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Most Startups Need a Wartime CMO
The entire world and nearly every business sector now find themselves in uncharted waters. Reflecting on what the current business reality means for marketing leaders, I recalled the concept of a Peacetime leader and a Wartime leader from Ben Horowitz’s book “The Hard Thing About Hard Things.”
Horowitz described the concept in a blog post where he wrote that the Peacetime CEO “focuses on the big picture and empowers her people to make detailed decisions.” The Wartime CEO, in contrast, “cares about a speck of dust on a gnat’s ass if it interfered with the prime directive.”
Peacetime in business is when a company is able to grow in its core market due to a substantial advantage vs. the competition. In times of peace, the company focuses on expanding the market and reinforcing the company’s strengths. For CMO’s, Peacetime is when we are free to be creative with our brand building by attending each trade show with an even bigger booth than last year’s and spending exorbitantly on sponsorships, all under the guise of building the brand.
Wartime is a different thing altogether because, in Wartime, the life and death of our company may be on the line.
As I write this article, the entire world is battling an invisible enemy called COVID-19, which has unleashed an overwhelming dose of business uncertainty globally. For CMO’s, the COVID-19 pandemic is the business equivalent of war. No longer do our 2020 marketing plans make sense.
This is more than being in a room with the light on, and suddenly you find yourself in pitch-black darkness, so you walk tepidly, continuing in the same direction knowing that you were heading toward the door before the lights got turned off. No, not only has the pandemic turned the lights out, its blown a massive crater in our path that was not there before, and devoid of light in the room, cannot be seen. But we must avoid at all costs falling into the crater.
Nobody craves war, but a Wartime leader does not shrink back from the battle, instead, they recognize that Wartime is the single best opportunity to leapfrog distracted competitors and take ground away. What follows is a set of suggestions and ideas to help you discover your “Wartime CMO battle plan.”
How to act as a Wartime CMO.
During Wartime, everyone is in uncharted waters, but this is where the opportunity is for many companies who previously struggled to compete against larger competitors and dominant market forces. Now, for the first time, you may be on equal footing as your stronger rivals. It’s the perfect opportunity to define your future.
In a global slow down like what COVID-19 has triggered, nothing makes sense. And yet, some of your competitors will continue to execute their same old “tried and true” marketing playback, assuming that building the brand with corporate communications messages from the CEO is going to contribute to their business objectives.
Now is the perfect opportunity for the Wartime CMO to take ground in the market.
Take bold action.
Creative marketing is required in Wartime more than ever. Now is the time to test your fundamental assumptions. As the global business environment has changed, and the stability of the core business called into question, CMO’s must be willing to reassess their original plan.
Consider that fewer consumers will equal reduced demand. And reduced demand means markets will not respond as they did before the crisis.
Think about it this way, when people buy less, advertisers spend less. But before you follow a slash and burn the advertising spend playbook, here are a few things to be aware of:
- Investment bank Cowen and Company examined the last six recessions since 1950 and found that spending on direct marketing grew during the previous recessions. Meaning, you will want to consider your mix of brand advertising carefully compared to sales activation marketing. It’s not time to stop advertising. Remember, there will be bargains across the board as media outlets see companies cut their marketing and advertising spends. Push marketing and branding drops in a slowdown, but sales activation marketing always increases.
- Shift spending to more measurable channels so that you can adapt quickly. Speed is everything. Marketing initiatives able to be tracked with specificity will be much more valuable than broad mass-market campaigns. Slowdowns accelerate the decline of interruption-based mass advertising. In its place will be an increased focus on measurable and relationship-based strategies.
- Downturns create an opportunity for companies that are more efficient at turning marketing investments into revenue. In the middle of a slow down when advertisers are cutting their spending is a great time to take advantage of low CPMs and CPAs.
- The Institute of Practitioners in Advertising completed a study in 2008 that found, “Following a budget cut, a brand will continue to benefit from the marketing investment made over the previous few years. This will mitigate any short-term business effects, and will result in a dangerously misleading increase in short-term profitability. The longer-term business harm will be more considerable, but will not be noticed at first.”
- Millward Brown reported in their study “Marketing During Recession: To Spend or Not to Spend?” that 60% of brands that went ‘dark’ during an economic downturn by cutting their TV advertising spend for six months experienced a decrease in Brand Use by 24% with a 28% decrease in Brand Image. Brands that cut their ad budget at a higher rate relative to their competitors were at an even greater risk of share loss.
There are a tremendous number of marketing studies that validate in a downturn, brands that continue marketing and advertising efforts recover more quickly. It takes bold action to spend when the data suggests that ROI is not possible. A Wartime CMO fights to retain the budget needed to continue advertising.
Maximize the value of each lead generated.
In a slowdown, risk-averse buyers take even longer to research purchases, and this applies equally to B2B and B2C buyers. When you first identify a prospect, they will likely remain in the awareness stage of your funnel and will not be ready to engage with an SDR or BDR. So don’t force this interaction. Marketing must be careful not to move a prospect through the funnel too quickly. Remember, the prospect’s professional life has been turned on its head also. What was a priority just a few weeks or months ago, is likely not top of mind today.
It’s tempting in a slow down to tighten your grip on leads because the rationale is that now more than ever, all leads are essential. Here is where lead scoring can be a valuable tool to identify highly engaged prospects from those who are not likely to become your customers. Now is the time for Marketers to hold on to MQL’s for an extended period so that you can groom the prospect to the fullest possible extent before handing them off to sales as a SQL.
Without lead scoring and a suitable prospect tracking system across your digital channels, as many as nine out of ten MQL’s who are not yet sales-ready could be lost. They will buy, just not now. You don’t want to miss the future sale because you didn’t keep in contact and add value though the journey. In a “Wartime” economy, you must do everything possible to maximize the value of your MQL’s.
CMO’s that do a better job of managing leads and developing early-stage candidates into sales-ready leads will be in the best position to win during the crisis and most definitely once it has passed.
Focus on your current customers.
It’s less expensive to grow revenues with your existing customers. Consider whether now is the time to scale back your mass lead generation programs and focus on building deeper relationships with those who already know your company. This doesn’t mean to stop your demand gen efforts, but it does mean that you may want to explore with product and sales how you can sell more to your existing customers.
In Peacetime, marketing teams are running on autopilot in pursuit of driving MQL’s to satisfy sales reps. For a company that has obtained traction on their way to becoming a category king or queen, this strategy, though costly feels good because of the tremendous volume of activity that is being generated. However, without careful analysis, the high degree of activity fools many CMO’s and management teams into thinking that their demand generation engine is finely tuned when, in fact, it’s emitting massive pollution, i.e. excessively high CAC, higher than average churn for the category, low CLTV, etc.
The Wartime CMO goes deep on their existing relationships, working with product and sales to create if needed new products or variations that can be sold to the customers they already have.
Marketing must align with sales.
Today’s prospects are in control of the buying journey. This wasn’t always the case, but now, decision-makers start the buying process by interacting with multiple channels long before they raise their hand to request more information.
Companies must integrate marketing and sales efforts to create a single revenue pipeline. The old days of functional silos and poor communication between the sales and marketing departments must end. If marketing doesn’t function as the MVP (most valuable player) for sales, they’ll likely never receive the resources and executive backing needed to execute a legendary marketing strategy. A CMO not tightly coupled with the CEO and CRO will find their job more difficult, or another CMO statistic. Listen to my coverage of this topic on theNextCMO podcast.
Change the perception of marketing as a cost center.
The Wartime CMO will need to increase the accountability of marketing by demonstrating the impact of each marketing activity on the pipeline as measured by revenue contribution.
In a slow down, marketing must shift the perception of being a cost center to a revenue driver. Reporting beyond the number of marketing qualified leads generated to include the total opportunity value for each lead source is an excellent way to represent the role marketing is playing to drive the economic objectives of the business.
Look out for “leaky” website landing pages.
Whether you are using Google Ads or Facebook Ads, premium content placement, or email sponsorships and newsletters, a dedicated landing page is the single most effective way to turn an inbound click into a prospect.
Studies have shown that a well-designed landing page can double your conversion rate over sending traffic to the home page, which tends to lack the appropriate call to action that matches the ad. Because of this, testing landing pages can increase conversions as much as 50% or more. Together, these tactics can give a 2.5X boost for every dollar you spend on advertising. Yes, conversion rate optimization makes a difference.
During Wartime, every marketing dollar is precious, and a Wartime CMO knows that winning will not come down to a single tactic or “silver bullet” strategy. But instead, many small things executed well. The CMO, who cannot understand the interplay of copy, messaging, creative design, and technology, will struggle to find and identify quickly where small changes can provide improved conversions.
Create content for late in the buying cycle.
It’s the marketing department’s job to identify, nurture, and introduce qualified prospects to the company. But when a sector slows down, the CMO should increase their intensity on this task by orders of magnitude. Many content marketing teams were built in an era where Google rankings could be achieved by spraying hundreds, thousands, even tens of thousands of blog and social media posts around the Internet containing your brand name and major keywords.
This content strategy worked, for a season, sort-of. But with the rise of Google RankBrain, the technique has not been effective for years. Without being in the midst of a crisis, you should stop this wasteful activity. But now as budgets are under pressure and every marketing activity must count, the way that we do content marketing needs to be updated.
Now, the content that we create needs to appeal to someone looking for our solution, and it should contain buyer intent triggers like keywords and phrases that a buyer would use as they get close to making a purchase decision. A Havas Group study revealed that 84% of people expect brands to produce content, yet 60% of the content produced is of poor quality or irrelevant, failing to meet the needs of the audience. Despite a 71% correlation between content effectiveness and a brand’s impact on personal well-being, just 40% of the world’s leading 1,500 brands produce content that meets this requirement. Brand’s are failing to produce meaningful content.
Stop producing assembly line content that is only intended to build the brand or introduce the product. Instead, content should target specific personas to address any holdups preventing the prospect from moving forward. This content will take longer to produce and require a greater ecosystem and product knowledge level.
CMO’s in Wartime must have an excellent understanding of the buyer psyche and their emotional needs so that they can create content that alleviates fear and addresses the honest questions they have.
Crisis will create nervous and fearful buyers, which leads to a tendency to opt for “safe” solutions. Large established companies will have an easier time of reminding these buyers that they’ll be there to serve them even after the storm passes. Younger companies will need to do more to build trust. Here, customer references, reviews, expert opinions, awards, and other independent validation should become a more significant part of the marketing mix. Geoffrey Moore wrote in his book Crossing the Chasm about the need to appeal to mainstream pragmatists. To do this, marketers must apply industry-specific marketing tactics, vertical customer references, relevant trust-building partnerships, and alliances where your company will benefit from the association, whereby easing the buyer’s fear.
Seize the day with Category Design.
During these trying times, we all feel in chaos. Don’t give any more mindshare than you need to the situation. Focus on how you can super-serve the market and the ecosystem. Do this sincerely, and you’ll be rewarded.
CMO’s in Wartime double down on Category Design so that their organization will come out as the leader, making them the dominant choice, putting them in the enviable position to take as much as 76% of the economics from the entire category.
Read more about Category Design.
The B2B sales process today is fragmented and complex, with dozens of stakeholders needing to sign off on a purchase decision. This renders traditional marketing ROI and attribution techniques less useful for anything other than academic study.
The marketing function today breaks down into three functional pillars comprising Product, Demand Generation, and Category Design. Because many marketing leaders have not fully adopted category design, it’s a surprisingly easy way to beat an incumbent during a crisis. Once the sector begins to talk about the category as you’ve defined it, your company will become the category and the obvious choice.
Even during Peacetime, the odds of a B2B buyer falling into a prescribed marketing campaign cycle are nearly zero. But in Wartime, marketing communications, product marketing, content marketing, and demand gen must all be done in the service of category design while defining the category and problem that you are solving so that you can become the leader.
To do Category Design requires a different working cadence. Wartime is the perfect time to embark on Category Design since nothing is “normal” during a crisis.
To take on the challenge of building a Category King company requires a ton of grit, perseverance, and an unwavering drive to win. For the Wartime CMO, who takes on the challenge, there can be no bigger pot-o-gold if successful.
Read the book Play Bigger to learn all of the category design concepts.
A Wartime CMO will want to begin mapping the foundational areas of the business and the market that will be changed post COVID-19. These can be structural, and they may be philosophical. It’s not too early to consider what it means for the makeup of your team, the tactics you deploy, and how the company portrays itself to the market after the crisis passes.
As in war, some run to the battle while others retreat. I believe the most significant professional experiences stem from having overcome great hardship and opposition. We are experiencing business dynamics that are unlike any other, but this represents a once in a lifetime opportunity whereby our response can catapult our organizations further than ever thought possible. I say pull the slingshot back and let’s go to war!
Presentation on Marketing Effectiveness by Les Binet & Peter
The following HBR article, “Are you a Peacetime CEO or a Wartime CEO?” is worth reading for a complete understanding of the Peacetime vs Wartime mindset.