“How to Optimize Digital Marketing Execution: Notes from the Field” – Fred Dumas, Ioana Popescu and Mark Blessington
What does it take to get things done in today’s world of digital marketing? Not only has technology completely changed strategic thinking in marketing; it has also revolutionized marketing operations, or the discipline of getting things done in marketing.
The following is a summary of how to achieve excellence in digital marketing execution. We focus on three areas: identifying essential digital marketing functions, driving operational excellence, and aligning investments with your essential functions.
1. Pick Essential In-House Marketing Functions
The marketing profession has a long tradition of outsourcing. For the better part of the 20thcentury, most large companies used advertising agencies (think Mad Men) to design and distribute TV, print and other types of ads. This was an outright admission that ad agencies had creative and media buying expertise than could not be replicated by in-house marketing groups. Agencies could attract, retain and motivate superior creative talent and apply greater leverage in media buying. The same was often the case with market research. Marketers often used outside firms with highly specialized expertise to design and conduct focus groups or telephone surveys and analyze the results rather than run these studies in-house.
Now with the meteoric rise of digital marketing, it is equally important to select which marketing functions are best performed in-house, and which ones should be outsourced. Often an easy choice involves software: few marketing or IT departments can compete effectively with the depth and breadth of functionality offered by readily available marketing automation and CRM applications. As a result, most marketing groups have purchased and installed numerous software packages to help run their digital marketing operations.
But what about supporting all of these software packages and making them fully functional on a day-to-day basis? Many marketing departments struggle here. The typical major software acquisition assumption includes hiring new technical FTEs. But technical labor markets are quite different from non-technical marketing. They constantly change and are intensely competitive in many parts of the world. Such dynamics make staffing and management a highly challenging endeavor. Which begs the question: Should we assume that all digital marketing operations be in-house because of their criticality, or should some be outsourced?
The importance of selecting a few essential marketing functions was perhaps most notably called out by Thomas Bonoma in 1984. As a marketing maverick, he critically observed that marketing thinking was rich strategically and poor operationally. In many ways this still rings true. His research led him to conclude:
No marketers are good at everything, but the most able concentrate on doing an outstanding job at a few marketing functions.
In the same tradition 30 years later, Mauro Guillén and Esteban García-Canal conclude that emerging multinationals that embrace an intense execution orientation are starting to triumph over massive, developed-world corporations. In one of multiple examples, they explain how Bimbo, the Mexican baking corporation, beat and ultimately acquired Sara Lee. Its secret to success was striving for production and distribution excellence rather than brilliant brand positioning and advertising.
Of course, every great strategy includes numerous implementation considerations. But the implication for digital marketing is to pick which functions are essential and should be retained in-house because they can be performed there better than anywhere else.All non-essential functions should receive less attention and investment, and some may be great candidates for outsourcing because an agency can perform it at a lower cost and deliver better results.
Major digital marketing functions include website, data optimization, marketing automation, analytics and social intelligence. Examples are provided below.
These systems are optimized not only to support each other, but also to enhance sales force management.
Key questions that can help marketing leaders identify their essential digital marketing functions include:
- Which digital marketing functions and tasks generate the most revenues and provide the greatest returns?
- Which ones have the greatest impact on customer satisfaction and lifetime value?
- Which ones have the greatest impact on sales effectiveness and productivity?
- Where can we reduce costs and increase effectiveness through outsourcing or further automation?
2. Drive Operational Excellence
Once you know which digital marketing functions are essential, how do you ensure they perform with excellence? This question is relevant both for in-house and outsourced functions. For in-house functions, the application is obvious: What do we need to do to deliver superior operational results? Knowing this answer for outsourced functions is equally important because it helps you select and manage the best vendors. They must be a center of executional excellence for that function if you choose to outsource it to them.
It goes without saying that you cannot drive operational excellence without a full range of performance measures. Digital marketing measures vary on timing (e.g., daily, weekly, etc.) and scope (e.g., omni-channel, overall function, sub-function process effectiveness, etc.). And of course, you need to track these measures, talk about them constantly, and refine them over time as you learn and improve. Measures are essential to creating a performance-oriented digital marketing culture.
While performance measures provide an important foundation, they seldom differentiate the best from the rest. Indeed, if performance measures are over-emphasized, marketing leaders can erode the performance culture.
The most important tool for driving operational excellence in digital marketing is to create an intense employee focus. If marketing leaders express genuine and regular interest in the operational employees who perform the day-to-day digital marketing tasks, then they effectively model how these people should treat their customers. Staff absorb and redirect this concern and desire to please back to their customers.
Interestingly, one of the best ways to establish a healthy employee focus is to create direct lines of contact among operational staff and customers. By enabling and encouraging such communications, marketing operations staff are empowered and more highly motivated.
When each member of the operations staff has a real customer rather than just a manager they answer to, staff come to deeply understand how they truly fit in. They receive useful and timely feedback. And they feel empowered and motivated to deliver with excellence.
While open communications are not a panacea, it is often the single most important aspect of driving operational excellence. When operations staff are treated like a black box and are cut off from the rest of the world, you may generate short-term efficiency gains, but the gains will quickly erode. Operational staff are emotionally fed by serving their customers. When you sever this connection, you restrict the metaphorical blood flow needed not just for motivation, but for performance feedback and improvement.
Technical labor markets are often highly competitive, especially in large cities where marketing departments are often found. People with advanced technical training and expertise in data, websites, social media and analytics can be hard to recruit and retain in major metropolitan areas. While this problem can be addressed by housing digital marketing staff in more remote locations, this also can disconnect them from the core of the marketing department and relegate them to second-class citizen status.
While the labor market problem can be daunting, it can be addressed by first selecting an attractive labor market for digital marketing talent, and then ensure these hires have customer access. This way technical staff members have something that is very valuable to the rest of the marketing department: a finger on the pulse of what customers are thinking about. No one in marketing should be a second-class citizen if they have direct interaction with customers.
The implication of the “labor market first” approach is that your recruiting profile must include a healthy emphasis on communications skills. While not the first trait that typically comes to mind for technical types, it is nonetheless an appropriate and feasible expectation. Further, it makes your job offers more attractive relative to typical “black-box” technical jobs where staff seldom interact with non-technical people or real customers.
Operational issues are common in digital marketing, if for no other reason than there is constant change: New data, new analyses, new target markets, new campaigns, new products and so on. Further, digital marketing is typically surrounded by tight timelines and challenging performance standards. In other words, digital marketing is an intense, human-dependent production environment. Yes, many aspects of the environment involve software and automation, but humans are constantly feeding, monitoring and adjusting these tools, which has a huge impact on results and whether the systems meet customer needs.
All of this makes issue resolution protocols absolutely mandatory. They should be easy to understand and should establish agreements between service providers and users. Escalation principles should protect low-level staff from receiving crushing, top-down email “flamers” from senior managers. Similarly, they should protect mid-level managers from being undermined by skip-level complaints that go straight to the “big boss”.
3. Align Investments with Priorities
The third major success factor in digital marketing execution involves finding an effective way to assess investments. No doubt, digital marketing is expensive, and the goal posts are constantly moving. Today’s definition of digital marketing excellence is tomorrow’s obsolete technology. Such constant disruption is driven by rapid adoption of new technology by customers. B2C and B2B customers frequently upgrade their smartphones, laptops, smart home devices, and so on. They constantly compare digital shopping experiences as they make online purchases. All of this makes it very expensive to stay relevant and competitive in digital marketing.
Digital marketers often hear comments like: “We need to deliver a positive return on the last system upgrade before considering a new upgrade.” Of course, this logic is entirely reasonable and important, but it must be considered alongside other important questions such as:
- What do customers expect today from our digital interface, and how does that compare with what we offer?
- What digital experience is offered by the leaders in our industry, and how do we compare?
- What incremental gains in revenues or productivity can be achieved with a new digital marketing technology?
- What new business might our competition be mining from social media and the internet?
The traditional way to assess marketing investments is to calculate net present value (NPV) on cash flows relative to the company’s cost of capital. This creates a free market for assessing investments and setting priorities. If the NPV is positive, the investment is positive. The higher the NPV, the better the investment and the higher the likelihood of receiving funding.
The problem with the traditional approach is that digital marketing cash flow assumptions almost always extend multiple years into the future. So, when the latest advance in customer expectations or digital marketing technology takes hold, the original NPV cash flow assumptions fly out the window and are no longer valid.
We suggest several enhancements to the traditional NPV approach. First, embrace the fact that most marketing NPV calculations hinge on uncertain revenue forecasts. As Yogi Berra is credited with saying: “It’s tough to make predictions, especially about the future.” In digital marketing, disruption is the norm, not the exception. Revenue forecasts in these NPV calculations are a wild card. The plus-or-minus error ranges for them are far greater than for the cost components.
Second, err on the side of investing to match or beat the leader, but only in those few digital marketing functions that are essential. For the remaining, non-essential digital marketing functions, either be a slow follower and underinvest relative to the leaders or outsource it to an agency that can amortize state-of-the-art investment costs across multiple clients.
To excel in digital marketing execution, the leaders first identify those few functions that are essential. They recognize you cannot excel in every aspect of digital marketing; it is too costly and unrealistic given the constant pace of technical disruption. Once they know what is essential to success, they assess whether they should keep the remaining functions in-house or outsource them to reduce costs and maintain high performance levels.
Second, they create a performance culture in their digital marketing shops. They locate digital marketing offices in attractive technical labor markets. They focus on employees and their higher need to do good, make a difference and have an impact. They take every opportunity to put digital marketing staff in direct contact with customers and ensure that issue resolution processes are constructive and perceived as fair and appropriate. They know such efforts will be reflected in how customers are served, thereby paying high dividends.
Third, companies can improve their approach to digital marketing investing by modifying the traditional NPV approach. To be sure, these calculations are useful, but they ultimately rely on highly unstable revenue forecasts. Consequently, it is important to channel digital marketing investments into the few essential functions. Investments in the remaining functions should have a “slow follower” investment status or be outsourced to an agency.
Fred Dumas is SVP Managed Marketing Services for Harte Hanks and lives in the area of Nice, France.
Ioana Popescu is Marketing Services Manager for Harte Hanks and lives in Iasi County, Romania.