Recent research shows that marketers are under increasing pressure to increase revenue.
The CMO Council found that marketers now account for 44% of company revenue, up from 10% in the early 2000s. Nine out of ten survey respondents expect revenue growth this year, and 63 percent say they and their marketing teams are under intense pressure to meet revenue targets.
Recent research shows that most marketers are still using marketing communication tactics to drive growth.
More than 80% of respondents to The CMO Survey in February 2020 said marketing plays a leading role in their organization in marketing communication activities like brand building, digital marketing, advertising and social media. But fewer than four out of ten respondents said marketing drives many other activities that impact revenue growth, such as market selection and entry strategies.
Why Marketing Expertise is Needed
Marketing communications are clearly important, but they aren’t enough to maximize revenue growth. Marketing leaders must develop deep market expertise to effectively identify and exploit all available growth opportunities.
Understanding the economic and competitive characteristics of the entire market in which a company operates, including segments not currently targeted, is market expertise. Thus, market expertise requires a thorough understanding of all potential buyers, including existing customers, targeted prospects, and non-customers.
Developing market expertise is critical whenever a company needs to identify and capitalize on new or previously unrecognized revenue growth opportunities. Identifying new growth opportunities is far less likely when marketing and other business leaders fail to view their market broadly.
Jack Welch’s Lesson
An example of this is Jack Welch. When Welch became GE’s CEO in 1981, he set out to make every GE business unit the market’s #1 or #2 player. “#1, #2, fix, close or sell,” Welch’s strategy became.
This strategy worked well for a while, but eventually had unintended consequences. In the 1990s, some younger GE executives questioned Welch’s strategy, claiming it hampered company growth. They claimed some business unit leaders defined their markets too narrowly to claim #1 or #2. The narrow market definition missed growth opportunities.
Concerned, Welch refined his strategy, requiring all business unit leaders to redefine their markets to under 10% market share. This forced business unit leaders to identify previously unnoticed or ignored revenue growth opportunities.
Always Look Past the Core
Marketers naturally focus on increasing revenue from their core markets – current customer types, current products/product configurations, current geographies, etc.
Some companies have a thriving core market with plenty of room for expansion, but many operate in markets with slower growth. Also, most markets mature from “growth stage” to “mature stage,” so even healthy growth can change quickly.
When a company’s core market(s) revenue growth slows, company leaders will likely consider business expansion. Expansions “beyond the core” require careful consideration.
Marketing, in my opinion, should lead the market expansion evaluation. Marketing leaders can (or should) assess the growth potential and risks of new markets or market segments. In fact, I believe marketing leaders should always be evaluating potential expansion moves to provide other senior company leaders with strategic growth options.