George S. Day from the Wharton School of Management, wrote an very true article with the title “Closing the marketing capabilities gap”.
In this article George argues that marketers are being challenged by a deluge of data that is well beyond the capacity of their organizations to comprehend and use. Their strategies are not keeping up with the disruptive effects of technology-empowered customers; the proliferation of media, channel, and customer contact points; or the possibilities for micro segmentation. Closing the widening gap between the accelerating complexity of their markets and the limited ability of their organizations to respond demands new thinking about marketing capabilities.
The increasing demands on marketing organizations are leaving marketers and their firms vulnerable. Most marketers would endorse this assertion and then acknowledge their uncertainty about how to navigate this reality. The drivers for the widening marketing performance gap are increasing complexity, interacting with an accelerating rate of change in markets and serious organizational impediments to responding. The growing gap is unquestionably costing firms profitability now and competitiveness in the future.
If the gap has become too wide to tolerate, what are companies doing to narrow their capability gap and possibly gain an advantage over slower-moving competitors?
What are the next practices for narrowing the gap and staying ahead of rivals? This requires expanding the reach of marketing capabilities well beyond the narrow confines of the marketing mix. These marketing capabilities are adaptive and enable the firm to adjust its strategies to fit fast-changing markets. These new or enhanced capabilities add anticipatory and experimental dimensions to the market learning capability and introduce a capacity for “open” marketing that orchestrates the capabilities of network partners. With these adaptive capabilities in place, the existing marketing capabilities also become more responsive to accelerating market changes.
The forces behind the widening gap, and best sources of solutions, are found in the evolution of the Internet and the shrinking cost of communication. The challenge for firms and marketers is to seize the opportunity for advantage out of the confusion created by accelerating market complexity. Their ability to do so will shape the future role and influence of marketing within the organization.
To what extent is the marketing capability gap also true for companies in the Netherlands? And in what type of dimensions does the marketing capability gap manifest itself?
As the marketing gap is present amongst most Dutch large B2C companies like telco’s, banks, insurance firms, postal and logistic we can also identify other variations of this capability gap:
- The digital capability gap
- The mobile communications gap
- The service gap
- The sustainability gap
- The mentality gap between marketers and information technology
- The Big Data capability gap
Anecdotal evidence about Dutch firms indicates that the speed in which consumers adapt to new digital, mobile and social media is just going much faster than organization can cope with. Today we are living in a time that consumers are digital savvy and demanding brand and suppliers to keep up with them. To my knowledge this is the first time that consumers are demanding much more then organizations can offer and are very capable to articulate what they want and as a result reversed the buying cycle, the consumer is in charge.
For instance in the Dutch insurance world, most insurance firms (there are some exceptions), still rely for their distribution on intermediaries and brokers. While consumers want to connect with their brands or suppliers and are less interested in the intermediary. European wide research conducted by the St. Gallen university and BearingPoint showed that 70% of consumers want to choose their own channels in searching, choosing and buying insurance products. Still it was just until recently that Dutch insurance firms did not have customer contact centers, although they received hundreds of thousand calls every year.
In his article, George Day does not only describes the problem he also describes what companies ought to do to close the marketing capability gap and introduces three concept of marketing adaptability:
Three adaptive capabilities are needed to close the marketing capability gap:
- Vigilant market learning that enhances deep market insights with an advance warning system to anticipate market changes and unmet needs,
- Adaptive market experimentation that continuously learns from experiments, and
- Open marketing that forges relationships with those at the forefront of new media and social networking technologies and mobilizes the skills of current partners. The benefits of these adaptive capabilities will only be realized in organizations that are more resilient and free-flowing, with vigilant leadership and more adaptive business models.
It are exactly these three capabilities that Dutch large firms lack at this moment. Innovation in developing the marketing capability lacked. Marketing innovation and CRM investment where primarily IT oriented and wasted, leaving marketers behind in confusion. During the last three years the recession made organizations take the wrong decisions. Instead of trying to win market share, they saved costs to survive. But the paradox of our time is that the consumer changed faster than ever, creating a huge digital capability gap. At the same time the volume of data exploded launching the “Big Data” challenge.
So, what should companies do?
Regardless if you are a Telco, bank, insurance firm, airline, postal and logistics or any other type of B2C firm it is essential to directly take 12 distinct measures.
“the 12 no regret moves”:
- Define how big your marketing capability really gap is
- Dare to invest, create a winning mentality, want to gain market share
- Develop a robust Digital Strategy
- Develop a robust Big Data Strategy
- Build adaptive and explorative marketing capabilities
- Send the board to a stress course in digital. Give them all an iphone, ipad and a facebook and twitter accounts
- Give all marketing innovation initiatives a 5x higher priority
- Stop with all above the line media investments like radio and TV
- Integrate your “social media team” into a real marketing organizational structure and increase their budget 10x
- If you didn’t already do so, assign a Chief Marketing Officer in the board
- Kill all traditional product based P&L’s and turn your organization to a market or customer segment based organization
- Streamline you marketing process using lean principles to bring back the leadtime of a campaign (from idea to conversion) from months to minutes
I wish you all emerging adaptive marketing capabilities!
Download the article from George Day here.