It is axiomatic that marketers should know their customers. In many firms, it is the role of marketing to speak for the customer – to represent the needs of and advocate for customers, and to build and maintain relationships with customers. These activities are essential to the long-term survival of the firm because customers are the ultimate source of revenue and other resources necessary for the firm. Without customers, a firm does not last long. Indeed, customers must not only be willing to cover the immediate costs of the products and services that they buy, but they must also be willing to pay a premium that the firm can use for maintenance, improvements, innovation, and profits. Customers pay the bills and fund salaries. If a customer is lost and not replaced with another comparable customer, the firm’s resource base is diminished.
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While external customers are critical to the survival of the firm, marketers also have customers within the firm. The most important of these internal customers is the CEO, who, directly or indirectly through other managers, decides how the firm’s resources are allocated. This customer relationship with the CEO is most obvious to external marketing suppliers such as advertising agencies, market research firms, brokers, and distributors, among others. However, the CEO is just as much a customer of marketing professionals within the firm, and marketers who appreciate this fact are likely to be more successful than those who do not. The CEO ultimately directs the use of resources in the firm, including who is employed by the firm. Thus, it behooves every marketer to understand the world of the CEO and how marketing can meet the needs of the individual who occupies this vital role.
For better or worse, the CEO is generally the public face of the company. In the event of adverse incidents, such as a decrease in sales, a significant accident resulting in injuries, or inappropriate actions by a subordinate employee, it is typically the Chief Executive Officer who is expected to provide an explanation. In most publicly traded firms in the United States, the CEO is responsible for signing off on a quarterly report that describes the firm’s financial performance, operational updates, employee metrics, strategic plans for the future, and progress toward goals established in the past. As a part of this reporting, the CEO must manage and respond to the expectations of many others who often have competing interests. It is not uncommon for a firm to meet its stated objectives but be criticized for not meeting expectations. Explanations of performance must be placed in a context that includes many things over which the CEO has no control – the blizzard in the Northeast that kept shoppers at home during a prime shopping season, a pandemic that disrupted supply chains, or a change in generational preferences for entertainment or beverages.
In light of these demands, it is not surprising that good CEO’s ask hard questions of marketers, especially when the use of resources is involved. These are often questions that marketers have difficulty answering credibly. The request for a million dollars to create a new branding campaign that will be supported by a ten-million-dollar media budget requires justification that the CEO can defend. A justification in vague terms about customer loyalty or brand equity that may (or may not) increase sales or revenue at some uncertain point in the future is not credible. The CEO has to defend such decisions, and in large firms, such decisions are not one-offs. Rather, many similar requests surface during every budget cycle and sometimes between formal budget-setting cycles in multi-product firms. And, marketing is not the only source of such requests for resources.
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Marketers will be more successful when they make requests for resources in terms that will help the CEO defend a positive decision and avoid personal embarrassment and embarrassment for the firm arising from a poor decision. As marketers develop their plans and the justifications for these plans, they should place themselves in the role of the CEO: are the plan and justification something that the CEO can defend to an audience of analysts and investors who are evaluating the firm relative to other investment opportunities? A presentation that begins with a statement that the new branding campaign will increase share by .25% with an incremental margin of 2%, resulting in an increase in contribution to profit of $ XX after accounting for the incremental marketing expenditure, is compelling, especially if backed by data, and will increase the confidence and credibility of the CEO. Another statement that might increase the credibility of a CEO is: marketing cannot tell us how much they contribute to the financial performance of the firm, so we are reducing our expenditures and headcount in marketing.
“Everything ultimately becomes the CEO’s problem, no matter where it starts.” (Yishan Wong, former CEO of Reddit). As in any market, being part of the customer’s solution produces better results than being part of the problem. Reviewing the CEO’s quarterly report and participating in the firm’s earnings calls are places for marketers to start learning about the CEO’s world and for thinking about how to better serve that customer.
Contributed to Branding Strategy Insider by Dr. David Stewart, Emeritus Professor of Marketing and Business Law, Loyola Marymount University, Author, Financial Dimensions Of Marketing Decisions, and Chairman of the Marketing Accountability Standard Board.
At The Blake Project, we help clients worldwide, in all stages of development, define and articulate what makes them competitive and valuable at pivotal moments of change. Please email us to learn how we can help you compete differently.
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