November 15, 2012

CEOs Don't Trust Marketers?

From a study in the UK:  70% of CEOs have lost trust in marketers (click here).

Is the percentage right?  Who knows.  Who cares?

There are three ways to prove that marketing works.

  1. Be excellent.  Just a guess - I'll be that fewer than 10% of marketers are excellent (just like fewer than 10% of anybody in any profession is excellent), so you're probably not going to be able to prove that marketing works in this fashion.  You're just not going to ever find a person who can deliver breakthrough results via marketing.  So this is the hardest thing to do (and yet, on Twitter, you'll read a lot of content that tells you just how easy it is to be excellent ... maybe that's why CEOs don't trust marketers).
  2. Stop marketing altogether.  This works really well.  In catalogs, you execute holdout tests.  In email, you execute holdout tests.  In search, you shrink the budget to nothing for a few months, measuring what happens.  In display, you execute holdout tests.  In offline marketing, you execute matched markets.  In social media, you stop doing all outbound efforts for three months (yes, you do this).  Do all of this at the same time, and you'll see sales drop by 50%.  You just proved that marketing works.  You just proved that your tiny little department is accountable for half of the business.  Now somebody will trust you.
  3. Screw things up.
Let's talk about #3.

When I became a VP at Nordstrom, way back in 2001 (think hanging chads and the bust), we mailed clearance catalogs.  The inventory executive at the time thought he was way smarter than the team I was inheriting (he might have been right).  So he told my team (the week before I arrived) that he would select the names/addresses of individuals who would receive "his" catalog.  

The performance of "his" catalog was 20% below the baseline for all other catalogs at that time.  His lack of marketing talent (compared with a team that, quite honestly, wasn't all that talented), was painfully obvious in the final result of that catalog.

I never forgot to mention that metric, when folks criticized my team for "not picking the right names".

In other words, you're trusted more when you demonstrate what happens to the business when you don't perform well.

Here's another story.  Nordstrom - 2004.  We have our Anniversary Sale in July.  We mail a 124 page catalog to best customers, and a 64 page catalog to average customers.  In spite of a myriad of audits, my team makes a big mistake, sending the 64 page catalog to best customers, and the 124 page catalog to average customers.
  • Sales impact = $1,000,000.
  • Profit impact = $350,000.
If I remember correctly, the E-commerce VP at that time said to our President, and I quote ... "I want blood".

We learned that about 8% of e-commerce sales in that time frame happened solely because of an additional 60 pages in a catalog.

I volunteered to send an email to 1,500 employees, saying that I was accountable for a mistake of this magnitude.

But more important, we learned a valuable lesson.  The simple act of getting the exact number of pages to offer to the customer right could sway total e-commerce sales results by +/- 8%.

All mistakes need to be documented.  Mistakes clearly illustrate the difference between incompetence and competence.  Testing illustrates the difference between competence and excellence.  Combined, your CEO might just learn to trust you, the marketer reading this essay.

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