To Formulate Marketing Strategy, Understand Your Business Context
B2B CMOs are often asked to develop a long-term marketing strategy with some high-level input from their corporate strategy at best case, or in a vacuum at worst case. Both scenarios present challenges, as CMOs are left to interpret the business strategy on their own, making assumptions as to what the business needs and expects from marketing. Or, they could compromise and think short-term, developing something more akin to an annual plan than a multi-year marketing strategy.
It’s not hard to imagine where these approaches lead. Instead of providing clarity and creating alignment across sales, product, and marketing during the strategy formulation process, the process may cause conflicting priorities, uncoordinated efforts, and disjointed investments.
To help our clients overcome these challenges, we use the Forrester Marketing Strategy Compass, a step-by-step model to formulate a strategy for marketing that aligns to the overall business strategy. This provides clarity, priorities, and measurements so that all marketing resources are delivering on the growth of the business.
The Marketing Strategy Compass comprises 15 critical decision areas that are organized in three levels. In the first, CMOs alongside CSOs, product leaders, and other business leaders determine together where long-term growth will come from and how growth goals will be reached. The outcome of those discussions creates a joined forward-looking “destination” that informs the next level of decisions that marketing needs to drive.
In the second, decisions are formulated across two “orientations”: The first is external, referring to how the business looks to customers; the second is internal, and describes how marketing will deliver on the strategic objectives. Finally, the marketing strategy cascades down to the third level, at which marketing subfunction leaders (e.g., portfolio, field, demand marketing) formulate their own specific three- to five-year strategies to support the decisions defined in the first two levels.
Having this best-practice approach in place provides CMOs with a strong foundation, but how CMOs deploy the Marketing Strategy Compass to drive stakeholder alignment and secure buy-in of their marketing strategy will depend on their specific business context. We’ve identified six external and internal factors that help CMOs determine their own business context. That determination in turn guides CMOs to establish critical interlocks and how decisions will be made across each level and the 15 critical decision areas:
- Audience overlap: To what degree do the audiences your organization is targeting intersect? Are different divisions or regions pursuing the same or different target segments and personas?
- Routes to market: Are they the same, or diverse?
- Customer expectations: Think of your offerings and how they are deployed. Are these diverse or homogenous? Regulations in different geographies may impact this — if there are specific regulations, you need to follow in different regions, customer expectations may be diverse.
- Organizational complexity: How is your company structured? Do you have business units, for example, or are you in a matrixed organization?
- Autonomy: Are decisions made independently, or does there need to be consensus across the organization?
- Strategic imperatives: Are there corporate-level initiatives that need to be delivered upon over the strategic period?
To give an abbreviated example of how this might come to life, take a large software company that has several business units, each of which has several divisions operating in different regions. Though each of the business units has a fair amount of autonomy, they share a company-wide strategic imperative: invest in a corporate-wide portfolio to boost revenue. In developing the overall business strategy, the business units must avoid becoming too myopic and instead think about trade-offs in business unit portfolios and make investments at the corporate level portfolio to deliver on the long-term growth objectives.
When formulating the strategy for marketing, internal and external business context would be considered — factors such as audience overlap, multiple routes to market, and consistency of customer expectations. We worked with this example company to determine its external orientation — how it would look to its audience considering its brand positioning, segmentation, and audience targeting and sustainable value over the strategic period. To drive longer-term revenue across the corporation and business unit, we decided that we could move portfolio investment from a portion of the business unit-specific portfolio to the corporate portfolio investment. Next, we worked with our client to determine the internal orientation. The business unit and the regions determined that establishing a centralized content team would improve messaging consistency and increase productivity. The marketing leadership team determined the new roles, processes, and measurements required to make this a success.
As the decisions cascaded down to the individual marketing subfunctions, one of the key benefits the teams realized was a sense of shared purpose. Working together, rather than in silos, to advance the goals of both marketing and the business overall made each individual’s work more efficient and impactful.
This is a significantly simplified example — there were many other decisions worked through as part of the process to formulate the strategy for marketing. But it shows how the context in which a business operates inevitably shapes the decisions it makes in strategy formulation. It takes time, but it keeps you from working in a vacuum and greatly improves the impact of all the marketing resources.
Learn more about using Forrester’s Marketing Strategy Compass.