company.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Marketing in a ‘Competitor-driven’ company

Following on from my previous post How is your company ‘driven’? , this post looks at what it means to be a ‘competitor-driven’ company and how Marketing functions in this type of company culture.

Competitor-driven companies generally identify a market opportunity for a copycat or ‘me-too’ product or service. The value proposition is usually to offer a cheaper alternative, or greater availability, or some tweaks to the design, features or functions to make their product or service an appealing competitive alternative. The market leader usually holds a dominate market share with a number of competitor-driven companies battling for what is usually single digit or low double-digit market share each.

The common marketing approach for competitor-driven companies seems to be mostly tactical, focusing on competitive comparisons, cheaper price promotions, higher availability through mass-market channels, product comparisons in trade publications, comparative ‘shoot-out’ coverage, and pursuing favorable exposure from the myriad of awards, recognitions, seals of approvals and other endorsements. While these products or services are mostly undifferentiated in the minds of target customers, marketing must come up with some differentiated value propositions to gain prospect and customer mindshare.

If applicable, a competitor-driven differentiator that works in some markets is to offer an industry standards-based product versus proprietary technology products. The beauty about standards is there are so many to choose from. :)

A more strategic marketing approach would be to research and identify niche market segments or adjacent markets where competitive products may have minimal presence or little traction. These niche markets could be geographic, vertical industry, demographic, psychographic, professional, trade, persona, or one or more of many other market segmentation dimensions marketers regularly use. Strategically this could be a great approach – building market share and credibility in niche or adjacent markets. This strategy moves the approach from undifferentiated to differentiated marketing.

“If you don't have a competitive advantage, don't compete” - Jack Welch

IMO, a mistake many competitor-driven companies make is trying to directly compete with the market leader(s). That’s tough territory. If you look at typical market share breakdowns, it may be strategically better to first directly compete with other smaller players and build up a solid position in the top 5 or better before putting resources into competing with the market leader(s).

Do you work in a competitor-driven company – what’s your marketing approach?
(use the comment link below to share your thoughts on this topic)

Next post, we’ll look at marketing in a sales-driven company.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

How is your company ‘driven’?

I frequently hear people categorize their company as being “customer-driven” or “we’re a sales-driven company” or “we’re definitely a market-driven culture” or something like that. I’m always tempted to ask 2 questions; “so what does that really mean for how you operate?” and “how does that impact your approach in marketing?” The curious thing is that when you do ask these questions you frequently get wishy-washy answers. So, being analytical and curious, I did some checking a couple of years ago to find out what these categories of how companies perceive they are driven really mean and more importantly, what it means for how you approach marketing.

Every business has a company culture, usually established by the founder/owner/CEO/executive team or similar chief person(s). One of the many facets of company culture is this categorization of how the business is driven. What you usually find is the chief person’s professional career is the primary determinant of the culture. Yes, other factors such as their background, education, culture, personal beliefs, etc. do play a role too, but their career experience seems to have the most influence. Therefore, a chief person who came up through the sales organization will generally establish a ‘sales-driven’ culture while someone with mostly customer service or consulting career experience may establish a ‘customer-driven’ culture.

Seems to me there are 4 major types of company culture drivers:

1. Competitor-driven
2. Sales-driven
3. Customer-driven
4. Market-driven

Sure there are other drivers such as product, engineering, innovation, etc. but IMO they’re a subset of one of these majors. While none of these are necessarily wrong or bad, there are ramifications for the organization overall and associated limitations that may not be readily apparent in some of these.

Companies could evolve through different cultures as the business matures and evolves in the marketplace – for example, a company founded on a competitor-driven premise of providing cheaper alternative products, may move to sales-driven as their market share increases and eventually to market-driven with their own product innovations establishing market leadership.

My next 4 posts on this blog will explore each category in more detail and discuss the implications for marketing supporting each type.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com