Quantic’s core principle is that connected organisations out-perform their competition. By connected, we mean those businesses whose commercial functional strategies are aligned behind one consistently understood growth agenda. Our previous posts have looked at the necessity to align these cross-functional strategies behind a common growth agenda. Marketing sets the direction via clear consumer-centric Growth Drivers. Consumer and Customer Marketing then jointly own the planning and delivery of Shopper Marketing activities.
In this post we explore how a Customer Marketing function can similarly help embed and operationalise an organisation’s growth agenda through its day to day work across internal and external customers.
Customer Marketing – a pivotal function in the alignment of strategy
Call it what you will (we will stick with Customer Marketing throughout this post), the importance of the function that sits between Consumer Marketing and Sales teams in many CPG organisations cannot be over-stressed. Working with our clients, Quantic sees on a daily basis the influence that this function has in creating both internal alignment and external customer connections. When it’s working well, this function has an incredible span of influence.
Quantic believes that the Customer Marketing function needs to evolve – it needs to be fit for purpose if it is to continue to deliver the Growth Drivers and take account of dynamically shifting shopper behaviours, where channels are blurring at an ever-increasing rate. In an omni-channel environment, Customer Marketing needs to actively participate in the development of channel strategy and in the creation of tailored executional plans, based on the different missions being shopped by channel. This increasingly includes e-commerce responsibilities.
Customer Marketing, now more than ever, needs to be a combination of category and shopper-centric if it is to deliver the growth strategy through everything it does.
How should Customer Marketing evolve?
To deliver against this ever-changing landscape, Quantic advocates a dual focus for any Customer Marketing function:
- It has to have a 0 to 18 month operational focus. The function operationalises this year’s annual commercial plan and creates, manages and delivers a channel-specific set of executions, working with key internal customers such as Marketing, Sales and Distribution. Additionally, the function needs to make the link between the Growth Drivers and RGM. It then helps create the plans that are inputs into next year’s corporate commercial plan.
- It has an 18 month to three year strategic focus. The Customer Marketing team is typically involved with Marketing in the creation of strategies to support Growth Drivers. These are often shopper marketing campaigns designed to close the shopper conversion gap (the subject of our last post), and the setting of both on and off-line, channel-specific sets of shopper experience standards. It typically manages the standard category management work and therefore sets these shopper experience standards across merchandising, range and ‘strategic’ promotions. Regardless of which focus the team has, Customer Marketing’s outputs need to be consistently aligned against the growth agenda created by Marketing. Customer Marketing teams’ deliverables must be firmly set in the context of Growth Drivers.
It is this duality of operational and strategic focus, plus the span of different skills required, that makes great Customer Marketers a rare breed. Great Customer Marketers combine the creativity and analytics of a Consumer Marketer, the planning and project management skills of an Operational Planner and the influencing and commercial skills of a Key Account Manager.
Having to be as adept at understanding consumer motivations as they are shopper missions by channel, having to be able to set and execute strategy and being able to manage relationships across both internal and external, is why great Customer Marketing teams have separate operational versus strategic divisions.
How do Customer Marketing teams use the Drivers?
What follows is based on the assumption that an organisation has created the consumer-centric Growth Drivers we discussed in our second post and that these Drivers have been quantified.
1. Use your Growth Drivers’ quantification strategically
Customer Marketing needs to play a key role in linking the Growth Drivers to the commercial planned investment strategy, taking into consideration where the growth is going to come from.
Driver allocation by Channel:
If your growth strategy shows an incremental £150 million potential across a three year period, how much of this will be found in each channel? In our last post we said that the critical penetration-building First Purchases that you need to target for brand and category growth, may not be coming from the traditional channels where routine, planned shopping occurs. By thinking about where you need to execute your three year plans, you can be more strategic in your trade and channel investments. Think omni-channel.
Your category specific growth strategy, planned by channels, gives you a head start over competitors who rely alone on channel development predictions based on macro trends. Use these excellent studies as an input but overlay your future-focused beliefs on top of them, to create a real point of category-specific, quantified difference.
Driver allocation by Customer:
If you have allocated category growth ambitions by channel, the next step is to provide a view on how much will be delivered by key customers. Customer Marketing is likely to be the function taking the lead in the delivery of the initial reveal of their organisation’s view on a category growth agenda to key customers. The function will certainly be involved in the shaping and joint development of a business plan, that takes each different customer’s own strategy and their different shoppers into account. How much of a channel’s potential is likely to be realised by each key customer and why?
Building joint business plans around the delivery of the strategically important activities helps make these plans future-focussed. It makes them strategic. Additionally, it provides an organisation with greater clarity on the priorities for investment.
Driver allocation by product Segment:
Growth Drivers should clearly indicate the product segments most likely to deliver the overall growth. Which Drivers are impacting which segments and by how much? Once you have a view on this, you can make your range and merchandising choices more strategic. Recommendations can be made on range coverage levels by segment, by channel and by customer, which align straight back to a joint business plan by customer, which in turn aligns back to the overall growth strategy.
These coverage levels will provide the Category Management Team with the perfect context to use their skills to support the strategic growth agenda in a fully aligned manner. By being able to create a forward-thinking projection on the speed and scale of growth of certain segments, matched by understanding of which segments are forecasted to decline, a new range and merchandising plan can be created. It becomes another connected strategy in the delivery of an overall growth strategy.
The best Customer Marketing functions realise the distinct difference between a traditional Category Management approach (the original eight step process is now 30 years old) and a POP management method set in the context of the overall growth strategy. Category Management works best in the context of a Category Marketing approach.
2. Align your promotional planning to your growth strategy
Customer Marketing plays a critical role in the planning of promotions. Quantic classifies promotions into two broad buckets – those considered to be more ‘equity’ building (delivering against Growth Driver behaviour changes) and those seen as being more ‘transactional’ (simply shifting short term volume).
Organisations rightly put a huge focus onto promotions, but the facts are that in flat to declining markets it is all too easy for manufacturers to throw badly-aimed monies at what is often perceived as the ‘silver bullet’ for achieving growth. Trapped between the proverbial rock and a hard place, the more money suppliers spend, the lower, if any, the incremental returns. Transactional promotions typically account for the majority of activities. Meanwhile, retailers continue to pressurise as they strive to beat like-for-like returns.
Quantic strongly advocates that the most valuable promotions, the equity building ones, are those which clearly demonstrate the strategic link between the investment and the specific consumer or shopper behaviours a supplier is looking to change or reward within its Category Strategy for each brand or segment.
How do we recommend achieving this?
Quantic’s approach to promotional strategy development is to understand the depth and frequency needed by segment, based on relevance and reach measures and then balance the promotions between the two types:
- Equity building promotions are designed to generate growth for both the category and brand by either attracting new users to the category or driving new usage occasions amongst existing users. Equity building can be subdivided into ‘Brand Equity’ (classic marketing levers) or ‘Category and Shopper Equity’ activations (often referred to as Shopper Marketing).
- Transactional promotions are typically designed to win market share and not specifically intended to drive category growth. These either switch existing category users from other brands to our brand, or encourage existing brand buyers to purchase more, effectively forward buying at a discount. Transactional activities tend to be more one-off, short-term volume generating, price-led activities.
Both types of promotions are equally valid, but getting the appropriate balance and understanding the comparative ROIs is at the heart of successful promotional management.
If you looked at your promotional calendar, what is the percentage split of your activities and investment? Most of our clients start with a 90/10 transactional to equity split, at best.
At Quantic, we are pragmatic enough to understand that you cannot expect to rebalance your promotional investments in one move, but a programme designed to redress the balance to a more 70/30 transactional to equity split is where we see the best results for brands and categories.
3. Continually reference and leverage your growth strategy
Customer Marketing should ensure that every activity put to customers is understood against the context of the Growth Drivers prioritised in the joint business plan.
Too many clients fail to leverage the hard work that has gone into the creation of growth strategies and assume that the initial presentation they make to customers is the completion of a process. It’s not – it’s the start.
Customer Marketing needs to challenge itself as to how every trade-facing presentation can be understood to be addressing the opportunities in each customer-prioritised Driver. If you have created a joint plan based on the Drivers, it only makes sense that they are fully leveraged, every time. This additionally means that Customer Marketing needs to be responsible for the measurement of physical availability KPIs against the plan and for feeding these into customer reviews, from the annual top to top reviews through to the more frequent quarterly reviews.
- Customer Marketing must structure for success by adapting to changes in the new omni-channel environment, aligning behind where tomorrow’s growth is coming from, not where the business is today, and by balancing operational versus strategic roles.
- In our previous posts we challenged companies to ask whether they were a consumer-centric or a brand-centric organisation. In this post we are challenging organisations to ask whether they are truly shopper-centric.
- Finally, being shopper-centric means continually investing in understanding which missions are most relevant to the behaviour changes identified in your Growth Drivers, and where those missions are fulfilled in this new omni-channel environment.
- All of this is central to any Customer Marketing function. Whether the focus is short-term operational or longer-term strategic, the stronger this function, the better the chance of your customers accepting and implementing your growth strategy.
Thanks for reading. Our next and final post in this series will follow next week and will address how the sales function can fully leverage the organisation’s growth strategy.