Part 1 of 2 The concept of the “ROI Marketer” was coined this month in a report from the The Fournaise Marketing Group. He...25 Jul 2012 1271 Views
Part 1 of 2
The concept of the “ROI Marketer” was coined this month in a report from the The Fournaise Marketing Group. Here’s why I think this is the worst idea in marketing — and why it has a shot at catching on.
The report is the result of interviews with over 1,200 large corporation and SMB CEOs and decision-makers in North America, Europe, Asia and Australia. The key finding was that 80% of CEOs don’t value or trust marketing folk. However, 90% of them DO trust and value the work of CFOs and CIOs because “they are 100% ROI-focused – where every dollar spent must have a measurable, quantifiable and positive impact on the company’s P&L and operations.” The report concluded that “To earn the CEOs’ trust and prove that they can be solid business generators, 74% of CEOs want Marketers to become 100% ROI- focused: they call them “ROI Marketers”.” I had one thought when I read this: “Be careful what you wish for.”
Jerome Fontaine, CEO & Chief Tracker of Fournaise, had this to add: “Marketers will have to understand that they need to start “cutting the rubbish” if they are to earn the trust of CEOs and if they want to have a bigger impact in the boardroom” he explained. “They will have to transform themselves into true business-driven ROI Marketers or forever remain in what 65% of CEOs told us they call Marketing la-la land”. “Rubbish” in this sense being anything that is not dirt simple and directly tied to P&L.
Last year’s report had more of the same like the 77% of CEOs who felt marketing people “keep on talking about brand, brand values, brand equity and other similar parameters that their top management has great difficulties linking back to results that really matter: revenue, sales, EBIT or even market valuation.” Unlike CFOs and sales staff, CMOs “don’t think enough like businesspeople: they focus too much on the creative, “arty” and “fluffy” side of marketing and not enough on its business science.” Translation: If the CEO doesn’t understand it then it can’t possibly matter much. P.S.: The CEO doesn’t understand marketing or brands — at all.
If these comments truly are representational then the rift between CEO and CMO is even wider than I imagined and may explain why CMOs are fired with such frequency. But where does this CEO / CMO rift come from?
Jonathan Knowles of Type 2 consulting provides a well-articulated answer: “For most people in marketing, it seems odd that the business case for marketing needs to be made. They assume that everyone sees the world the way that they do, and therefore understand that human beings make choices on the basis of more than just functionality and price.” And he sees it from the CEO’s perspective: “Many (if not most) people in business have an implicit assumption that human beings are “rational economic maximizers” and that their decisions are driven primarily by considerations of functionality and price. To those holding this view, the role of marketing is to get people to do things that they would not otherwise do by distorting or manipulating their perceptions of the product or service in question… The starting point for any discussion about the strategic contribution of marketing must be an appreciation that marketing represents a form of value creation for the customer (how to address customer needs that go beyond functionality and price) rather than value extraction (how to get customers to buy our product, no matter what).”
To use Jonathan’s terms, converting to ROI Marketing is basically about replacing value creators with value extractors. Seems little more than salesmen in marketers’ clothing. Appealing on the surface, maybe, but short-sighted to be sure. Companies need to create value in the form of products and services in order to extract value in the form of cash and brand advocacy from customers. Companies today do not need to choose between the two. They need to balance and orchestrate them.
In my next post “The ROI Marketer: Hell Yes.” I’ll look at why, despite its flaws, the ROI Marketer just might catch on.
Speaker, consultant & founder of Duffy Agency, the flipped digital agency that provides accelerated growth to aspiring international brands.