Over two decades ago, Sergio Zyman, the one-time chief marketing officer of Coca-Cola, wrote, "The sole purpose of marketing is to get more people to buy more of your product, more often, for more money . . . Yes, you need to advertise and create images that you hope customers will like and remember in the store or at the register, but the only reason to spend money on them is if they help you sell more stuff." (The End of Marketing As We Know It, 1999)
In the B2C world, marketing has always played the starring role in driving revenue growth. In contrast, marketing was not seen as the primary driver of revenue growth in most B2B companies. Sales typically owned the revenue line of the income statement, and marketing's primary role was to support the salesforce.
The role of marketing started to change in the early 2000's, largely because of three factors.
First, the volume of online information began growing exponentially. The abundance of easily accessible online information enabled business buyers to research potential purchases on their own, which greatly reduced their dependence on vendor sales reps. In essence, business buyers started to learn about products and services through content resources rather than through interactions with a salesperson.
Second, B2B marketing automation solutions made their appearance in the early 2000's. These technologies enabled B2B marketers to automate lead generation and lead nurturing programs and to implement sophisticated lead scoring systems. The adoption of B2B marketing automation applications meant that marketers could take responsibility for a larger portion of the buying process.
Third, and more recently, ecommerce has made significant inroads in B2B buying, and it's growing rapidly. By one estimate, B2B ecommerce sales will be $7.72 trillion in 2021, and they are forecast to reach over $25 trillion in 2028. In fact, worldwide B2B ecommerce revenues are now six times larger than B2C ecommerce revenues.
Revenue Growth Becomes a Primary Marketing Mandate
By the second decade of the 2000's, driving revenue growth had become one of the primary mandates of the marketing function, as evidenced by two research surveys conducted in 2016.
- In a global survey of CEO's and CMO's by Accenture Strategy, 50% of the CEO's said their CMO is primarily responsible for driving disruptive growth in their organization. CMO's were ranked ahead of all other C-level executives.
- In a survey of CMO's and senior VP's of marketing by the CMO Council and Deloitte, 35% of the respondents said the senior managers and board members at their company had high expectations for marketing to be a driver of revenue growth, and 33% said their senior managers and board members see revenue growth as the primary mandate of marketing.
Today, the pressures on marketers to deliver consistent revenue growth have become even more intense. A 2021 global survey of marketing leaders by the CMO Council found that marketers are now responsible for 44% of revenue on average. That's up from just over 10% of revenue in the early 2000's. This study was apparently not limited to B2B marketers, so it's not possible to determine from this research what percentage of revenue B2B marketers are responsible for.
The CMO Council study also found that nine out of ten marketers are expected to grow revenue this year, and 63% of the survey respondents said they and their marketing team are under very high or extreme pressure to deliver on revenue targets.
Are Marketers Meeting the Revenue Growth Challenge?
So how well are marketers meeting the revenue growth challenge? On this point, recent data paints a mixed picture. For example, in the CMO Council study just discussed, over half (53%) of the respondents said their CEO is only moderately satisfied with marketing's performance.
Other research by the CMO Council confirms the mixed picture. In a 2021 survey of senior management executives, 17% of the respondents said they were extremely confident that their marketing function can lead a growth recovery in 2021. However, 52% of the survey respondents said they were only moderately confident in marketing's ability to lead growth this year, and another 29% reported being only somewhat confident.
Findings from The CMO Survey indicate that marketers have not yet taken a leadership role in many business activities that have a major impact on revenue growth. In the February 2020 edition of the survey, senior marketing leaders at U.S. companies were asked what activities marketing is primarily responsible for in their organization. The four activities more frequently identified by survey respondents were:
- Brand (90.0% of respondents)
- Digital marketing (86.0%)
- Advertising (86.0%)
- Social media (80.7%)
On the other hand, only 32.7% of the respondents indicated that marketing is primarily responsible for revenue growth, and even fewer respondents said that marketing has primary responsibility for market entry strategies (31.3%), new products (22.7%), and market selection (18.0%).
There is no single "silver bullet" solution that will enable marketers to immediately fulfill their revenue growth responsibilities. But they can take steps to improve their ability to impact revenue growth. I'll discuss one of those steps in my next post.
Image courtesy of Kari Bluff via Flickr (CC).