Without Marketing is your Business Model Strategic? (And why your business needs to put customers first)
Too often business strategy (at the executive level at least) is reduced to revenue and profit targets. But if you want to drive real growth your strategic approach needs to start with the single distinguishing capability of any organisation: its marketing.
Marketing people are sometimes seen as the colouring-in crowd: we’re creative-types who make pretty brochures about products and services, choose nice shapes and colours for the brand identity, and spin messages about the company’s performance to make it look better.
Those things are partly true, but the real value marketers bring is strategic thinking. And that starts with thinking about what customers really want.
Back in 1954 management consultant and educator Peter Drucker upset some business leaders when he declared a business’s primary goal is not profit (though it is vital for business sustainability): a business’s main responsibility is to serve its customers:
“Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business." – Peter Drucker, The Practice of Management 1954
He also added a kicker about what customers want from an organisation (and what they want to see in its marketing):
“What customers think they are buying, what they consider value, is decisive—it determines what a business is, what it produces, and whether it will prosper. And what customers buy and consider value is never a product. It is always utility, that is, what a product or service does for them.”
1954 might seem a long time ago, but the principles of Drucker’s strategic approach still hold true: put customers first and drive growth with a customer-centric marketing strategy.
These principles have proven useful throughout my career working with numerous organisations across banking, technology and services.
I’ve successfully applied them to help repair the disconnect between what internal stakeholders think is a cool product and what customers really need by sharing insights on the customers’ jobs to be done.
For instance, a major organisation I’m working with is now rationalising its customer offerings from more than 80 products and services to about 20 after recognising that many of its offerings were more designed to serve internal purposes than serve customers’ needs. A painful process. Much better to start with the customer in mind, right? So the critical first step when developing or updating a business strategy is to plan how you’ll address customers’ jobs to be done.
Applying a strategic marketing lens to your business
Those jobs customers are trying to get done will shape your value propositions: they’re what you offer customers to set you apart from your competitors.
‘Value Propositions’ form the central starting block of a business model canvas I share with business leaders when I work with them on updating or developing their strategy.
It was designed by Alex Osterwalder of Strategyzer, and I’ve chosen it because it helps frame thinking about how an organisation will deliver value – and make money – by serving customers well.
It’s logical, easy to understand, and elegantly simple – and has proven very useful in my work with 24 Hour Business Plan, where we espouse simplicity and clarity in our strategic approach to designing business growth.
Source: Strategyzer AG
This business model canvas shows how the practice of marketing is across everything, which is why you need an experienced CMO (with CEO and Sales experienced) driving your strategic approach.
You’ll notice five of the nine business areas explicitly require a strategic marketing lens:
Value Propositions – satisfying customer needs (jobs to be done) and delivering value (better than your competitors).
Customer Relationships – establishing and maintaining relationships with customers (across various segments).
Customer Segments – identifying the different people and organisations your organisation serves and understanding what value they’re looking for
Channels – reaching and communicating with customer segments to deliver your Value Propositions.
Revenue Streams – identifying how you’ll generate revenue from each customer segment, based on what they’re willing to pay for products and services.
The other four blocks focus on what your organisation needs for it to deliver value, including key activities, resources, partnerships and cost structure. These are also important, and although as Drucker pointed out they’re costs to doing business, they all benefit from having someone with deep marketing experience help you think about the business holistically.
High performance marketing puts customers first
In my career I’ve worked with multinational corporations, national enterprises and fast-growth start-ups, and in each of them I’ve brought a strategic approach to putting customers first through high performance marketing.
These days I’m working more with business and marketing leaders who want to level up their organisation’s marketing performance with CMO-level thinking, but don’t have the internal capacity.
I’ve found these leaders can drive great improvements in their organisations’ business models with an understanding of the market context. This context then helps us explore how to create value for customer, before we look at the best ways the business can capture value.
Often it just takes a few hours away from the day-to-day running of your business to get a clear focus on what customers really want now and how your organisation can deliver them real value.
While plenty of business leaders claim their organisations put customers first, if you really mean it, you’ll make customer value the heart of your business model.
And it will be guided by the one distinguishing capability of your business: marketing. That’s where I come in.