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Digital Marketing Can Cost More Than it Makes, Here’s How to Reverse That

Digitalization offers marketers many more ways to reach customers but also many more ways to annoy them; the answer is to focus on developing marketers' digital skills

You don’t have to go back too far in business history to find a time where the responsibility of the marketing department was to “make things look nice.” They hosted events, updated sales collateral, and sent out letters and parcels with perfectly placed logos. It was relatively straightforward work, and required skills and experience that marketing departments had been honing for years.

But digitalization has changed all that. Although companies’ entire strategies and operations are now being upended by the trend, Marketing has been in the vanguard of those changes. Because of this, marketing teams are now looked to for strategic guidance more than ever but they are also less confident and more overwhelmed than they’ve probably ever been.

In fact, 39% of all marketers say they feel overwhelmed because they don’t have clear goals that show what constitutes “success” in a digital environment, according to CEB data. And senior marketing managers aren’t any more optimistic, with 64% of them saying they don’t have confidence in their team’s ability to make the transition needed to produce successful digital marketing. On top of all that, 75% of marketing functions report only marginal returns from their digital investments, particularly when it comes to their efforts to personalize content for different customers.

Costing the Company Money

All this effort for lackluster returns is not only costing money that could possibly be better spent on other investments but it might actually be stopping the company bringing in revenue as well. Overwhelmed marketers trying to run personalized marketing campaigns can easily put off customers.

For example, something as simple as incorrect salutations in an email (Jon rather than John or Mrs rather than Mr, say) won’t engender customer loyalty. Equally, flooding customers with content that has little do with any of their business challenges will annoy them, and pushing a hard sell on a product that they have no interest in can cause outright anger. Getting any of this wrong can hurt sales (see chart 1).


Chart 1: Customers will punish suppliers for unwanted marketing contact  n=545  Source: CEB analysis


As chart 1 shows, just under a third of customers are likely to actually retaliate against a company for unwanted communications. Take a company with annual revenue of $1 billion and a thousand clients with roughly equal spending: if 30% of those clients spent just 1% less with the company, that would equate to a loss of $3 million. This is hardly a reassuring state of affairs when senior marketing managers go to the CFO and senior executives asking for more money in the next budget cycle.

A digitalizing world has given marketers an opportunity to reach many more customers in many more ways, but it has also created many more opportunities to get that communication wrong.

Stop them Retaliating

Unfortunately, marketers aren’t ever going to be able to tell whether customers are retaliating against them (see chart 1), but there are specific actions they can take to stop annoying customers in the first place. The best performing marketing teams are good at being customer centric and applying a lot of rigor to the way they segment customers but what really marks them out, according to CEB research, is their approach to marketers’ development.

Many of these high-performing teams have moved away from developing “siloes” of experts and, instead, teach and equip the entire team with a grounding in the fundamentals of all marketing. Ensuring the entire team has this knowledge means that teams speak “the same language,” and they are better able to collaborate on campaigns. Most interestingly, according to CEB analysis, the companies that have increased overall marketing knowledge had a direct positive correlation on an increase in corporate sales growth (see chart 2).


Chart 2: Impact of marketing knowledge on corporate sales growth  n=7,350  Source: CEB analysis


Making Personalization Campaigns a Success

When it comes to the best performing digital personalization campaigns, a focus on talent development is even more important. An analysis of what specifically differentiated top performing digital personalization campaigns from the rest showed that data, technology and strategy (areas all marketing functions are likely to prioritize) had no bearing on whether a team was successful or not. In fact, what made the biggest difference was that high performing organizations were seven times more likely to prioritize their people when trying to guarantee good digital personalization (see chart 3).


Chart 3: Relative likelihood of criteria being selected as a top enabler of personalization  Above-average performers compared with below-average; n=90  Source: CEB 2016 Marketing Personalization Survey


So it’s clear that to make a success of digitalization, and the personalization tactics that are such an important part of it, marketing managers should focus on helping their teams build out a full set of foundational competencies. These should include traditional fundamentals, such as segmentation, branding and market analysis, which will then enable staff to progress up the marketing skills hierarchy (see chart 4) to gain a solid understanding of what are now necessary digital skills, such as analytics, social media optimization, content creation, and lead management.


Chart 4: Marketing skills pyramid  Source: CEB analysis


 

Until companies make skill and behavioural development a priority for their marketing departments, and ensure marketers have the ability to dissect, interpret and make use of the technology and data at their hands, then they will continue to risk destroying client relationships with ineffective and misguided communication. What’s worse is that they will do so while always hoping new technology will provide the needed fix.

 

More On…

  • CEB Marketing Excellence Survey

    Use CEB’s Marketing Excellence Survey to assess the skills gap in the marketing function, and provide a tailored training curriculum for marketers to close it.

  • The Effortless Experience

    Learn more about the importance of customer loyalty, and how to stop customers becoming disloyal

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