How an influential marketing department affects business performance
Research shows that a stronger marketing department influence within the company does not directly lead to an increased business performance. However, a stronger marketing department results in a stronger market oriented business, which in turn leads to an increased business performance.
What happened to marketing’s influence within the business?
The status of marketing in today’s businesses resembles the fact it is in a bad shape. Over the past three decades, marketing academics have raised their concern with the reducing influence at the level of corporate strategy.
The marketing department was once not solely occupied with and limited to:
- relationship management (including satisfaction measurement and improvement) and
- segmentation, targeting, and positioning
They were once also occupied with tasks such as pricing and distribution. These tasks are now covered by other departments, such as sales and finance. In other words, this means for example that marketers are now engaged in more tactical decisions.
How to increase the marketing department’s influence within the business
It turns out that the capabilities of the marketing department influences the amount of influence that the department has. To be more specific, the following 2 capabilities are good predictors of the degree of influence that a marketing department has within a business:
- Accountability, i.e. make them more accountable for the link between marketing actions and policies and financial results, and
- Innovativeness, i.e. make them more innovative by increasing their share in new product/service concepts
In other words, when the marketing department is made accountable for their actions and has a high degree of innovativeness, its influence within the business will most probably be high.
Make marketers accountable for their actions
The issue with marketing is that it has a hard time justifying their expenditures in terms of direct return on investment. Marketers tend to be creative thinkers, i.e. good at using the right-brain.
There is no shortage on creative marketers in the field of marketing you could say, but there is a shortage on marketers who lean toward an analytic, left-brain approach to the discipline.
What is the reason for this?
- The effects of the actions of marketers is not being measured
- The wrong metric and/or method is being applied
- Suitable specifications of metrics are lacking
How are you able to explain the effects that are resulted from your actions when you’re not measuring or if your applying the wrong metric/method?
This explains the hard times that managers face when they can’t provide a clear, compelling answers about marketing’s impact to their CEO. Therefore, marketing productivity could reach higher levels if managers were able to measure the effects of their actions.
Additionally, it’s not clear for a lot of managers what to measure or how to interpret results. Say for example that you collect customer satisfaction scores and customer retention rates. If you don’t know how to explain these scores (compared to marketing activities), the data will not be very useful.
Therefore, when the marketing department is more accountable for their actions, the influence of the marketing department within the business tends to increase.
Make marketers more innovative
When marketing is applied correctly, it can play an essential role in the innovativeness of businesses, in that it could start new innovations or decipher customer needs into the pipeline of innovations.
In other words, marketing can help tremendously to maximize and create massive customer value and profit. The innovativeness of the marketing department can be seen as the degree to which it contributes to the developed new products within the business.
The importance of a businesses innovativeness can hardly be understated when it plays such a big role in the performance of the business and strategy making. Therefore, the marketing departments will be more influential within the business when its capabilities complement business requirements.
Increasing business performance
The findings show that a stronger marketing department influence within the business does not directly lead to an increased business performance.
However, a stronger marketing department results in a stronger market oriented business, which in turn leads to an increased business performance. Additionally, an influential marketing department is mainly appropriate when your firm is not market oriented.
Furthermore, research has shown that market-oriented firms tend to have stronger marketing departments, and that influential marketing departments with a strong customer-connecting capability lead to a stronger market orientation. This illuminates the impression that they grow together.
Therefore, due to the influence of a marketing department ,on market orientation, the importance of an influential marketing department cannot be neglected. Additionally, an influential marketing department increases the perceptions of your firm’s financial performance, customer relationship performance, and new product performance.
Therefore, I promote the idea of installing a high influential marketing department with a strong customer-connecting capability.
By developing capabilities in analytics, finance, and cost accounting marketers can achieve greater accountability. This could be achieved when for example marketing plans have a financial section that features the planned financial consequences of their marketing actions.
Or you could demand more cooperation between the sales and marketing department. This will however decrease the perceived influence of marketing, but it will increases the top management respect.
Additionally, innovativeness can be increased by exploiting market and customer knowledge to develop successful new product and service concepts.
Train marketers in techniques, such as lateral thinking, to transform customer’s wishes and needs into real physical products.