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In Search of Marketing Excellence: Ten Differences Between High-Performing and Low-Performing Companies

CMO Survey Results

Marketing excellence—marketing leaders strive to attain it and marketing professors try to dissect it. For the first time, The CMO Survey-August 2012 asked top marketers “How would you rate your company’s marketing excellence?” on a 7-point scale where 7=one of the best in the world, 6=a leader but not one of the best, 5=strong, 4=good, 3=fair, 2=weak, 1=very weak. The mean score was 4.4 (standard deviation=1.4). Figure 1 contains the full distribution of responses.

Figure 1. Marketing Excellence Ratings in Companies

Over time, The CMO Survey will develop a longitudinal database and provide more definitive answers to the questions surrounding marketing excellence. However, using only the August 2012 data, I can share some of the performance, spending, strategy, leadership, and organizational choices/outcomes that are and are not correlated with marketing excellence.

To generate these insights, I classified companies participating in The CMO Survey according to whether they performed above or below the mean on the marketing excellence question. The high-performing group (n=184 firms) has a mean marketing excellence score of 5.52 (s.d.=0.66) and the low-performing group (n=170 firms) has a mean marketing excellence score of 3.22 (s.d.=0.88).

Then I looked at differences between the two groups. Here is what I found:

    1. Excellent marketing companies report less spend on traditional advertising (high-performing = -2.91% change vs. low-performing = -0.62% change) and more spend on digital marketing (high-performing = 12.61% change vs. low-performing = 10.26% change).
    2. Excellent marketing companies spend more on marketing as a percent of firm revenue (high-performing = 13.62% vs. low-performing = 10.04%), but the difference on marketing spend as a percent of firm budget is not statistically different (high-performing = 11.79% vs. low-performing = 10.99%).
    3. Excellent marketing companies spend more on social media as a percent of their current marketing budgets (high-performing = 8.6% vs. low-performing = 6.53%) and one-year budgets (high-performing = 11.76% vs. low-performing = 9.57%). Excellent marketing companies also more effectively integrate social with the firm’s marketing strategy (7-point scale, 1=not at all effectively and 7=very effectively) (high-performing = 4.37 vs. low-performing = 3.15).
    4. Excellent marketing companies spend more on marketing analytics as a percent of their current marketing budgets (high-performing = 9.61% vs. low-performing = 6.49%). Excellent marketing companies also use marketing analytics to make decisions in a higher percentage of projects (high-performing = 40.2% vs. low-performing = 29.3%).
    5. Excellent marketing companies have 10.7% of their employees engaged in marketing versus low-performing companies which have 7.3% of their employees engaged in marketing.
    6. Excellent marketing companies spend more on marketing training YOY (9.6% increase) versus low-performing companies, which report only a 3.86% increase in marketing training.
    7. Excellent marketing companies have more direct reports to their marketing leaders (11 people) vs. low-performing companies, which have only 5 people. Indirect reports are no different (high-performing = 24 people vs. low-performing = 23 people).
    8. Excellent marketing companies give more responsibility to marketing. The CMO Survey asks CMOs to rate whether or not they are responsible for 19 different activities in companies (e.g., new products, positioning, distribution, market entry strategies, advertising, brand, promotion, innovation, market selection, customer service, pricing, social media, lead generation, stock market performance, customer relationship management, marketing research, sales, and competitive intelligence). Excellent marketing companies give marketing more responsibility (11.2 areas) vs. low-performing companies (8.6 areas).
Perhaps as a result of the priorities and behaviors described in points 1-8 above, I find these final two performance differences between high and low marketing excellence companies:
  1. Excellent marketing companies exhibit bigger changes in profitability metrics: marketing ROI (high-performing = 4.32% change vs. low-performing = 1.66% change) and firm profits (high-performing = 4.18% change vs. low-performing = 2.38% change).
  2. Excellent marketing companies outperform low-performing companies on customer metrics: customer acquisition (high-performing = 4.10% change vs. low-performing = 2.55% change), customer retention (high-performing = 2.59% change vs. low-performing = 1.38% change), and brand value (high-performing = 4.42% change vs. low-performing = 2.02% change). The difference for customer retention is weaker and I’ll discuss that opportunity in a forthcoming blog.