The U.S. economic outlook is healthy according to various economists. One of the most important economic indicators is the gross domestic product, which measures the nation's production output. As I write this article, the U.S. GDP growth achieved a remarkable 4.1%. Unemployment is forecasted to continue at the natural rate, dropping to 3.6% in 2018 and 3.5% in 2019 and 2020. That's lower than the Fed's 6.7% target. There isn't too much inflation or deflation. Inflation is forecasted at 2% in 2018 and 2.1% in 2019 and 2020. U.S. manufacturing is forecasted to increase faster than the general economy.
All in all, 2018 looks to be a prosperous year. While some economists believe another recession is inevitable, most expect it to be two to three years out. The economy we have at the moment brings to mind the story of Goldilocks: “just right.”
Therefore, for many businesses, the worry is less about generating demand and more about scaling on all fronts to accommodate demand. So, what does a marketing department focused on demand generation do when times are this good?
It’s Time for a Tune-Up
Now is not the time to rest on one’s laurels. Here are three areas marketing should target for a tune-up NOW.
1. Determine What’s Working and What Isn’t
Your might be flush with demand, but that doesn’t mean you want to scale back your marketing. Now that you’re not under pressure, this boom is a good time to do experiments and delve more deeply into your data and analytics. Use your insights to focus more on marketing effectiveness than on ROI. Apply analytics to help you understand what is and isn’t working and create better models and dashboards to support strategic decisions. If your marketing dashboard is primarily a smorgasbord of data, measures and metrics or myopically focused on the pipeline/funnel, it’s probably time to retune your dashboard.
To make the most of your analytics, first determine where you are in your analytics maturity and build a roadmap to take you to the next level. For example, if your analytics are mostly descriptive—that is, more about what happened—explore what skills and tools you need to move to use analytics to help you become more diagnostic (evaluating why it happened), and then predictive (evaluating what will happen).
If you’re in the early stages of your analytics capabilities, keep things simple. Think Aristotle first, NASA later. You can always add in the nuances and details as you learn more and become more proficient.
2. Define the Core Jobs of Marketing
If you’re like many companies we work with, you operate in a highly competitive market. Competition remains fierce, and customers are selective even when the good times roll. You know that your success depends on producing and selling exactly what your existing and prospective customers want. What your customer thinks he/she is buying, what he/she considers value, is decisive. This determines what your business is, what you produce and whether your business will prosper. Your marketing organization has the opportunity in a Goldilocks economy to step up to the plate and take a more active role in value creation and the innovation process.
The current environment provides an opportunity for marketing to be sure it is top notch at:
Messaging against the competition. Your competition isn’t sitting still. They are refining their strategy and messaging. It’s important that your market and customer-facing teams don’t get blindsided by the competition. This is a good time to flesh out your message maps because they help you visualize how to best tell your story. Think of your message map as a framework for developing compelling, relevant messages for your various target customers.
Leading innovation. The creation of new products and services to meet the needs of customers provides the basic ingredient for growing shareholder value. A quote often attributed to Peter Drucker articulates the value of both marketing and innovation: “Because its purpose is to create a customer, the business has two basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.” Use this time to create and leverage your customer advisory boards and voice of customer studies to translate customer information into new products, positioning these products in the market, and gaining insights it to who will buy and why they want to buy.
New products/services are the way companies respond to changing customer preferences and dynamic competition. Various studies have shown that companies where marketing and R&D communicate and cooperate have enhanced new product performance. Marketing generates insights that benefit your organization, the kind of insights that can not only make or break your new product but can make or break your company. A good starting point for marketing is to be sure it has the skills and processes in place to keep monitoring the pulse of the market and customers, utilizing customer insights to drive innovation and properly position these new products/services.
Focusing on the right customers. Something can happen on the way to a Goldilocks economy – you don’t have enough capacity to service your demand. So how do you decide how to and when to service which customers? These decisions should be based on your customer segmentation model. Segmentation is a foundational marketing capability associated with marketing’s ownership of the upstream processes, which include segmenting the market and your customers, selecting the right target markets and customers, defining the value proposition, and superbly communicating this value. Your customer segmentation model will most likely reveal that not all customers are equal. Now is the time to know which customers are profitable and/or will provide future growth.
3. Refine Customer-Facing Processes
Research suggests that when an average-performing company moves to the top-quartile of performance, profits increase by 3-4% of revenue. Process is one of the four pillars of high-performing organizations. All functions within your organization run on process, and marketing is no exception. Processes capture the sequence of interdependent and linked procedures used to convert some type of input (typically marketing inputs take the form of data) into an output.
We categorize marketing processes into two groups: processes designed to drive revenue by acquiring, keeping and growing the value of customers (externally oriented) and processes designed to improve profit and margin by reducing costs and increasing efficiencies (internally oriented). The current environment enables marketing to examine their revenue-generating processes designed to affect your customer’s buying behavior. It is essential that these are quality processes. Easier said than done. The increasing complexity of the customer-buying process and the demand for the rate of product/service innovation is challenging marketing and other parts of the organization to develop, implement, and consistently follow processes.
Plus, it is easy when times are good for waste to creep into processes. If you haven’t mapped your customer-facing processes, this is a good time to do so. If you have and it’s been awhile since you dusted them off, it may be time for an audit. Regardless, review each of your process steps with these three questions in mind:
1. Is this step still necessary?
2. What value does this step add?
3. What can we do to make this process more effective? more efficient?
There is a lot to do even when the economy is going gangbusters. A proactive tune-up of your marketing in these three areas will put you a step ahead the competition and ensure you are prepared for whatever lies ahead.
Laura Patterson is president and founder of VisionEdge Marketing.