Our recent economic turbulence has been of concern for economists, business owners, corporate leaders and marketers alike since 2007 – putting us in our seventh successive year of having to think, plan and act a little differently. Now, it’s late-2013 and the word “recovery” is growing in prominence.
Yet, while talk of “growth” and “exit velocity” are a welcome change for households and businesses, there’s still work to be done. Growth is a product not just of improved sentiment, but of action, primarily by customers and consumers making a choice to buy, to renew, to upgrade or just to spend a little more.
It is for these reasons that The Chartered Institute of Marketing introduced, in late-2012, a comprehensive quarterly benchmark exploring UK marketers’ attitude, sentiment and outlook, designed to serve as a credible indicator of business and economic performance. The good news is that the picture has improved significantly over the first full year of this benchmark, but a number of vulnerabilities to sustainable growth have emerged, which require management attention.
Most businesses agree that the economic downturn, which began in 2007, went deeper and lasted longer than expected. Early predictions of the “shape” (U, V or W) of the recovery soon faded as a multi-year series of body blows, from bank bailouts and Greek political upheaval, hit home.
Now that growth is replacing survival as the dominant theme of media coverage and management meetings, businesses are increasingly realising that a return to “how things were” looks unlikely, at best. Customers and consumers have changed; their needs, values and behaviours have shifted (in some instances profoundly), while trust in and attitudes towards corporations and other institutions has been scarred by events of recent years.
To thrive in this “new normal” requires businesses to accept change – to embrace a return to customer focus, a willingness for risk and investment in innovation to identify and create future opportunity. And it’s these areas where marketing truly comes into play to drive customer choice and truly ignite growth.
Despite much work over recent years, the role and purpose of marketing remains, for many organisations, unclear. Best known for their outputs – namely advertising, sponsorship and communications – marketers have, for many years, expressed frustration that the more strategic expertise inherent within a marketing function, such as customer insight, innovation, proposition development and brand experience, are misunderstood and under-leveraged.
Businesses must embrace a return to customer focus, a willingness for risk and investment in innovation to identify and create future opportunity
Our latest results show this frustration remains as prevalent today as it was in our pre-recession research. Some 50 per cent of UK marketers agree with the notion that marketing is largely viewed as a communication-focused function in their organisation, restricting their ability to contribute to strategy development. Fewer still (44 per cent) believe that other business disciplines share a common understanding of the role and value contribution of the marketing function.
Furthermore, only 55 per cent say market and customer insight is actively used in the early stages of business planning and strategy and 33 per cent of marketers label themselves a “permitted contributor” to growth conversations in the business, acknowledging that, while they’re part of the discussion, they’re treated with some scepticism by colleagues.
While we wouldn’t suggest an introspective exercise in self-definition and navel-gazing, we strongly believe that clarity and a common purpose are crucial to success for leaders, and taking the time to build shared understanding and clarity of remit for all functions, not just marketing, in the pursuit of growth, is essential.
The recent economic downturn forced many businesses, often necessarily, into “survival” mode. Projects were mothballed, travel was banned, training and recruitment were frozen, and marketing spend cut. Customers and consumers reduced or simply stopped spending and business’s appetite for “new thinking” or ambition followed suit.
As we enter the new normal and growth potential resumes, the hatches simply cannot remain battened down. The turbulence of recent years has produced a positive outcome: new opportunities are emerging for new competition, new ideas, new business models and new ways of working. Seizing on these opportunities requires investment, however. As a member of the steering committee for our confidence index puts it: “You can’t just sit back and wait for the customer to grow your business for you; you’ve got to get your best people working on creating the future and investing to make that happen.” And those words are from a finance director.
Despite the growing optimism evident in our research results, risk aversion is still a dominant factor for the majority. Only 43 per cent of marketers believe their business has an appetite for risk and investment over the next 12 months.
What’s more, where businesses are willing to invest, their priorities are focused on lower-risk investments. The top-ranked corporate priority identified by marketers for the next 12 months is maintaining share of current customers or retention, while the lowest-ranked priority is entering new markets or categories.
Since the inception of this study, marketers have been largely downbeat about the prospects for UK economic performance. Concerns about the sustainability of any recovery and the impact of the eurozone crisis have marred otherwise cautious optimism about career prospects and business performance.
Marketers must grasp the opportunity and invest in research, new ideas, new ways of working and general efforts to get closer to customers
In the last quarter’s data, however, we see a marked shift in outlook. Confidence in UK economic performance is the strongest of all dimensions of our survey, with 52 per cent of marketers feeling more confident about the year ahead, compared with just 15 per cent reporting falling confidence – both figures representing dramatic improvements in the last three months.
What’s more, this stability over the year ahead is also reflected in near-term sentiment, with 49 per cent of marketers predicting an improvement in economic conditions over the next three months and just 12 per cent reporting the opposite. Meanwhile, for the first time in nine months, less than half of marketers report above normal levels of general financial and economic uncertainty facing their organisations.
Marketers are also notably more positive on customer and consumer behaviour, the critical “other side” to the equation. Some 52 per cent of marketers believe that consumer confidence will increase in the next six months, double the number saying the same in the prior quarter (April 2013), and more still (58 per cent) believe that business confidence will show improvement over the same period, more than doubling also.
For this stability and certainty to bear out, businesses – and marketers in particular – must grasp the opportunity and invest in research, new ideas, new ways of working and general efforts to get closer to customers than recent years have perhaps allowed.
Finally, our most recent set of data reveals a possible lack of cohesion within organisations. Less than half of marketers claim to have positive relationships with their finance, HR or IT functions, each of which is critical to an organisation’s growth aspirations and critical to the effectiveness of marketing itself.
Growth and performance aren’t the preserve of merely one department. Only with alignment among an organisation’s leaders and a shared “rhythm” can organisations truly be successful and capitalise on emerging opportunity. Inter-departmental relationships are critical to this success – growth simply can’t occur in a vacuum.
The full results of CIM’s latest confidence research will be published at the CIM/Bloomberg 2013 Growth Summit in London on September 3. You can watch and interact with this event for free, either live or on-demand at growth-summit.com