In 2012, IBM surveyed 362 leading marketers from around the world to better understand today's rapidly evolving marketing landscape. We found that there is a segment of Leading Marketers that have a high level of responsbility for engaging with customers across channels and that have a sophisticated approach to investing marketing resources. These Leading Marketers' organizations had significantly better financial performance over the past 3 years. We explore what exactly these Leading Marketers do differently than the rest.
Machine Learning Model Validation (Aijun Zhang 2024).pdf
How Leading Marketers Outperform
1. IBM Center for Applied Insights
Why leading marketers outperform
Effective engagement and intelligent investment
2. 2 Why leading marketers outperform
Evolving technology and social trends hold The opportunity of a connected world
We live in a world of connections, awash in data. Thanks to
tremendous potential for engaging customers technology, customers interact with brands and one another
on an individual basis, helping to turn marketers’ in ways unimagined only ten years ago. Relationships used
to be simple and unidirectional, with brands reaching out to
long-held aspirations into reality. Conceptually, customers through static media channels such as advertising.
Now, interactions are true dialogues, complex and bi-
these new capabilities should yield more
directional. Customers are deeply involved in shaping their
effective marketing and ultimately better relationship with the brand and are communicating that point
of view to others through social and mobile channels.
business results compared to traditional
approaches. But can this prove true in practice? This dynamic environment represents a vast opportunity for
those who can meet the demands of ever-more sophisticated
consumers. Today, people are primed to expect a high-
The answer is yes – though the story has an quality overall experience, one based on a deep knowledge of
their motivations, desires and preferences. At the same time,
interesting twist. Marketing outperformers excel
marketers need to effectively use their limited resources to
at engaging individual customers systematically. move the needle where it matters most. If the organization
can balance these external demands and internal requirements,
What truly differentiates them, however, is that it can consistently touch customers in exactly the right way.
they also have the insights and organizational
Today’s abundance of customer data is a priceless resource.
influence to invest marketing resources to better Armed with advanced technology and more scientific
approaches to harness this big data, marketers can finally be
coordinate the customer experience across their equipped to do what they’ve always wanted: market to indiv-
enterprise. Their marketing approaches contrast iduals. They can detect patterns, make new associations and
acquire a deeper understanding of customers as individuals
with the rest of the pack and provide valuable – thereby enabling new methods of personalized engagement.
lessons for those looking to boost returns on That same approach is making it possible for marketers
marketing investments. to demonstrate tangible returns on marketing spend. They
now have the ability to gather, analyze and use hard data to
discern marketing effectiveness and make fact-based invest-
ment decisions.
About the study
To understand the impact of marketing management on
business outcomes, IBM surveyed 362 marketing
professionals from around the world across more than fifteen
industries. We linked these responses to publicly available
financial information to identify possible correlation between
marketing sophistication and financial performance.
3. IBM Center for Applied Insights 3
Paying off on the opportunity organizations also make spending decisions differently,
So what’s the upside for marketing organizations that can employing a more analytical and cooperative approach. Often,
both engage customers effectively and invest their marketing line-of-business peers are part of the process, providing
spend better?1 What it adds up to in real terms is the power to valuable input on the marketing mix.
drive better financial performance (see Figure 1). As a group,
businesses armed with forward-thinking marketing Simply put, leading marketers establish a system of engage-
organizations have three-year revenue CAGR more than ment that can help drive quantifiable outcomes. They deploy
40 percent higher than that of other companies, and their innovative technology and processes to automate, deliver,
gross profit is growing at a rate double that of their peers. guide and accurately measure the impact of marketing actions
Those are impressive figures, especially in light of the current across all channels. This system allows them to engage with
economic climate. customers in a personalized way and make more informed
marketing investments with greater ROI.
Beyond the revenue and gross profit differences, what’s
equally significant is rate of gain. These leading companies
are growing gross profit faster than revenue. This suggests
they’re able to maintain high margins and sell more products Lands’ End: Engagement in action
at full price instead of relying on discounts. Catalog retailer Lands’ End created a customer data mart
to gain a greater understanding of buying behavior and
Inside the forward-thinking develop systematically targeted, personalized marketing
strategies. The end goal was to drive cross-channel stream-
marketing organization
based and longitudinal campaigns. For example, automated
The stand-out financial results that some companies are able to
campaign management software is able to support any
achieve suggest that they manage marketing more effectively.
number of versions of a mailing, meaning Lands’ End is
Indeed, leading marketers report greater effectiveness across
able to coordinate customer relationship management and
all four of the classic marketing “Ps”: Promotion, Product,
campaign management with the catalog bindery to create
Place and Price (see Figure 2). They are more likely to assume
custom, individualized mailings.2
an all-encompassing role, “owning” the customer experience
across channels and/or business functions. These marketing
Revenue growth Gross profit growth
3-year CAGR, 2008-2011 3-year CAGR, 2008-2011
10% 12%
7% 6%
Leading marketers Others Leading marketers Others
Figure 1: Leading marketers both perform better and are able to grow profit faster than revenue.
4. 4 Why leading marketers outperform
Engagement: A system that
Influence of marketing organizations works holistically
Leaders Ownership Effectiveness A robust system of engagement fuels marketing innovation,
Others % responded 4 or 5 % responded 4 or 5
“full ownership” “highly effective”
enabling the business to meet customers whenever and
however they wish to interact with the brand. It also leads to
91% 72%
Promotion greater flexibility and speed of execution with campaigns that
79% 55%
are more accurately targeted, integrated and closer to real time.
The system allows leading marketers to drive customer value
Products 71% 66% at every interaction – online, offline, inbound and outbound,
/services 48% 48% across all channels.
64% 57%
Tapping into the power of integrated,
Place multichannel campaigns
50% 46%
By linking timely information about customers with flexible
campaign management, it becomes possible to craft more
Price 62% 52% personalized offers across all available channels and make use
41% 39% of technology to optimize interactions. Leading marketers are
33 percent more likely to serve personalized or targeted offers
in four or more channels and in real time and are better able
Figure 2: Leading marketers report greater influence across the to create integrated online/offline marketing programs (see
organization, including areas outside the traditional marketing silo.
Correspondingly, they also indicate greater effectiveness in these areas. Figure 3). They see the value of a coordinated, dynamic effort
and tend to use technology across all channels.
Channels used to deliver targeted/personalized messages in real-time
Leaders
Others
74%
63% 63% 62% 62%
51% 53%
49% 47%
38%
Website Customer service/ Face-to-face Social media Mobile channels
call center
Figure 3: Across the board, leading practitioners make greater use of a wide variety of channels to deliver targeted/personalized messages in real-time
based on customer interaction with the brand.
5. IBM Center for Applied Insights 5
If leading marketers are more likely to deliver messages across
Leaders
channels, which ones are they using? As it turns out, they Others
excel at leveraging these offers across virtually every channel: Mobile
web, call center, social media, mobile, and face-to-face.
Consider what that means from a system and process stand-
point: campaign management has to be tightly integrated,
highly efficient and very agile. This is where a well thought-
out system of engagement shows its true value.
Putting personalization to work with mobile and
social marketing 41% 25% 36% 20% 33% 18%
Currently use mobile Currently use location- Currently use
By integrating technology across the marketing function, messaging campaigns based targeting mobile ads
leading marketers can make better use of specific tactics within
mobile and social media marketing. Although mobile and
social have become commonplace – “table stakes” in marketing Social
today – these companies are able to innovate while those they
outperform are more likely to merely follow trends.
In mobile marketing, for example, the vast majority of
companies today make use of standard tactics such as mobile
device applications, optimized websites and emails formatted
for smart phone delivery. Leading marketers, however, take
it to the next level by using time- and location-specific mobile
71% 56% 48% 31% 43% 30%
Currently use apps Currently use Currently use
messaging campaigns and ads (see Figure 4). Knowing not on 3rd party social social/local group location-based games
networking sites buying (or plan to (or plan to use within
only to whom you’re talking, but also where they are is critical (or plan to use within use within a year) a year)
intelligence as it drives the ability to make relevant offers that a year)
reflect customer context. Imagine someone walking into a Figure 4: Leading marketers make greater use of specific mobile and
concert or sporting event and having a virtual “pop up” store social marketing tactics. They are quicker to incorporate location data and
appear on their mobile device, with specific promotions linked embrace new marketing models such as social/local group buying.
to that event.
Social media marketing follows a similar trajectory.
Brand accounts on Facebook and Twitter have become
the new “brochureware” and are seen as ordinary. Leading
marketers are innovating with new models such as local/social
group buying and creating engaging apps that run on sites
like Facebook.
6. 6 Why leading marketers outperform
Telefónica: Fine-tuning the The critical importance of attribution
customer interaction Many organizations have only a general sense of how well
Spanish telecommunications provider Telefónica executes their campaigns and tactics work. Leading marketers stand
200 campaigns per month through millions of SMS marketing out because they place greater emphasis on measurement,
messages and emails. Its outreach is coordinated and tracking results and linking them to individual efforts.
optimized based on customer actions, an approach that While their methodology may vary, 88 percent engage in
goes beyond predictive modeling to prescriptive, “next best attribution in some way. And of that group, 93 percent have
offer” marketing. Each new offer is precisely tailored based a set process for determining how results are attributed to
on customer purchases, segmentation, behavior, geography various marketing activities.
and external data, with business rules around profitability,
company values and regulation. This has helped deliver a What that means for the marketing organization is greater
35 percent increase in the number of customers in just efficiency in their use of marketing budgets. They have
three months.3 complemented investments in real-time engagements with
corresponding measurement and analytics capabilities so
they can optimize new efforts.
Earning influence through results
Investment: Making resources count The same measurement-driven insight that informs opera-
The technology that enables multichannel, personalized tional spending decisions also impacts the role of marketing
marketing is readily available, and many companies have within the organization. Leading marketers’ ability to
taken steps to implement it. So why exactly don’t more demonstrate results helps them build credibility and the
organizations achieve the results shown by leading marketers? financial justification needed to construct an enterprise-wide
It has to do with their ability to invest effectively, making system of engagement. With this grounding, they’re able
results-based allocation decisions that maximize the return to enlist the support of other business functions in knitting
on marketing spend. together a common view of the customer across different
points of interaction.
In part, investing wisely means putting marketing funds where
they’ll do the most good. However, it’s also about enabling Collaboration with IT is particularly important since this
marketing to justify a broader role in consistently coordinating system of engagement increasingly depends on technology.
and leading the customer experience across the enterprise. Leading marketers have a distinct advantage here. Because
they’re farther along the business transformation and
technology adoption curve, these organizations have greater
freedom of action. They are focused on how to improve
and scale operations to differentiate their customer experience
and grow their businesses.
7. IBM Center for Applied Insights 7
In contrast, their less successful peers still struggle with basic • Encourage innovation – Leading marketers are at the fore-
alignment and coordination between marketing and IT – and front of adopting innovative technologies and channels and
technology integration with the rest of the organization. analyzing customer behavior and preference trends. By
Compared to leading marketers, they’re less likely to “own” embracing new technologies and channels – and making
marketing technology decisions. Consequently, it’s more a concerted effort to coordinate activities – the business
difficult for them to invest in the technologies that enable an can shift its consumer interaction stance from reactive
effective system of engagement. to proactive.
• Measure what matters – Marketers need to demonstrate the
The ability to show ROI on marketing investments not only benefit of everything they do – every touch point, interaction
helps leading practitioners to invest more intelligently, it also and outcome. This will help them justify their expanded role
elevates their role in the business. They’re positioned to guide and optimize future investments.
marketing technology decisions and shape the customer • Collaborate with IT – To create a system of engagement that
experience across business functions. They can focus on delivers value to customers at every touch, marketers need
driving strategic growth and shaping business strategy versus technology. By working closely with their IT colleagues,
simply managing the mechanics of marketing. leading marketers can advance their ability to deliver
a differentiated customer experience across a broad mix
of channels.
Seton Hall University: The demonstrated
value of attribution Valuable lessons can be taken from leading marketers. By
Seton Hall University made innovative use of social marketing looking closely at what they’ve done to enhance their ability
to make smarter marketing decisions. The University cor- to engage and invest – develop a robust system of engagement
related Facebook usage and traditional marketing campaigns and rigorously attribute all results – clues can be found for
with subsequent applications and enrollments to fine-tune its improvement in your own organization. Equally important,
outreach. The result: the largest freshman class in 30 years, however, is the strategic role of marketing within these
accounting for an 18 percent increase in net present revenue forward-thinking organizations. Their view of marketing as
– all in an era when overall higher education enrollment is an activity that interacts with and serves the entire business
trending downwards.4 is an essential part of their success. It’s this rich combination
of engagement, innovation, measurement and collaboration
– all enabled by technology – that can help produce better
What should you do? financial performance.
As you look to improve your ability to engage and invest to
consistently drive greater performance for your enterprise,
consider these key initiatives:
• Expand the role of marketing – Leading practitioners have made
marketing a business priority and given marketers a voice in
overall strategy. Through greater ownership of the 4Ps and
demonstrated results, these marketers have moved beyond
traditional demand generation activities and are shaping the
customer experience across the business.