For decades, marketers have measured success differently than the rest of the organization. We raise awareness, increase share of voice, generate impressions, deliver MQLs to sales.
Meanwhile, the success of the business itself is measured in….well, money. Revenue. Earnings before interest and taxes (EBIT).
But this disparity is changing as marketers are becoming more data-driven — and being increasingly accountable for their direct contribution to revenue. It’s not enough to show a return on investment; it’s not enough for marketing to not be a cost center. The marketing department needs to be a powerful engine for generating revenue.
Our latest episode of Break Free features a marketer who is exceptional at generating value for her company, and proving that value to the bottom line. Julie Brown, Institutional Market Leader at Johnson Controls, is using data to flip marketing upside down. Instead of creating demand for the company’s products, she’s measuring the existing demand in her target audiences. Then she uses that data to advise the company on how to develop products that best suit their audiences’ needs.
With the right reporting in place, Julie’s team is able to show exactly how much its efforts are contributing to Johnson Controls’ EBIT.
This was a fascinating interview about a side of marketing you don’t hear much about, and I’m grateful that Julie shared her expertise with me. And with all of you, of course.
You can watch the video and check out the podcast version below, or scroll down for some highlights.
B2B Marketing Interview with Julie Brown
:58 Institutional marketing defined
1:57 Upstream marketing — where to play and how to win
5:08 Three big challenges in institutional marketing
7:18 Marketing as a revenue center
8:39 How do we get to the ‘why?’
10:40 Staying centered on the customer
13:12 The next evolution of marketing
17:21 Can marketers predict revenue with certainty?
20:03 How leaders can reorganize teams around revenue
20:45 The revenue-focused marketing tech stack
22:04 Forming a “Voltron of Meeting Customer Needs”
24:00 Meeting the needs of the new B2B buying committee
So we were talking about upstream marketing. Can you explain that term for our listeners and what exactly that entails for your day-to-day?
When we think of marketing at Johnson Controls, there’s the old — I believe it goes back to Procter & Gamble — the concept of where to play and how to win.
So upstream marketing is the “where to play.” Understanding customer needs, segmentation, targeting, product innovation. Once you’ve defined a new offering, then the “how to win” is how you connect with sales, whether you do account-based marketing, or you do content, lead generation.
All of that is: Now I’ve got something, how do I get so the market is aware and purchases it or goes through their buying process?
So this is research to drive the right audience for our product or the right product for an audience, or a little bit of both?
A little bit of both. It really starts with understanding what customer needs are, where are their pain points, and looking at what we do. And are there new and creative ways that we can help address those needs and pain points?
It feels like in those verticals, you’re in education and health care. You’re going to have some pretty unique challenges to doing that research and to even executing on the marketing. What are you encountering?
I’d say there’s three big challenges that we’re facing. One, the markets themselves are really in a state of flux. Healthcare continues to evolve and adjust, based on the outcomes for the Affordable Care Act, ObamaCare.
We’re watching demographic changes, so the youngest millennials might be a senior in college. So that’s changing the demographics of who’s in college, they’re establishing families and so that’s creating growth in K through 12.
And you’ve got really persistent hard problems around security and active shooter that everyone’s trying to figure out around a very, very hard problem. So that would be the first one.
Probably not surprising to a lot of companies is how we use data and what the data is and how you align that around customer needs. There are lots of great opportunities, but some days, you work hard on what you’ve got and see how you can get it to come farther.
And then the last one is this evolution of marketing from being something that participates as a function in a business to actually being a measured driver of growth that the business can count on.
So, we look at our programs very much from a financial standpoint. So it’s not good enough to just have ROI. I’ve got a couple of programs where we’re looking for the EBIT, the actual earnings before interest and taxes that the program is going to contribute.
It’s not just how much revenue we track within marketing, things like clicks and opens and stuff like that, but the respect that comes to marketing comes when you can present the work you’re doing in terms the CFO recognizes and understands. And those are the terms of business, not the terms of marketing.
There’s that whole idea historically that marketing is a cost center that you put money in and you get marketing out the other side. And that we’re looking at trying to change that model to where you put marketing in and you get money out of the other side.
Does that make sense?
Absolutely, that’s what we’re driving towards and evolving towards every day.
I think there’s an evolution happening in marketing more broadly around, as you said, the validating what marketing’s bringing to the table.
And if you think about it, it creates a powerful opportunity for companies that are early movers, but we’re not the first ones to go through this. If you think back to the late 1980s and early ’90s and you looked at, manufacturing companies are like, you know what? We can probably do better. And brought in things like Six Sigma and Lean.
And so now, companies — if you look at manufacturing in a company — they know pretty well, if they’re going to expand a plant or if they’re going to invest to build a new plant, the CEO of the company knows, how much it’s going to cost, what the payoff is going to be and how long they have to wait for it.
They know how much waste they can predict will come out of the system through continuous improvement every single year. You get to the late ’90s and the early aughts they did the same thing with IT. The CFO sitting here going, it seems like I’m spending a whole lot of money with IT, not sure what I’m getting for it.
Companies have gone through things with SAP and other IT transformation so that today they really have often a seat at the table as an engine for driving any B2B business.
And again, the CEO and the CFO know, if we’re going to invest in data centers, or roll out this new version of office, or new equipment. They know what productivity they’re going to get. They know what risks they’re avoiding by making that investment.
What we see is that’s coming to marketing. And what’s encouraging about that is both from a manufacturing or an operational excellence standpoint, and IT — they adapted.
They figured out how to start talking about what they did in financial terms that the CFO understands. And on the flip side, every company is looking to grow. A lot of companies don’t look to marketing because they don’t trust and respect marketing enough to deliver that.
It’s financial terms, it’s EBIT, it’s operational ROI, it’s revenue, it’s earnings per share. Those are the things that they understand and when marketing can say, listen, if you give me this much within this period of time, I’ll deliver this much back.
“It’s EBIT, operational ROI, revenue, & earnings per share. When marketing can say, if you give me this much within this period of time, I’ll deliver this much back.” — Julie Brown of @johnsoncontrols Click To Tweet
When you’re president of a business, if you hire 200 more sales reps, you know what you’re going to get. You know, whatever your cycle is. In 18 months they will be productive — 200 sales reps are going to drive this much revenue and this much profit. If for whatever reason you’ve got to take 50 out, you know it’s going to be painful, but you understand what that pain is and you know about how big it’s going to be.
They don’t know how to do that with marketing, and that’s the opportunity. And doing that is what we’re working really hard on. The flip side of it is, it’s kind of the last function where you can get a big strategic competitive advantage. I mean, think about the companies who were early adopters of Six Sigma and manufacturing, they had huge systemic growth in the market and in their industry.
Companies who are early adopters around that IT transformation got huge market share and transforming their business. The companies that can leverage marketing for growth have first-mover advantage available to them. It’s just going to take marketing to explain in business terms — financial terms — how to be that player.
Stay tuned to the TopRank Marketing Blog and subscribe to our YouTube channel for more Break Free B2B interviews. Here are a few interviews to whet your appetite: