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Published: November 30, 2006

 
 

Best Buy's 70 Percent Solution

By aiming to get innovative marketing programs 70 percent complete before launching them, the electronics retailer gained more marketing knowledge than it would have achieved with a more conservative approach.

It seems more difficult today than ever before to be a successful marketer. Whereas marketers once all had essentially the same choices of tools and media — newspapers, magazines, in-store advertising, television spots, or radio — they must now think about data mining, international advertising, interactive media, partnerships, customization, buzz marketing, and more. A wealth of choices is often an opportunity for innovation, but not so for most marketers, who are often dissuaded from creativity by an increasing demand for short-term organic growth.

Do marketing leaders really face unique pressures, compared to executives in other parts of an organization? Statistics suggest that the answer is yes. According to a recent study by the Association of National Advertisers, the average job tenure for a chief marketing officer (CMO) is 23 months, the shortest for all C-suite positions. Given that track record, I was fortunate to have lasted nearly five years as CMO of Best Buy Company.

There are two reasons that marketing is in the bull’s-eye in many companies. First, everyone can see what the marketing arm is doing, as well as which competitors are doing better. Few people would accost a chief information officer at a company party to make suggestions on data architecture, but colleagues are only too willing to share their thoughts about whether the latest ad campaign strikes their fancy. Second, a lot of marketing innovation is tough to measure. Although there is empirical evidence about the speed of technology, the length of supply chains, and the cost of manufacturing, the effect of a marketing campaign is more difficult to quantify, especially in its early stages.

Marketers who rely exclusively on programs that can provide immediate, predictable results, such as promotional sales or a standard TV or print campaign, are doomed to be left in the dust by innovative competitors more prepared to develop bold new promotions attractive to their customers. Yet marketers who devote too much time to innovative but unproven techniques can miss out on short-term returns that, however limiting, cannot be ignored. Success is driven by picking your moments for innovation, setting reasonable expectations, and knowing your company’s culture. Marketers must stay objective at all times, but also maintain the passion to create something new and different.

Unfortunately, many of the most promising areas for innovation have not been tried and therefore lack metrics for judging response. Is there any way to accurately project the effect of a partnership with the Rolling Stones to deliver an exclusive DVD? It’s nearly impossible to roll out a major PR event or loyalty program with any estimate of up-front monthly return on investment that is much more than a guess.

To satisfy both long-term and short-term needs, marketers should devote the bulk of their budgets to predictable endeavors with calculable returns on investment (ROI). (I refer to this type of marketing management as “Ready, Aim, Fire” because we plan meticulously before we act.) But do not try to prove ROI on every tool or program. Instead, project your return against the total budget and set aside a portion of the marketing budget for a small group of uncertain, or “Ready, Fire, Aim”–style, projects — in a word, innovations.

Want to try a new partnership deal, jump into a new medium, sponsor a NASCAR driver, or try e-couponing? Do so on the smallest scale possible and then measure the effort once it is in place. Stop the promotion if it’s not working and expand it if it is, but don’t spend an inordinate amount of time trying to project its brand impact and financial return unless you really have a way to do that. Instead, set broad expectations based on the best logic you can muster.

 
 
 
 
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