Previous Accenture research demonstrated that a company's ability to win customer loyalty is the defining characteristic of high performance in marketing—the quality that distinguishes Starbucks Corporation and a handful of other companies we call capital-M marketers. That research also identified five core marketing capabilities characteristic of high performers.
- Developing and delivering the branded customer experience
- Creating and shaping demand
- Harnessing talent and technology
- Translating foresight and insight into marketing productivity
- Driving marketing to meet performance objectives
Subsequent research into the link between marketing capabilities and business performance has further revealed that those five capabilities account for at least 50 percent of a typical company's ability to win customer loyalty, a number that can reach 60 percent for B2B2C companies. To be sure, factors that have nothing to do with marketing also play an important role in sustaining customer loyalty. Market maturity and customer buying habits, as well as regulation, product patents and industry structure (monopolies, for example), all contribute to the nearly 50 percent of a typical company's ability to win and sustain customer loyalty not accounted for by our five core capabilities. Yet the number and range of these extraneous factors make the impact of our five core capabilities—and the 120 supporting skills that underlie them—all the more remarkable.
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Some marketing capabilities are clearly more important to business performance than others, even among our five core capabilities. Of this group, the two most closely associated with customer-facing delivery—"developing and delivering the branded experience" and "creating and shaping demand"—are the most crucial (see Figure 1).
Integrated Execution
However, the top performers in our survey (and to some extent their closest competitors) also scored especially well on the three of these capabilities that have less direct impact on customers. So while mastering certain marketing capabilities is critical to a company's success, high-performance businesses clearly recognize the importance of excellent, integrated execution of all five capabilities.
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Interestingly, the two customer-facing capabilities are as important to B2B companies as they are to B2C companies, a result we find particularly striking, since industries that use the B2B model have traditionally been relative laggards at marketing. Equally interesting, we found that mastery of these two capabilities is by no means exclusive to companies from fully industrialized nations; indeed, some of the highest scores came from companies in emerging economies.
We found that these companies, notably in Asia, are frequently just as good as their Western counterparts at developing and delivering the branded experience and creating and shaping demand—and that they are successfully leveraging these capabilities to penetrate markets in industrialized nations. Taken together, we see marketing capabilities as an emerging weapon of choice for all companies—across industries, business models and geographic boundaries.
No company, regardless of business model or geography, can become a capital-M marketer—that is, achieve the kind of marketing mastery that contributes to high performance—without taking a business-wide approach to marketing and without integrating the marketing function into everything the company does. The high performers we have observed have achieved excellence across the full range of marketing capabilities and skills.
However, we have also observed that mastery of specific skills—or executing these skills at a proficiency level even above excellence—plays an important role in setting some companies apart. We discovered, for example, that "executing a pervasive innovation agenda" is the element or skill set within the "creating and shaping demand" capability that has the most impact on business performance. It is also the same skill set that so clearly differentiates the Japanese carmaker Toyota Motor Corporation.
Targeting Generation Y
Keen to target younger car buyers—a notoriously fickle and demanding demographic, as well as a stubbornly anti-establishment one—Toyota launched an entirely new brand, the Scion, and targeted its marketing to Generation Y. Scion has been a huge success. Its unique-to-America designs are especially popular, as are a huge range of aftermarket accessories, which enable buyers to tailor cars to their personalities.
Several skills within the five core capabilities seem to be especially strong predictors of success or failure at winning customer loyalty and thus achieving high performance. High scores on both "managing talent" and "focusing on high-potential segments"—components of "developing and delivering the branded customer experience"—greatly increase the likelihood of top business performance. By contrast, low scores on these particular skills, as well as a low score on "using leading-edge research into future needs"—a component of "translating foresight and insight into marketing productivity"—diminish the likelihood of achieving high performance.
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As we probed deeper into the specific contributions of the skills that are components of the five capabilities, a clear message emerged: Execution is everything. Among the skills required for "developing and delivering the branded customer experience," those needed for delivery are paramount. The critical issue in delivery, moreover, is consistency, which accounts for almost half of the total impact that the branded experience has on winning customer loyalty.
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Most Critical Factor
People are often the most critical factor in execution. Even for the three non-customer-facing capabilities, the skills that matter most are those that have to do with people. For example "harnessing talent and technology" is the capability that, if improved, is most likely to help a company outperform its competitors, according to our respondents. And managing, training and retaining talent is the skill within the "harnessing talent and technology" capability that has the most impact on the branded experience.
Indeed, the marketing skills that matter most across all the capabilities are largely concerned with people management—ensuring that all functions deliver the same branded experience, training all frontline people completely and effectively, and reinforcing the brand promise across campaigns.
Starbucks, for example, has an intensive training program that educates employees about the company's strict product specifications—such as the precise instructions for preparing an espresso—which are key components of its brand promise. Starbucks is also one of the few companies in any industry to extend its attractive pay and benefits package to part-time workers, thus attracting the best people from what is normally a transient workforce.
Our research shows that training and retaining the best talent accounts for most of the "harnessing talent and technology" capability's impact on customer loyalty. And a company that scores very high on managing talent has a significantly increased likelihood of being a top business performer. Among the key skills that underpin this capability are "applying rigorous recruiting criteria" and "encouraging risk taking among staff." Pret A Manger (Europe), a gourmet sandwich shop that has revolutionized mealtimes for UK office workers, not only invests significantly in recruiting, training and compensating talent; the company also empowers its employees to take action to maintain positive impressions of the Pret experience—by offering a free cup of coffee to a customer who has had to wait too long for an order, for instance.
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So can any company become a high-performance marketer? Some industries are plainly much better suited to marketing than others. Not surprisingly, those closest to the consumer, like retail and consumer products, display superior marketing mastery (see Figure 3). Take Samsung, a large electronics company in Korea, which has excelled at "translating foresight and insight into marketing productivity."
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Confronted with the challenge of allocating marketing resources across more than 400 category and country combinations, Samsung launched an 18-month project to gather detailed and integrated information about all these combinations, right down to country-level brand data. It then made sure that these data were easily accessible to all company marketers and used sophisticated analytical software to predict the impact of different resource allocations. The upshot: one of the most successful attempts to extract meaningful insights from customer data ever undertaken.
Some companies currently enjoy a solid lead as masters of marketing, but nearly all our respondents see clear challenges to achieving their ideal state of mastery. Surprisingly, it is not organizational barriers that daunt them, or an excessive focus on costs or technology. Nor is it a lack of leadership, accountability, vision or innovation (though underperforming companies are more likely to cite these reasons for failing). The two obstacles most frequently cited are a lack of funding or investment, and a lack of resources and talent.
Investing in Performance
That executives feel this way is unfortunate, because our research has found that investment is critical to the successful creation of marketing mastery and its impact on business performance. According to our research, the companies that invested the most in marketing capability, as a percentage of their overall investment in the business, achieved the greatest level of mastery and the best performance.
How companies divide up the total investment among the five core marketing capabilities is not really important, however. Rather, it is the level of mastery achieved in each of the capabilities and skills that we were able to link to a company's success, regardless of the portion of spending allocated to it. So when companies invest in marketing, they must ensure their investment translates into real capability improvement.
So can the best maintain their lead? Or will the rest catch up?
Maintaining a leadership position through sustained marketing mastery is by no means a sure thing. The skill levels that constitute mastery continue to shift constantly, and today's best practice becomes tomorrow's price of entry. No company can afford to be complacent, because marketing mastery does matter, which means the time to invest in marketing mastery is now.
About the Research
Accenture generated the hypothesis about the five core capabilities and 120 supporting skills that underpin high performance in marketing by interviewing 70 marketing experts and executives.
These skills helped focus our quantitative research, which consisted of a comprehensive survey of more than 700 key marketing decision makers across 17 industries in North America, Europe and Asia, representing B2B, B2C and B2B2C industries.
Participants rated their company's mastery of the 120 skills needed for mastery of the five core capabilities, as well as their performance, against four measures:
- Customer satisfaction, retention and loyalty
- Profitability, margins or returns
- Revenue growth
- Shareholder return
We wanted to be sure we were comparing like with like, so we probed our respondents carefully about the precise nature of the capabilities they claimed to have mastered.
The data we collected enabled us to use sophisticated statistical analyses to determine the links between competency in the five capabilities and their component skills, and the ability to build customer loyalty and achieve superior business performance.
Segmentation analysis deepened our understanding of what distinguishes the high-performance marketing businesses overall. Our survey participants fell into nine business performance segments, and these, in turn, fell naturally into four groups. The stellar performers in segments one and two—less than 25 percent of the survey sample—significantly exceeded both average performance and the performance of the next-best segment.
About the Authors
Marianne Seiler is a senior executive in the Accenture Marketing Sciences practice. Dr. Seiler's 15 years' experience has included developing customer strategies, launching new products, expanding geographic and customer markets, valuing and retaining customers, developing and implementing marketing/sales/service segmentation strategies, creating and enhancing marketing databases, and restructuring marketing/sales organizations; she has also worked for a number of Fortune 500 companies. In addition, she has spoken and published on numerous marketing topics, including customer retention, telemarketing, database marketing and customer segmentation. Dr. Seiler is based in Chicago.
Outlook Senior Contributing Editor
Paul F. Nunes is an executive research fellow at the Accenture Institute for High Performance in Wellesley, Massachusetts, where he directs studies of business and marketing strategy. His work has appeared regularly in the Harvard Business Review and other publications. His most recent book is Mass Affluence: Seven New Rules of Marketing to Today's Consumers (Harvard Business School Press, 2004).
Jeffrey D. Somers is a Chicago-based manager in the Accenture Marketing & Customer Strategy group. He has 13 years of experience in strategic marketing and business strategy consulting. Before joining Accenture, Mr. Somers was a senior manager in the Brand & Corporate Strategy Group of the Blue Cross and Blue Shield Association.
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