I keep being amazed at what CEOs of large companies get conned into by their so-called “marketing departments.” (Well and smaller companies too for that matter.) There is a big “to do” going on over the fact that Twitter has put their CFO in charge of marketing. In a recent article, while defending this action (which I don’t agree with), a pundit is quoted as saying, “More and more marketing departments are not only held accountable for brand building but for driving revenue…” Seriously, holding marketing accountable for driving revenue is a “new thing?”
Really? I state unequivocally, the only purpose of marketing is to grow revenue, profitably. How could one logically think otherwise? What is the purpose of brand building if not to grow profitable revenue? (Ok, if you are focused on selling your company or driving its stock price higher, it has been shown that increased awareness will increase a company’s perceived value, but that is a short-term effect if increased revenue does not follow.)
As I noted in a earlier post, GE knew this in 1952 at least. (Granted, I have also noted they too lost sight of it, but how does this happen?)
I realize that part of the problem is the vague/ambiguous/varied definition of marketing that too many people hold. Many (most) equate it with the promotional activities, or since brand came back in vogue, brand building. But let’s consider GE’s description of their marketing function in 1952:
In the 1952 GE annual report, GE defined marketing as an omnibus concept and stated “The marketing department will establish for the engineer, the designer, and the manufacturing man what the consumer wants in a given product, what price he is willing to pay, and where and when it will be wanted. Marketing will have the authority in product planning, product scheduling, and inventory control, as well as sales, distribution and servicing the products.”
In our book, Value Acceleration, we state that the role of marketing is to align the capabilities of the company with the current and future needs of its market(s). If one considers that true marketing, is MUCH more than branding building, social media, voice of the customer, etc. One would logically come to the conclusion that the outcome for marketing has to be focused on profitable revenue.
What else could it be, unless one was trying to find an easier to manage intermediate metric that could be stated as a “better” measure for marketing, because, after all, what if the sales department screws up. How is it fair to hold marketing accountable for revenue then? And thus a key source of marketing/sales misalignment is born.
If you recognize that marketing is a key part of the demand chain then it is easier to focus them on profitable revenue. Not necessarily just or even mostly in the current period of course. Once people caught on that the results of production output in a manufacturing company (ie the supply chain) was impacted by the engineering/R&D efforts, and that engineering was responsible for creating producible products, much improved in supply side processes.
The same is true of the demand-side. Get it, got it? Good (to steal from a current Grainger ad campaign).
Mitch
