Marketing, Interrupted

by Dave Sutton

  tion their products and services in a diverse and dynamic marketplace. The big question is: How can businesses leverage these important trends as an opportu- nity to grow, to move to the TopRight quadrant in their competitive frame, and most importantly, to stay there?

  There are so many trends and sub trends that may impact various indus- tries that we could not possibly cover them all here. However, there are a few

  important trends that we believe will have an outsized effect on marketers in the next decade—driving innovation and transforming marketing to give customers a reason to care, a reason to listen, a reason to engage, a reason to buy and most importantly, a reason to stay.

  The Emerging Middle Class: Welcome to the “next billions” market. According to estimate from the World Bank, the global middle class has grown from under two billion consumers in 2011 to nearly five billion within two decades, thanks to the economic growth in emerging markets. This tremendous new market is a key driver of growth and seeks for innovative products that may increase their quality of life. This consumer demographic trend is not only evident in emerging coun- tries, but also in more developed countries. In US, for example, the increasing purchasing power of Hispanics, now eclipsing $1.2 trillion annually, directs mar- keter focus on attracting and engaging this lucrative segment with their brands. A share of wallet study from Nielsen shows that Hispanics spend at least $10 more per visit in consumer packaged goods than the total market.

  “We are reaching a tipping point, where over the next several years the global middle class will expand dramatically.”

  —Hori Kharas, Brookings Institution

  Regardless of the industry or category where you compete, transformative marketers must understand this emerging middle class, their wants and needs, their personalities and the distinctions in the ways they buy and consumer goods and services.

  A New Form of Capitalism: Creating shared value is a new form of capitalism that works to generate positive results not only for the business, but also for the society. Shared value is not just about social responsibility, philanthropy, or even sustainability. It is a new way to achieve economic success by “reconceiving” products and markets in line with the society’s needs such as health, better hous- ing, improved nutrition, help for the aging, better use of scarce resources and less environmental damage. Literally overnight, brands are born and value is released from the marriage of scarce resource to a specific consumer need. Consider the

  simple and clear brand story of the mobile app JustPark: “Find parking in sec- onds”. Users rent out their private parking spots to drivers in the local area who are looking to avoid exorbitant parking fees.

  “We used to live in a world where there are people and a world where there are businesses, and now we’re living in a world where people can become businesses in 60 seconds,”

  —Brian Chesky, Co-founder of Airbnb

  The sharing economy, led in large part by the Millennial generation, is now poised to disrupt traditional industry structures around the world. Consider how Uber, Airbnb and ZipCar have completely transformed the hospitality industry— these brands didn’t even exist a decade ago. They’ve challenged big brand market- ers at companies like Carey Limo, Hyatt and Avis to retrench in their competitive frame and re-imagine the customer experience. Transformative marketers must understand the implications of this new form of capitalism and envision the new brand stories that it will enable. But more importantly, they need to consider how legacy brands can rewrite or refocus their stories and customer experiences to assure that they do not get left behind.

  A Fortune at the Bottom of the Pyramid: The sharing economy is also driving another important trend that is often referred to as the “bottom of the pyramid” effect. This opportunity is represented by the five billion underserved people around the world—about two thirds of the Earth’s population. These are people who are seeking innovations to enable them to increase their quality of life with the right value. While traditional, developed markets tend to grow at 1-2% a year, the bottom of the pyramid market is growing 8-9% a year and this represents an enormous opportunity for the future.

  “When the poor at the bottom of the pyramid are treated as consumers, they can reap the benefits of respect, choice, and self-esteem and have an opportunity to climb out of the poverty trap.”

  —C.K. Prahalad, The Fortune at the Bottom of the Pyramid

  For marketers, facing increasing demands to “do more with less”, the bottom of the pyramid could represent a fortune in brand growth potential. “Growing elsewhere” will become increasingly important over the next decade and market- ers must be able to adapt their stories, strategies and systems to enter emerging and frontier marketers. However, upon entering these new markets, marketers will encounter an environment that is every bit as complex, if not more so, than developed countries.

  Product choices and communication channels are exploding as is the poten- tial of marketing automation platforms. Consumer empowerment is on the rise. Cracking the code on emerging markets and connecting with consumers requires a transformational approach to the overall customer experience. The focus of which should be telling your brand story in a way that makes them the hero. A compelling brand story engages and delights consumers; it makes them want to learn more, want to participate, and want to advocate on a brand’s behalf.

  The Mastery of the Internet of Things (IoT): By 2020, it is expected that there will be 26 billion devices on the Internet of Things. Broadly defined as the inter- connectivity of our digital devices, IoT provides powerful opportunities for mar- keters to listen, observe and respond to the needs of their target customers with the right message, at the right time, on the right device.

  Studies on the IoT have revealed an interesting transformation in the pri- orities of customers. Led by Millennials, people now want a personalized digital experience. The interconnection of a wide variety of devices redefines the com- petitive landscape, by enabling marketers to completely personalize customer experiences. This amazing new world of always on, always connected devices will challenge marketing to deliver “real-time relevance” to their customers.

  IoT will enable marketers to create totally different experiences by bridging the digital and physical world. Imagine your refrigerator ordering groceries when supplies are running low or notifying emergency services when your aging parent falls down.

  “Any sufficiently advanced technology is indistinguishable from magic.”

  — Arthur C. Clarke, Profiles of the Future

  Transformative marketers will be entirely data-driven in their operations. From analyzing customer buying habits across their devices, to delivering authen- tic messaging and fully contextual offers in real-time, the IoT will drive customer experience innovation and create substantial organic growth opportunities for brands to capture.

  The Rise of the Blockchain: Most people equate the Blockchain with Bitcoin— the notorious cryptocurrency that is frequently associated with illegal transac- tions on the “dark web” and traded by nefarious types hiding out from the regula- tors of monetary systems around the world. In fact, blockchain is the enabling technology behind Bitcoin and many other forms of cryptocurrency, but it repre- sents far more than that. Simply put, Blockchain is a way to store information and keep track of transactions for anything of value. And that information is stored in a secure, immutable, and decentralized data base that is not governed or owned by any third-party.

  “The Blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtu- ally everything of value.”

  —Don Tabscott, Blockchain Revolution

  It is now clear that Blockchain has enough inherent advantages over more conventional stores of digital value that adoption by much of the world is only a matter of time. For marketers, this means the Blockchain is not a question of ‘if ’ it is a question of ‘when’ their data will be stored in this fashion
. Understanding the implications will be critical to success. Everything from the storage of customer transaction data on the cloud, to digital identity of prospects and customer smart contracts for media buying can be enabled through Blockchain technologies. Transformative marketers are already thinking about how their strategies and systems will be impacted and taking steps to learn through experiment with the Blockchain.

  Netflix must change, again

  In late 2017, Disney surprised the home entertainment industry when it announced that it was launching a digital streaming service for ESPN sports pro- gramming and another one dedicated to Disney entertainment. Simultaneously, Disney CEO Bob Iger announced that the media giant would end its lucrative licensing deal with Netflix—shifting distribution of Disney Animation, Pixar films and all its TV shows to its own streaming platform. And just like that, the Mouse declared war on Netflix. No doubt, Reed Hastings and the team at Netflix are gearing up to transform once again and deliver the best home video viewing experience for its customers. I wouldn’t underestimate them.

  Chapter 2

  Transforming Marketing, One Marketer at a Time

  ike Ziegler knew that he faced an uphill battle when he signed on at Ameritox as the SVP of Marketing and Sales in June 2013. But having

  seen his fair share of hazardous duty as an officer in the Marines, he knew he was up to the task. Ameritox had established itself as a leading brand in pain medication monitoring and urine drug testing services. Their toxicology exper- tise and accredited laboratory services were highly respected by physicians and health insurance payers. However, at the time, the overall drug testing industry was under intense regulatory scrutiny due to the unscrupulous practices of one of Ameritox’s largest competitors, Millennium.

  The Department of Justice alleged that Millennium had violated the False Claims Act for billing Medicare, Medicaid and other federal health care programs for medically unnecessary urine drug and genetic testing. The DOJ also alleged

  16

  that Millennium had given kickbacks to physicians who agreed to refer their expensive laboratory testing business.

  Even though Ameritox was not implicated in of any of these violations, the Millennium story was tarnishing all of the players in the industry, lowering the level of reimbursements and eroding overall sales and profitability. Needless to say, Ziegler had to quickly find a way to change the dialog, reposition the Ameritox story and transform marketing and sales operations to deliver growth. To complicate matters further, Ameritox leadership had committed to achieve aggressive growth plans. They were in the process of launching a new behavioral health division that would focus on the untapped market of helping psychia- trists monitor patients on anti-depressants and antipsychotic drugs. In addition, Ameritox had recently acquired PRIUM, a business specializing in helping com- panies resolve workers compensation claims, monitoring employee adherence to pain medication prescriptions and getting them back to work as soon as pos- sible. Mike realized that the current messaging for the three brands was com- plex, poorly focused, and didn’t differentiate the company from its competitors.

  Furthermore, he inherited organizational changes that had created issues with operational efficiencies and gaps in current sales and marketing processes.

  Mike kicked off a thorough discovery process—conducting multiple executive workshops and market interviews with the goal of gathering the right informa- tion in order to form the foundation of a new and innovative destination for the Ameritox branded lines of business. According to Ziegler, one of the keys to Ameritox’s success was “identifying why we do what we do as a company.” He identified this as a foundational step to drive transformation across the entire organization. He also noted that “it’s crucial to establish the core values and pur- pose of the company and always put the voice of the customer at the center of the brand’s offering and messaging”.

  Ziegler and his team led the development of brand stories for each of the branded lines of businesses—being certain to illuminate the “why” and reveal clear points of difference and preference drivers focused on making the customer the hero. Even though they offered similar drug and genetic testing protocols, each brand had a different target customer. So, they were required to develop segmentation, targeting, channel and messaging strategies that aligned with the different targets buyers and their unique buyer journeys. They also completed a

  comprehensive audit of the marketing people, processes, and platforms to ensure they had the right systems in place to activate the brand stories and execute the corresponding go-to-market strategies.

  “To transform the company, not just the sales and marketing department, we had to develop a simple and clear message to everyone across the organi- zation as well as those who were communicating with our customers.”

  — Mike Ziegler, SVP Marketing and Sales, Ameritox

  Under Ziegler’s leadership, Ameritox was completely transformed with three branded business lines on the path to profitability in the midst of challenging industry headwinds. His restructuring of the Ameritox marketing organization alone resulted in a 25% reduction in staff, marketing spend savings of more than 12% and increased efficiencies across the board. They successfully launched the new behavioral health services division—now branded as Ingenuity Health. Today it serves community mental health centers across the US. With an astound- ing 300% growth in sales, Ingenuity became the fastest growing division within Ameritox. PRIUM initiated a strategic selling approach which resulted in a 42% closure rate in targeted accounts and ultimately contributed substantially to the growth of the firm.

  Organizations like Ameritox and Netflix, that navigate through industry dis- ruption, transform marketing and generate remarkable results for their business, have one thing in common: strong transformative leadership. By reshaping their story, driving change in their industries, and redefining relationships with their customers, leaders like Mike Ziegler and Reed Hastings build remarkable cus- tomer experiences and ultimately transform customers into brand advocates.

  Transformative marketers know that success depends on the simplicity, clar- ity, and alignment of their brand’s story, strategy, and systems. Yet, they also understand that big change is difficult to achieve from the “top down”—there must be understanding, alignment, and commitment across the organization.

  According to executive search firm Korn Ferry, a “Transformative Chief Marketing Officer (CMO)” is marked by these core competencies:

  Creating the new and different: The ability to generate new ideas and breakthroughs requires vision, creativity, and broad interests and knowledge.

  Focusing on action and outcomes: Transformative CMOs must possess the potent combination of attacking everything with energy—while also keeping an eye on the bottom line.

  Inspiring others: Building motivated, high-performing teams—or even moving an entire organization to perform at a higher level—demands a compelling vision, commitment, and superior communication.

  These are unquestionably a very different set of core competencies for CMOs than those that might have been enumerated five or ten years ago. The explosion of digital marketing, the empowered customer, and the acceleration of demand for innovation are having a profound impact on customer experiences and expectations.

  Driving customer demand no longer relies on the best creative copy or the most entertaining tag-lines. It relies on an analytical, psychological, and perhaps even anthropological understanding of the customer. Transformative marketers can no longer rely on “the way things have always been done” to generate demand. Instead, they must find new, innovative ways to engage their target audience.

  As organizations strive to set themselves apart from competitors, market- ing has taken on new prominence throughout the business process. We believe that the days of marketing as “brand-builder” and “lead generator” are things of the past. Today, marketing is actually involved with transforming how busi- ness is done, and it all starts with the CM
O. Another key driver of change: CEOs and corporate boards are scrutinizing marketing activities and budgets with an unprecedented level of analytical intensity.

  When you consider the Ameritox story and the leadership of Mike Ziegler and his team, it becomes evident that today’s transformative marketer must pos- sess different skills and master unique tools to be successful in the marketplace:

  Lean and agile—Transformative marketers must have an understanding of lean and agile principles, and the ability to apply those principles across all sys- tems and strategies. The “always be shipping” approach must be aligned across

  departments—IT can’t run on two-week sprints while Marketing runs on six- month “marathons”.

  Performance driven—Transformative marketers are results-driven and measure success with KPIs clearly linked to business performance. These marketers have an in-depth understanding of business operations, an analytical approach to problem solving, and the ability to inspire others to action. They build a culture of execution.

  Navigate organizational silos - In addition to partnering with the CEO to grow the business, it is the role of transformative marketers to navigate, and in some cases, bring down organizational silos. Transformational marketing initiatives depend on internal alignment of departments, transparency of data, shared infor- mation and fully integrated technology stacks to succeed. By quickly identifying and resolving time wasters and bottlenecks, transformative marketers are able to build momentum and drive growth.