A Marketer is a Terrible Thing to Waste (P.2)
Beth Comstock / BusinessWeek
Last week, Beth Comstock, chief marketing officer and senior VP at GE discussed the importance of Marketers in rebuilding the economy. Today, more tips on the importance of reexamining value, how to measure success, making innovation the lifeline and investing in the best.
Reexamine Value and How To Measure Success
According to a recent study of CMOs conducted by executive recruiting firm Spencer Stuart, the top three measurements for success in a downturn are controlling expense budgets (cited by 60% of respondents), retaining high-value customers (49%), and demonstrating positive return on marketing investments (48%).
At GE, we’ve been particularly focused on understanding customer profitability. Do we understand the true cost of serving our customers? Which ones represent the highest value? Marketing can give you a laser focus on which customers are worth investing in—and which are destroying value for your company.
Despite so much effort, there’s still no Holy Grail of marketing metrics, because the goals of a given effort differ. But if there were one metric on which to hang a marketer’s hat, perhaps it is value—helping to define what something is worth in the context of the market and key trends, driving demand and capturing the highest possible return on a product offering. What is my product worth, and how much am I delivering of my entitlement? How can I increase the perceived value of my offering?
These types of questions are top of mind at GE Aviation, where our marketers have developed with customers a software-driven value calculator. Customers are invited to plug in their data, and the calculator outputs long-term savings vs. competitors along with key engine attributes, such as fuel burn.
This is the time to ask: How do your customers measure success? Are you still operating on old assumptions about the value you provide?
In a crisis, needs change for both you and your customers. Understanding these changes early allows better targeting and differentiating of what you have to offer.
For the ambidextrous marketer, the first task is to gain firm control over the marketing levers that optimize today with one hand while pulling a different set of levers to help build tomorrow with the other.
Make Innovation the Lifeline
We have all seen recessions—and survived them. Yes, they’re tough. But inevitably they end. Yet the Spencer Stuart survey found that more than half of the marketers they interviewed said the economic downturn had led them to neglect long-term strategy. Moreover, the business research firm known as the Corporate Executive Board found that industry leaders committed to innovation during a downturn have twice the number of breakthrough projects in their pipeline as lagging companies.
For the past six years at GE, we’ve refocused our innovation pipeline through an initiative called Imagination Breakthroughs, which has created a disciplined approach to finding, funding, and nurturing ideas across GE. We’ve created a special class of 100 protected ideas, ensuring that they get a lifeline during tough times. Think of it as insurance against the question: “If I have to survive today, how can I invest in tomorrow?”
John Jacko, CMO of the global engineering supply company Kennametal, explains how his company is thinking similarly: “We have taken this economic downturn as an opportunity. The Kennametal CEO tasked a cross-functional team, led by marketing, to step back and build what we think the next generation structure of the company would look like in 2010, aligned to our corporate strategies, voice of the customer, and employee and shareholder aspirations. This has been an incredible opportunity for the team to zoom out, reexamine our vision, and use the economic crisis as our burning platform for change.”
Professor Gulati has been a great resource for GE as we evaluate how to define marketing success in a reset world. I find inspiration in these words of his: “Think of marketing as a beacon upon a cliff during the economic storm. It illuminates the landscape and shines a light on the best path ahead. The function works best when it provides key insights and helps lead strategy to meet customer needs and fend off challenges in the marketplace.”