Developing a Marketing Strategy by Working Backwards
Introduction
What are the ‘ingredients’ to a great Marketing strategy that maximizes value for your customers and stakeholders? How do you determine what your Marketing objectives should be? How do you prioritize them? What does a high performing Marketing team look like? How can you create repeatable, sustained performance year over year? First, it is helpful to paint a picture of where you want to be and work backwards to get there. There are no shortcuts. The secret sauce to sustained performance lies in three areas: 1) clear marketing objectives that are built on a constant flow of customer learnings, clear and robust measurement of value, and iterative experiment learnings, 2) the team and culture that you build to ensure high performance and help team members perform at their best, and 3) the rigor behind the mechanisms you create, keep and optimize. During my time leading WW Marketing for the Amazon App, I learned a lot about how to do this — and how not to do it. I wanted to share my top learnings and some considerations for you as you build your team and Marketing strategy.
I split this topic into two parts: this article focuses on the inputs you need to develop a long-term Marketing strategy. There are four parts to this first article: 1) Imagine and Define the End-State, 2) Developing your Marketing Objectives, 3) Understanding your customers to develop valuation and entitlement, and 4) Building your Brand, Product, and Channel Marketing Strategy.
The second article is about operationalizing the strategy to realize your goals. There are four parts to this second article: 5) Building your Team, 6) Crafting your Culture, 7) Measuring your Objectives, Business, and Customer Needs, and 8) Creating Rigorous Mechanisms to Reach your Goals.
These articles are for anyone looking to create a marketing organization and for those who are already deep on these topics I hope you find some nuggets and tips and tricks to help. This article is agnostic to B2C or B2B marketing. While the content of the strategy certainly differs, the inputs to creating a long-term sustainable team, culture, objectives, strategy, and mechanisms are not.
The long-term objectives that these articles intend to address include: 1) Consistently over-achieving your outcomes and goals and preparing contingencies for changes in market dynamics, 2) Building a high performing team that attracts and retains talent, 3) Maintaining a close connection with your customers’ needs and modifying your strategy accordingly.
1 Imagine and Define the End-State
Let’s start with the fun part and fast forward 6–12 months. When you walk into the team room, join team meetings, and have 1:1s with your leaders: What do you see and hear? Here are some thoughts on what extraordinary marketing organizations do well:
1. The team’s vision, objectives, understanding of customer entitlement, strategy and goals are known and clear to everyone on the team,
2. The team maintains a robust view of how to value customer actions, which ones matter, and which do not. All team members understand how value breaks down and are regularly pitching new ways to further break down and evaluate customer value,
3. The team knows your customers’ motivations and problems intimately and actively seeks out more information. The team maintains several mechanisms to understand customer behavior and is relentless to extract insights. The team is paranoid about the customer experience and maintains a high bar for anything that is put in front of the customer,
4. The team builds — together — a comprehensive three-year strategy with clearly laid out investments and goals. This strategy is updated regularly to adjust for changing customer needs and learnings. Your leaders are constantly evaluating the skillsets required to execute the strategy,
5. Your team thinks of distributions and not averages. The team modifies its approach for the varied customer preferences and needs,
6. The culture is known and clear to everyone and always reinforced. Team members deeply act on the principles that facilitate a high-performance culture — and one that enables employees to do their best every day,
7. The team sees opportunities anywhere and everywhere the customer spends their time. Marketing is not limited to brand or channels, but includes the onsite customer experience and also experiences on other company properties,
8. The team develops and manages a robust roadmap to experiment and re-experiment to learn what most resonates with the customer to improve ROI, elasticity, and incrementality,
9. Your team members are not ‘just’ marketers, but they think and act like a product manager, like a business development executive, and like a business analyst.
10. Your team develops rigorous mechanisms to 1) Manage your business, 2) Understand your customers, 2) Manage and improve your strategy and roadmap, and 3) Manage the development of your team. You inspect and modify your mechanisms (or eliminate them) based on learnings.
I’m sure all sounds great (and hopefully familiar). But how do you get from where you are now to this new world? Everything starts with a clear set of objectives.
2 Understanding your customers to develop valuation and entitlement
The first step is to understand where your customers are in their journey with your product or service. Are they aware that your product exists? If so, have they checked it out? Have they purchased it? Repurchased it? Why have they not checked it out or purchased or repurchased? Why did they purchase or repurchase? To structure this, most marketers utilize a simple framework referred to as the customer funnel, which tracks how your customers progress through a funnel of understanding and using your product or service. Starting at the highest level: what percent of your customers are aware of your product or service? Would consider your product? Have viewed your product? Added a product to the cart? Purchased your product? Re-purchased? Purchased different products?
Within the funnel spectrum, customers can take a variety of actions or events. These events are determined by your business model (i.e., transactional, subscription based, advertising based or a combination). Each of these actions leads to customer value and the key is to identify the most critical actions by value and prioritize.
Make the investment to map your customers along the funnel mentioned above. Now you know where the biggest opportunities are to move customers along the funnel (at least in terms of quantity of customers; not yet in terms of value). Next, you need to determine what it is worth when customers take these actions. There are several ways to calculate this value. Ideally, you are trying to understand the marginal, incremental value of a customer taking that action. Marginal meaning the optimal point where the incremental value is more than the incremental cost for a customer to take the action. For cases where the marketing expense is free, e.g. owned and operated inventory such as email or onsite placements, it is the opportunity cost that you are measuring against (e.g., for email, it may be the negative value of an opt-out). Incrementality measures the ‘true’ value of marketing over and above customers taking the action on their own without marketing (they just happened to click or tap on your marketing placement). This can be measured through hold-out experiments. You will also want to separate your actions into short-term and long-term. For example, a short-term action would be a product-placement ad in Google — the customer searches for a product, clicks on your ad in Google, visits your site and purchases the product. This transaction has a specific value. However, if this was the first time your customer purchased on your site, there is likely additional, long-term value associated with the action. You can then evaluate cohorts of customers that took this action to see if there is indeed long-term value associated with the action. If you want to consider multiple actions along the funnel, you will need to think through how each action is incremental from the previous action. There is incrementality of the action and incrementality of the value of the action.
Bringing these two components together, i.e., quantity of customers and the value per action, will provide you with a value potential per set of actions and a prioritized set of actions. This list then becomes your list of candidates for marketing objectives.
Another concept that is helpful to define for strategic planning is entitlement. Entitlement is the theoretical maximum that you can achieve if all ‘eligible’ customers took a particular action. Another term for this is Total Addressable Market (TAM). An example would be if your objective was to have all customers adopt your mobile app. Through your research, you may learn that a certain percent of customers only use desktop (hard to believe, I know, but it still happens around the world), a certain percent that never use apps, and a certain percent that strongly prefers the mobile browser for different reasons. These customers would then be removed from ‘eligible’ as you define entitlement. Of the customers that are then ‘eligible’, you can quantify the gaps between where you are now and entitlement. Customer eligibility changes over time, so you will want to update this regularly. Entitlement then becomes a strategic metric where you can highlight the gap between where you are today vs. entitlement, and then label the reasons for the gap and what you need to do to address each reason. Entitlement can be both a percentage (e.g., 50% of your customers have signed into your mobile app) and a value (e.g., it is worth $800MM if all eligible customers signed into the app).
One key concept that I will discuss in the next article is the need to develop customer segments. Thus far, I have articulated the need to develop valuations for customer actions, but the value of these actions can vary widely depending on your customer. Also, why your customer would take a specific action will also vary widely. Developing segments will help you operationalize your strategy to make sure you are targeting the right customers with the right message in the right way. Everything discussed so far (actions, value of actions, entitlement, where to reach customers and how) can be broken down by these segments.
Now that you have your customer actions, the value they generate, and the gaps to achieve entitlement, you can prioritize the most valuable customer actions to set your Marketing objectives.
3 Developing your Marketing Objectives
In its most basic form, Marketing is about approaching the customer with the right message, in the right place, in the right way, and at the right time to meet a specific objective. And the best Marketing does so in a measurable, incremental, and least expensive way. The objective simply answers the question “What are you trying to achieve?” At the highest level, an organization is either trying to attract new customers or more deeply engage existing customers, i.e., encourage repeat purchase, cross-sell/up-sell products, increase time spent.
Now that you understand the total potential value of specific customer actions, you can prioritize your Marketing objectives. Which ones to invest in and to what level, and how to achieve those objectives most efficiently and effectively is the subject of your Marketing strategy.
4 Building your Brand, Product, and Channel Marketing Strategy
Marketing strategy should reflect where, how, and why you will invest your resources to maximize business value. Elements of a great strategy document include: 1) Analysis of your customer funnel and where the greatest opportunities lie, what your entitlement is, and the largest gaps to entitlement, 2) Learnings about your customers, what their motivations/needs are, where they spend their time, and what messages they will be responsive to, 3) What learnings you’ve taken away from experiments you’ve run and what inspires you based on what customers resonate with outside of your company, 4) Major themes of investment (e.g., onsite, offsite, partnerships, field events, new programs and experiments) and what you expect to get from them, and 5) SMART goals tied to your investments.
Your analysis should include a comprehensive review of your customers, where they are spending their time, and the options you have for investment with a relative review of the best ROI. This can include not only ‘traditional’ offsite Marketing channels (offline and digital) but also owned and operated investments that require engineering work, e.g., site changes to showcase product features, landing page changes based on where customers are coming from. In addition, what partnerships can you develop that can also contribute to the marketing objectives? These can provide just as much or more return than spending externally on Marketing.
You should also be experimenting. A lot. What are you trying to learn?
· What do you need to know for the product to scale and should you make the full investment to either automate the program or not pay for the service?
· Does the experience resonate with customers? If not, why not, and can it be improved or should you ‘kill’ the experience?
· What is the overall scale and ROI? How does this vary by segment?
· What messages and creative resonate by segment?
· What targeting works best?
· What landing page experiences work best?
These can all lead to a set of SMART goals, or Specific, Measurable, Actionable, Relevant, and Time specific. I always find it helpful to structure your metrics in a ‘tree’ fashion where the drivers of a specific metric lead to a higher branch of the tree. This will help your stakeholders and team members understand why you chose specific metrics for your goals.
In the next article, I will discuss how you operationalize your marketing strategy. Critical elements to consistently meeting your goals include developing a high performing culture, building robust measurement, and creating rigorous mechanisms.