Why You Need To Be A Modern Marketer: The Business Impact Of Marketing Maturity In The Age Of The Customer

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1 A Forrester Consulting October 2014 Thought Leadership Paper Commissioned By Oracle Why You Need To Be A Modern Marketer: The Business Impact Of Marketing Maturity In The Age Of The Customer

2 Table Of Contents Executive Summary...1 How Mature Is Marketing?...2 Marketing Maturity Supports Business Success...2 Marketers Upgrade To Modern Practices...4 But More Work Is Required...5 Modern Marketing Delivers Tangible Benefits...6 Key Recommendations...7 Appendix A: Methodology...8 Appendix B: Endnotes...10 ABOUT FORRESTER CONSULTING Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/consulting. 2014, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to [1-Q3V24Y]

3 1 Executive Summary Technology gives customers new decision-making and purchasing power. Potential buyers can access information about products, services, pricing, and brand reputation from anywhere, anytime. This makes customer understanding a strategic imperative, and only those companies that obsess over knowing their customers intimately will thrive in this new digitally powered age. 1 The mounting need to leverage customer data, along with the insight to better target audiences, engage them in dialogue, build relationships that turn into sales, and engage customers throughout their life cycle, is transforming marketing from an intuitive art to a predictable science. But are marketing practices keeping up with this rapid pace of change? In June 2014, Oracle commissioned Forrester Consulting to evaluate marketing s maturity in targeting, engagement, conversion, analysis, and technology the areas in which modern marketers most need to excel to engage their more capable and sophisticated buyers. To further explore this trend, Forrester set out to test whether companies with more mature marketing practices what we called modern marketers in our benchmark experience more business success when compared with peers. With technology expanding rapidly, marketers must refine and evolve their marketing practices to better understand and serve customers. by 10% or more last year, compared with just 23% of peers. Despite increasing focus on digital channels and marketing automation, many marketing practices remain immature. While the majority of marketers indicated that their practices around customer data analytics, data management, and segmentation and targeting are mature, most are less than halfway to the goal when it comes to marketing measurement and attribution, automation and technology adoption, communicating using dialogue with buyers, and converting prospects to longtime loyal customers. Traditional brand management skills rank as most important. While marketers recognize data now drives the business and have upgraded core practices around data management and targeting, their hiring practices have yet to catch up. Data analysis ranks third on the list of most important hiring and training criteria, lagging behind traditional marketing, brand management, and business strategy experience. Modern marketing delivers increases in sales and profitability. Marketers who win and retain customers in the digital age use technology and new processes to scale their reach and engagement while delivering measurable results to the business. When asked to describe the results of upgrading to modern marketing practices, over 55% pointed to increased sales and 37% to higher profitability. In conducting 492 surveys and six phone interviews with marketing decision-makers across the US and Europe, Forrester found that most companies are in the process of evolving marketing practices, but on average they are only about halfway to the goal of becoming customer-obsessed. In fact, only 11% of our survey base scored well enough to be considered a modern marketer today. KEY FINDINGS Forrester s study yielded four significant findings: Marketing maturity has an impact on the business. Companies that employ marketing best practices and topped the scale as modern marketers on our maturity index also grow revenue faster and enjoy greater market share than their less sophisticated peers: 44% of modern marketers said their companies exceeded revenue goals

4 2 How Mature Is Marketing? Marketing is undergoing incredible change. The longtime guardian of brand, advertising, and the corporate image, marketing today must prove its value against firmwide business revenue and growth objectives. Recently, Forrester Research found that 54% of chief marketing officers (CMOs) identified meeting revenue targets as their most important business driver. 2 Yet being accountable to the business has never been more challenging, as marketers face a growing array of program options, both digital and physical, where technology is essential to engaging increasingly sophisticated buyers. To explore the rapidly changing marketing landscape, Oracle commissioned Forrester Consulting in May 2014 to conduct a study assessing marketing maturity. Oracle wanted to understand how mature capabilities potentially affect business results and to identify the characteristics that distinguish marketing excellence. The study surveyed senior marketing executives and managers from corporations across a diverse set of industries to learn how modern marketing practices are distributed across the marketplace. Upon completing a survey of 492 marketers from the US, UK, France, and Germany, we found that 56% of marketers ranked only in the first two stages of our maturity index (see Figure 1). Just 11% of those surveyed scored high enough to be considered modern marketers. FIGURE 1 Only One Out Of Nine Are Modern Marketers Marketing maturity (Respondents graded on seven criteria, each worth up to four points) % of respondents Marketing Maturity Supports Business Success Our study discovered a strong correlation between modern marketing practices and business success. Companies that embrace modern marketing processes outperform peers and competitors on key business performance indicators, including revenue growth, market share, and workplace excellence. A closer look at the connection between modern marketing practices and positive business outcomes shows modern marketing has an impact on: Revenue growth. Overall, 44% of modern marketers, those scoring in the top category of our index, reported that their company s revenues exceeded their plan by 10% or more over the past 12 months, versus only 23% of their peers (see Figure 2). Companies that achieve this level of revenue growth also outperform peers with less revenue growth in their use of intelligent targeting and their ability to comprehensively understand customers. 3 FIGURE 2 Mature Marketers Improve Revenue Growth How would you characterize your company s revenue growth rate over the past 12 months against your plan? Were lower than plan 7% Achieved plan or were close 23% Don t know 4% Achieved 10%+ higher growth rate than plan 25% 44% of modern marketers achieved revenue growth 10%+ above plan. 41% 33% Achieved 1% to 9% higher growth rate than plan 41% 15% Novice (2 to 11) Developing (12 to 17) Experienced (18 to 23) 11% Modern marketers (24 to 28) Base: 492 North American and European marketing decision-makers Base: 492 North American and European marketing decision-makers

5 3 Increased market share. When we asked respondents to evaluate their company s market share and leadership position in their respective markets, an overwhelming 94% of modern marketers told us that they have attained a significant market share, and 49% enjoy the marketing leading position (see Figure 3). Workplace excellence. In our survey, 71% of modern marketers claimed that they had received national recognition as a best place to work at least once in the past three years. Experienced marketers achieved similar recognition just 51% of the time, developing marketers 45% of the time, and novice marketers only 38% of the time (see Figure 4). We are using technology to create efficiencies in manpower, time, and revenue. This differentiates us from our competitors who are striving for the same thing, but technology has given us that little bit of difference in understanding who we are, what our business is, who our customers are, and how to approach them. Global director at a communications firm ranked in the modern marketing category FIGURE 3 Modern Marketing Leads To Market Leadership Which statement most closely describes your company s market share relative to your closest competitors? Are not in a market leading position 16% Share market leadership with one to two competitors 47% Don t know 2% Sole market leader 35% 49% of modern marketers identify as sole market leaders. Base: 492 North American and European marketing decision-makers FIGURE 4 Modern Marketing Improves Workplace Culture Which statement most closely describes the industry or market recognition you have received for your employee working environment within the past three years? Have not received workplace recognition 34% Don t know 3% Have been named to multiple national best place to work lists 22% 71% of modern marketers have received national best place to work recognition. Have received local recognition as a best place to work 14% Have been named to at least one national best place to work list 27% Base: 492 North American and European marketing decision-makers

6 4 Marketers Upgrade To Modern Practices To assess marketing maturity, we asked marketers to match their current practices against a list of increasingly sophisticated options (see Figure 5). Looking at the benchmark results, we found there are several areas where marketers overall excel at putting technology and processes to work. Specifically, our study found that marketers: Improve targeting and customer understanding through data analytics and personas. Marketers today are very mature when it comes to using data to help understand their customers: 67% said they have formal, consistent data gathering techniques, including 34% who are developing personas for each of their major audience types. An astonishing 87% of respondents agree that their messaging has become much more targeted because data analytics now give them the ability to address specific segments, personas, or client needs. Increase investment in data management technology and skills to turn data into insight. Marketers are advancing in data management and in their ability to turn insight into action: 60% said they have successfully combined or are in the process of combining realtime customer data with predictive models and statistical techniques to help them drive their business opportunities more efficiently. Retail and telecom are the most advanced here, with media and financial services trailing other verticals. To find lookalike prospects, 83% of those surveyed somewhat agree or strongly agree that they are able to use their existing customer data to analyze their best customers and understand how they buy (see Figure 6). You can t be narrow-minded about what you are doing. Despite what your traditional marketing practices may be, innovating continually leads to some of the most successful outcomes. Channel marketing lead for a financial services firm ranked in the modern marketer category Use real-time feedback and behavior tracking to understand their customers better. Of the five key areas studied, marketing practices around targeting and segmentation also rated as very mature. Fifty-five percent of marketers have advanced beyond basic demographic and firmographic information and basic readiness criteria to segment prospects based on personal criteria such as expressed preferences or interests. Another 31% employ intelligent targeting based on real-time feedback and behavior tracking. Retail and telecom respondents are, on average, particularly advanced in this category, with 46% FIGURE 5 Modern Marketing Practices Increase In Sophistication As Maturity Grows Novice marketers: Segment inconsistently and use basic information like industry, company size, and geography. Don t really use formal data to inform understanding of customers. Focus on outbound communication through direct channels like and sales calls. Use conventional conversion processes, running campaigns and turning respondents over to sales to qualify and close. Have incomplete, siloed, and untrustworthy customer data. Measure channel effectiveness for each channel separately. Do not use any marketing automation systems. Modern marketers: Employ intelligent targeting based on real-time feedback data and behavioral analysis in addition to preferences and readiness criteria. Use data to develop personas for every major audience type, and use these to guide marketing strategy, messaging, and execution. Distribute thought leadership, build a two-way dialogue about challenges, and give customers exactly what they need at each stage of the purchase journey. Use scoring, nurturing, behavioral triggers, and recycling across not only the sales pipeline but also after sales to increase loyalty. Have current and real-time accessible customer data. Use predictive models and statistical techniques to create models and drive business opportunities. Leverage attribution measurement to understand the impact of all channels. Have a standard, fully integrated cross-channel marketing automation platform.

7 5 using intelligent targeting, versus other industries such as manufacturing, which had the lowest rate of intelligent tracking at 18%. But More Work Is Required Despite this progress, we also found a few areas where marketers are not quite as mature. We found many marketers still need to: Extend conversion efforts beyond acquisition. More than half of our respondents (52%) focus conversion activity on customer acquisition and rate their processes as conventional with limited use of lead scoring and nurturing. The most advanced marketers (17%) extend advanced conversion techniques like lead scoring, nurturing, behavioral triggers, and lead recycling beyond the sales pipeline to include after sales activity aimed at retaining customers and increasing loyalty. On the positive side, 77% of all respondents said they now engage with customers post-purchase to ensure successful adoption and use, and 79% said they have instituted programs aimed at converting buyers into repeat purchasers. Avoid depending on traditional outbound approaches. While marketers strive to communicate with customers and share information customers care about, 57% still conduct mostly one-way, outbound communications. Only 11% said they engage in real dialogue with buyers at each stage of the purchase journey and personalize communications according to their needs. Media, financial services, and healthcare lag behind in the adoption of engagement tactics that give buyers exactly what they need at each stage of the purchase journey personalized to their preferences. One of the key investments we have made is in our digital and social media presence. We have a team that has grown to about four times the size of what we had two years ago. We feel this helps us to engage in dialogue with our members. Marketing director for an insurance organization ranked in the modern marketer category Measure cross-channel influence to better attribute marketing s impact on the business. When it comes to measuring campaign effectiveness, 31% of marketers studied said they measure each channel separately, independently from other activity or media. Another 25% claimed to be able to measure the halo effect of channels and campaigns. Only 13% of marketers leverage attribution measurement beyond these limited channel effects to understand the impact of marketing activity carried out across multiple channels. Overall, marketers showed the least maturity on this criterion. FIGURE 6 Marketing Practices Are Evolving Our messaging has become much more targeted toward specific segments, personas, or client needs We analyze our best customers to understand how they buy and find others like them We have programs that actively engage customers to convert them into repeat purchasers or to grow wallet share Cloud-based deployments are the ideal way to ensure we have access to all of, and the best, functionality We have programs and processes that engage with buyers after purchase to ensure their onboarding, adoption, and use is efficient and valuable Agree or strongly agree Base: 492 North American and European marketing decision-makers 87% 83% 79% 78% 77% Knit together systems to produce a fully integrated automated marketing platform. Poor adoption and integration of marketing automation contribute to the inability to perform cross-channel attribution. More than half (57%) of respondents admitted their marketing infrastructure is separated by channel, not well-integrated, or lacking entirely. Only 14% have standardized, fully integrated cross-channel marketing automation platforms, with 42% of retailers standing out as more advanced than other verticals using this type of solution. Fortunately, marketers see technology evolving rapidly, and 78% of respondents agree that cloud-based deployments are the ideal way to access all of, and the best, functionality they need.

8 6 Place a higher premium on analytic skills. When asked to rank the most important skills they consider when hiring or developing marketing staff, one-third of respondents put brand/marketing management in the top spot, while only 12% did the same for data analytics (see Figure 7). While it is important to balance the creative side of marketing with the analytical, the transformation to modern approaches will lag behind until marketers bring these skill sets into alignment. Modern Marketing Delivers Tangible Benefits When marketers transition to more modern practices around sophisticated targeting, engagement, conversion, and analytics, they start to see important results in business activity and marketing progress (see Figure 8). Marketing organizations that upgrade their marketing strategy, processes, technology, and skills enjoy: Increased sales. When we asked respondents to rank the benefits they have seen on their journey to become more modern marketers, 35% listed increased sales as the primary benefit. Overall, the vast majority of those surveyed (55%) said higher revenues were a direct benefit of investing in marketing. Streamlined profitability. Modern marketing contributes not only to revenues, but to the bottom line as well. More than one-third of respondents (37%) believe they are better able to focus their marketing efforts on more profitable activities through the use of more modern processes, technology, and skills. Greater executive support. As a result of their investment in modernizing their practices, 32% said they have seen an increase in how executives champion marketing as a strategic part of the business. As a senior marketing strategist at a manufacturer told us: Our leadership has worked to give marketing a more prominent role outside the company in particular in development. We ve become much more consumercentric and are using that consumer centricity to help figure out what products to bring to market. FIGURE 7 Traditional Marketing Skills Still Top List Of Training And Hiring Criteria Which are the most important skills that you consider when hiring/developing marketing staff? (Rank up to top five) Rank 1 Rank 2 Rank 3 Brand management/marketing 33% 12% 8% 6% 8% Strategic planning 13% 12% 12% 9% 5% Data analysis 12% 14% 8% 6% 6% Creative strategy 6% 7% 9% 7% 7% marketing 6% 8% 6%5%6% 4% Lead management/nurturing 6% 9% 9% 6% 4% Copywriting/publishing 5% 7% 6% 4% Event planning/production 4% 6%5%5% 4% Public relations 3% 5%5%6%6% Graphic design 3% 6% 4% 4% 2% 1% 2% Social media 4% 11% 8% 2% 3% 4% Mobile strategy 6% 4% 2% 3% Search engine optimization 5%5% 4% Website management 1% 5%5% 7% 1% Rank 4 Rank 5 Base: 467 North American and European marketing decision-makers FIGURE 8 Companies Enjoy A Wide Range Of Benefits From Upgrading Their Marketing What have been the most important results of upgrading your marketing strategy, processes, technology, and skills during the past two years? (Rank up to top three) Emphasis on more profitable activities Senior management champions marketing strategies Rank 1 Rank 2 Rank 3 Increased sales 35% 12% 8% 13% 11% 13% 14% 11% 8% Increased ability to prove marketing 7% 12% 14% delivers a return on investment Lowered costs/competitive 7% 13% 12% advantage Better able to differentiate 9% 9% 10% brand/new productivity Validation of marketing s mission 6% 12% 7% 4% Improved image as a 10% 8% digital company Base: 437 North American and European marketing decision-makers

9 7 Key Recommendations Forrester s in-depth interviews with marketing executives and managers, supported by global survey results with 492 of their peers, show how companies with modern marketing practices outperform on revenue goals, capture market share, and deliver better business results. To develop the practices and make the right technology investments required to nurture a firm s untapped marketing potential, marketing leaders and executives should: Use technology and process to simplify the marketing approach. Advancing all five key modern marketing practices simultaneously can become complicated without tools and analysis that can focus the marketing team s priorities. Modern marketers should work toward putting a marketing architecture and platform in place that lets them focus on the customer and build relationships across the buyer s lifetime. As one channel marketing lead at a financial services firm told us; The use of a platform has made it easier for us to run campaigns, conduct A/B testing, analyze results, and do a lot of other things that were very manual or just not smooth before. We give a lot of weight to the analysis that we do and have dropped programs that didn t work to give us capacity and budget to spend on other programs. Invest in a comprehensive data strategy. If customer understanding is the key to competitive advantage in the digital age, then data will become the currency by which marketers acquire this insight. Modern marketers put their data to work when they combine primary customer data from internal systems and databases with anonymous third-party sources to upgrade their customer intelligence. A more comprehensive customer data model managed through a data management platform that enables marketers to activate this data helps marketers predict which leads to pursue, target and reach the most promising market opportunities, conduct lookalike modeling based on ideal customer profiles, and determine the next best offers to make to potential buyers. 4 Sharpen their attribution acumen. Marketing can no longer rely on soft measures like brand awareness or disconnected stats like trade show badge scans, social likes, or website traffic to demonstrate how marketing returns value to the business. When only 10% of marketers can strongly agree that marketing s financial impact is clear to the business, it s time to put metrics to work managing marketing s performance. 5 Modern marketers upgrade their metrics, reporting, and dashboards to quantify cross-channel campaign effectiveness; track and attribute marketing activity against sales; and measure marketing s contribution to overall revenue goals. Combine content strategy with automation to scale message delivery. To maximize the chance each marketing-generated opportunity turns into a successful revenue event, modern marketers must combine marketing automation with content marketing strategies that engage customers with information and utility they value. Modern marketers deliver the right message at the right place and time when they develop cross-channel strategies that engage buyers in ways appropriate to each channel as they also convert suspects to prospects, prospects to customers, and customers to advocates. Own the customer s digital experience. Digitally empowered customers are in more control of the purchase process. This provides an opportunity for marketing to assume a leading role in transforming the customer s digital experience across the organization from pre-sale to post-sale activities. Modern marketers must look beyond their own marketing practices to engage peers in sales, support, service, and customer experience so all parts of the business can better understand a customer s context and preferences, deliver utility with every interaction, and guide the customer into the next best interaction.

10 8 Appendix A: Methodology In this study, Forrester conducted an online survey of 492 B2B and B2C marketing decision-makers in the US, the UK, Germany, and France across industries to evaluate the evolution of their marketing practices. Further, Forrester conducted six phone interviews with these same respondents who scored high on the maturity scale in order to gain deeper insights into their marketing activities. Respondents were offered a small incentive as a thank you for time spent on the survey. The study began in June 2014 and was completed in September To benchmark marketing maturity, we asked seven questions that progressively assess how well a marketing organization targets its audiences, engages with buyers, converts buyers across their lifetime, analyzes marketing s performance against goals, and uses technology to support all the associated marketing processes. For each question, respondents picked the statement that most closely matches their current practices, with statements increasing in sophistication. We assigned a score of one to four points to each response, for a maximum of 28 points total. We then ranked respondents into one of the four maturity levels based on their scores. We found marketing maturity follows a normal distribution, with 74% of respondents falling into the two middle categories out of the four we identified in our maturity index. Our maturity scale included the following nomenclature and defining characteristics. NOVICE These marketers: Segment inconsistently and use just basic information like title, industry, company size, or geography to distinguish audiences. Don t really use formal data to inform understanding of customers. Have primarily outbound communication; they focus mostly on brand advertising and promoting messaging through direct channels like and sales calls. Use conventional conversion; they run campaigns and turn respondents over to sales to qualify and close. Have disorganized customer data: It s incomplete, siloed, difficult to work with, and few people trust what it says about customers. Measure channel and campaign efficiency and effectiveness based on each specific channel, not considering other marketing or media activity occurring at the same time. Do not use any marketing automation systems. DEVELOPING These marketers: Segment using readiness criteria like BANT (budget, authority, needs, timeline) in addition to basic information. Have superficial understanding of customers: Data gathering and analytics around customer types are inconsistent and ad hoc. Distribute to the market information about customer successes and thought leadership on topics that customers care about, in addition to outbound communications. Have conversion processes that are just beginning to adopt practices like the waterfall method of lead scoring and nurturing to develop demand ahead of sales involvement.

11 9 Are working to clean up customer data. They still have disparate systems but are doing manual analysis and augmenting it with second- and third-party data. Measure the halo effects of channels and campaigns. Have separate, disparate automation systems running for various channels. EXPERIENCED These marketers: Segment based on expressed preferences or interests in addition to basic information and BANT. Have advanced customer understanding: They gather and use data about customers based on roles and responsibilities and involvement in the purchase process. Strive to build a two-way dialogue with buyers about the issues they face and the problems they want to solve. Have conversion processes that are maturing beyond scoring and nurturing to include behavioral triggers and lead recycling that accelerate the most qualified leads through the funnel. Are maturing their customer data management. They are investing in more technology and skills to help streamline data management, enhance it with second- and third-party data, and find hidden or novel insights across all transactional systems. Measure limited channel and campaign effects. Have separate marketing automation platforms that are integrated together. MODERN These marketers: Use a combination of expressed preferences/interests, BANT, and basic criteria and also employ intelligent targeting based on real-time feedback data and behavioral tracking/analysis. Have customer understanding that is comprehensive: They use data to develop personas for every major audience type and use these tools to guide marketing strategy, messaging, and execution. In dialogue with buyers, give them exactly what they need at each stage of the purchase journey, personalized to their preferences. They give the buyers nothing that would waste their time. Have conversion processes that are comprehensive and apply scoring, nurturing, behavioral triggers, and recycling across not only the sales pipeline but after sales to retain customers and increase loyalty. Have customer data that is current and accessible in real time. They use predictive models and statistical techniques to model things like lookalikes and next best offers to drive the best business opportunities more efficiently. Leverage attribution measurement to help understand the impact of multiple channels. Have a standard, fully integrated cross-channel marketing automation platform.

12 10 Appendix B: Endnotes 1 Source: Competitive Strategy In The Age Of The Customer, Forrester Research, Inc., October 10, Source: The Evolved CMO In 2014, Forrester Research, Inc., February 24, In the survey, we asked respondents about their revenue growth against plan, their market share against competitors, and about any recognition that they have recently received for workplace excellence. We found correlations between success in all three of the above metrics and modern marketing practices, with the strongest link between modern marketing practices and those achieving revenue at 10% or more above plan. Those who are achieving this revenue growth are greatly outperforming their peers in the use of intelligent targeting (47% versus 25% of their peers achieving lesser revenue growth); creating a comprehensive understanding of their customers (48% versus 29%); creating personalized dialogues (20% versus 9%); maintaining current and accessible real-time data (41% versus 19%); and using an integrated cross-channel marketing automation platform (28% versus 11%). 4 Source: How Analytics Drives Customer Life-Cycle Management, Forrester Research, Inc., June 19, Source: B2B Marketing Measurement Needs An MBA, Forrester Research, Inc., August 27, 2013.

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