No amount of perfume can overcome the stench of a technology product that people don’t need.
According to research from executive search firm Spencer Stuart, the average Chief Marketing Officer in a technology company can expect to stay in the job for 23 months.1 That’s half the time we expect for CEOs and COOs. Why is a CMO’s job in such jeopardy? Invariably, this short tenure is the result of the CMO’s inability to meet unrealistic demands of the job—expectations that are in fact impossible. The CMO fails to create the need for your company’s product.
Unfortunately, people don’t need what they don’t need.
In effect, CMOs have been hired to perfume the pig. Product Marketing is relegated to delivering the product to market without clarity on the problem and who wants to solve it.
Alas, no amount of perfume can overcome the stench of a technology product that people don’t need.
Your founder, a brilliant technician, started the company years ago when he quit his day job to market his idea full time. He created a product that he just knew other people needed. And he was right. Pretty soon he delivered enough of the product and hired his best friend from college as VP of Sales. And the company grew.
But before long, the VP of Sales complained, “We’re an engineering-led company. We need to become customer-driven.” And that sounded fine.
Except… every new contract seemed to require custom work. And you signed a dozen clients in a dozen market segments. And the latest customer’s voice always dominated the product plans. You concluded that “customer-driven” means “driven by the latest customer” and that can’t be right.
Later, a board member declared, “We’ve become a sales-led company. We really need to start being marketing-driven.” So you hired a brand specialist away from a consumer company as VP of Marketing. She designed a new corporate logo with a new color scheme, the collateral, and the trade show booth. Everyone got new company icons on their clothing. Except… you spent millions on the logo but without any change in revenues. Apparently, branding isn’t all that it’s cracked up to be, eh?
The CFO whispered to the founder, “Don’t you think it’s time that we started controlling costs?” So the company became cost-driven and started cutting all the luxuries of the business, like travel, technical support, bonuses, and awards dinners. And Marketing. The CFO asked, “What do those marketing people do?” and since no one had a good answer, the CFO deleted the marketing budget and fired all the marketing people.
Eventually, the president and founder said, “We’ve tried being sales-driven; we’ve tried being marketing-driven; we’ve tried being cost-driven. It’s time to get back to our roots and become engineering-driven again.”
Actually, no, that’s the wrong conclusion.
Many companies move through this cycle: from being led by Engineering, Sales, Marketing, Finance, and back to Engineering again. We go from technology-driven to customer-driven to brand-driven to cost-driven and back to technology-driven.
Until… someone decides to be market-driven.
The way to break the cycle of dysfunction is to stop listening to each other and start listening to the market. Listening to the market means first observing problems in the market and then solving them.
I’m convinced that developers, engineers, and executives want to be market-driven. They just don’t want to be driven by marketing departments.
There’s a big difference between listening to the market and listening to the marketing department. The problem is, marketing people don’t buy our product. Nor do most of them understand the product. In fact, many marketing people deserve all the respect that they get— which is none.
“Marketing is too important to be left to the marketing department.”
A Director of Marketing asks me to talk to her management. She tells me that her executives “just don’t get marketing.” Then she starts reminding me about the importance of awareness and “buzz” and exposures… and I realize that I agree with her management: she doesn’t “get” marketing either. She’s not talking about marketing; she’s talking about promotion.
Marketing directors frequently ask, “What percentage of revenue should I allocate for my marketing budget?”
Do you mean the marketing budget or the promotion budget? A promotion budget reflects the product strategy; the marketing budget defines the product strategy. The marketing budget should contain market research; the promotions budget contains marketing research. Which is right?
If you’re in maintenance mode and just want to keep your existing customers, a promo budget of 3-5% of revenue is plenty; keep the cash cow alive. But what if you’re in a market-share fight? If your strategy is striving for dominance in the market, you might spend more in promotions than your entire corporate revenues. In a drag race, you’re not interested in optimizing fuel efficiency or ensuring good tread wear on the tires. You are literally burning through resources to win the race.
For the first few years, Amazon lost money on every book sold. They were in a drag race for market dominance. Before AOL became a party joke for acquiring Time Warner and then being eaten up by it, AOL spent millions on the ubiquitous install disk everywhere you looked. AOL was in a drag race to be everyone’s on-ramp to the internet. AOL and Amazon each spent more on promotions than on development. And each became number one in their space.
So, what is your strategy?
“Uh-oh. We don’t seem to have one of those. Can I just budget a percent of revenue?”
Okay here’s an answer: spend 10% of your revenue target on promotion if you don’t have a strategy. (And then seek employment with a company that does have a strategy.)
The real problem facing tech companies (and life sciences and web 2.0 and, okay, well almost everybody) is that they’re not doing marketing; they’re only doing promotion.
Pragmatic Marketing, Inc. has continuously delivered thought leadership in technology product management and marketing since it was founded in 1993. Today, we provide training and present at industry events around the world, conduct the industry’s largest annual survey and produce respected publications that are read by more than 100,000 product management and marketing professionals. Our thought-leadership portfolio includes the Pragmatic Marketing Framework, eBooks, blogs, webinars, podcasts, newsletters, The Pragmatic Marketer magazine and the bestseller “Tuned In.”
To learn more about our courses and join the growing international community of more than 85,000 product management and marketing professionals trained by Pragmatic Marketing, please click here.