Are Your Marketing and Business Strategies Aligned?


By: Suresh Srinivasan         

A tight economy forces businesses to scrutinize every resource. All too   often marketing comes under the gun because its tactics are not perceived by management as having a direct impact on the company’s bottom line. If your business is evaluating the value of marketing and looking for ways to cut it, you should first cast a critical eye on whether you have the right management model to ensure that marketing is measurably helping your business achieve its goals. A good management model means marketing and business strategies become aligned and stay aligned. Good alignment means your company gains the flexibility to grow in any economy, and marketing can always demonstrate its direct contribution to achieving business goals.   

There are many tell-tale signs of non-alignment. Common symptoms include:   

• Management does not believe marketing has a direct impact on the company’s financial performance.   

• Management feels marketing is out-of-pace with the speed the business is moving.   

• Marketing tactics are often discussed yet results are rarely communicated.   

• Too many functional silos exist within marketing, each fighting separately for management attention and budget.   

• It seems there are too many marketing initiatives and   no one really understands how or which ones contribute to the bottom line.   

• The budgeting process is simply based on last year’s budget, not on hard metrics, achievements or what goals the company has set for the coming year.    

If you answered “yes” to any of the above, you’re likely out of alignment or heading there. The key to rectifying this situation is to take a look at your process for managing the marketing function and to develop a chart of the clear relationships between marketing’s objectives, tactics and the business strategies that help it meet its financial goals.      

A good management process starts with a unified framework that all stakeholders understand what aids decision making. This framework should be codified into a living document, spreadsheet or chart that is reviewed and evolves over time. A good framework starts with the big picture (input from the CEO, COO and CFO) and then allows functional heads to winnow those down to specific strategies and tactics they can delegate throughout their department. Once approved, this framework should be fed to IT and process leaders who will be tasked with capturing and reporting data back from the field when necessary.    

Meeting of the Minds: Understand Business Objectives 

First, the marketing chief must clearly understand the scope of his fiscal and conduct authority. For example, what is the budget? What areas does it cover? Does it cover both advertising as well as systems, or are systems covered by IT? What spend level requires extra sign-off, if any? Does the marketing chief understand the risk profile of the company? Does the marketing chief understand the company’s policies and procedures? Defining authority is a key success factor for alignment because it sets the right tone at the highest level that will eventually control the myriad decisions made throughout the marketing organization over the next year.     

Once you’ve defined scope of authority, focus on the financial objectives for the company for the next year. Financial objectives boil down to creating shareholder value. Shareholder value is often expressed as profits (or cash flow) plus intangible assets (brand value, distribution channels, market share, product categories, customer relationships and so forth). Focus on the highest-ranking goals for the next year and then define how your company measures them. Is your business looking to increase revenue by $50 million? Or improve its return on invested capital by 30 percent? How are these financial goals measured? The head of marketing should understand the concrete goals (in numbers) and the measurement methods inside and out.   

Next, the marketing chief must understand the business strategies that are considered critical to meet the financial goals. Strategies may focus on product or service leadership, price/cost leadership, customer convenience, growth of distribution, market categories (niches), but should always focus on the means to achieve the financial goals. If a financial objective is to increase revenue by $50 million, a business strategy might be to open “X” number of new stores in Tier 2 markets.   

Chart Out Marketing Objectives and Strategies 

After financial objectives and business strategies are clearly defined, it’s the   marketing department’s turn to decide what marketing objectives and tactics can deliver results. Creating a chart that clearly highlights the relationship between strategies, objectives and tactics will help the department visualize each contribution and eliminate redundancies. Marketing’s central purpose is to create customer value propositions that get prospects to behave as the business would like them to—to try your products, purchase more products and remain loyal. These value propositions weave themselves through each strategy and tactic, so as a first step list the central value propositions that are core to your business   at the top of the chart.   

Next draw three columns. List the “Business Strategies” in the far left column. Label the center column “Marketing Objectives” and the far right column “Marketing Tactics.” Start listing all current objectives and any new objectives that you believe will help meet the strategies in the center column. Once you’ve done that, list all current and future planned tactics in the far right column needed to achieve the objectives. In deciding what the objectives and tactics should be, marketing must always think about things that can be measured to quantify a return on the investment. In many cases, marketing must continue to scrutinize the objective until a quantifiable result becomes apparent.   

For example, if a business strategy is “highest in customer loyalty,“ the marketing department may want to first measure customer loyalty and benchmark that versus the competition. To become the highest in customer loyalty, marketing must think of appropriate quantifiable strategies, then set targets appropriately (maybe one million customers enrolled in a loyalty rewards program). Marketing tactics might include creating a rewards program Web site, mailings to existing clients and so forth, the costs and gains of which should all be tracked. Now, draw arrows on the chart to map the causal relationships from tactics to objectives, and objectives to strategies as shown in Figure 2. You may start noticing that some marketing activities in your columns do not clearly map to any objectives or goals or are not quantifiable. This is good. Those items either need to be scrutinized further to be made measurable, or stripped from the marketing department’s efforts. This is part of the house-cleaning effort.   

Of the items that remain on your chart, the next step is to prioritize or score each tactic’s contribution to each objective, and each objective to each business strategy. Give each item a score out of 100, where 100 represents 100 percent of your marketing department’s effort. This assigns a priority to marketing’s activities and aligns those priorities with the business’ priorities. If business priorities happen to change in the future, marketing can readjust its activities accordingly. This prioritizing process is usually a collaborative exercise and will likely be contentious, but will create a tremendous amount of alignment.     

Close the Loop With Reporting and Communications 

Alignment doesn’t exist without frequent communication. Set a communication and reporting schedule that is meaningful for your business. Businesses that generate enough data daily to make meaningful decisions about resource allocation should have key stakeholders meet daily. For others, weekly or monthly might be sufficient. Meetings should review activities and results using simple charts and graphs that use the same vocabulary and formulas the business uses to measure its financial goals.   

Also, be sure to decide the primary constituents that must be involved in ongoing communications and get them vested in the process. Then decide what that communication must include and how that communication must flow. For example, while feedback to and from all department heads is great, too many chiefs giving input is a recipe for disaster and can increase internal costs. You might want to restrict the number of people in meetings so that the input remains focused. Or you might want to develop an online dashboard where certain non-primary stakeholders can view reports at their leisure.      

Success Begins With Alignment 

In good economies and bad, change is constant. It’s not uncommon to shift financial or business strategies in response to the economy, the competition or other market developments. Alignment is a two-way street, so a unified framework combined with frequent communication is very important. Marketing must always be made aware of shifting business priorities so that the realignment process can take place. Marketing must become very good at communicating its contribution to the business goals using business vocabulary. A good communication strategy ensures that business and marketing stakeholders are all “on the same page” all the time.   

Whether your goal is to increase the number of units, same-store sales, market share or improve brand recall, success starts with alignment. Alignment is not something that happens once a year. It’s an ongoing process of adjusting marketing priorities to changes in the business.   

Business executives always want hard evidence that they should continue to invest in marketing. By creating a unified framework, executives undertake the necessary first step to shore up marketing’s effectiveness.    

Suresh Srinivasan is CEO of BroadSpire, Inc.