You know that feeling you get sometimes when everyone is saying one thing and you believe another, and then begin to doubt yourself? There’s social pressure to conform of course. However, listening to Malcolm for 40 minutes was rejuvenating. It was almost like therapy. It reminded me that as a strategic marketer I HAVE got it right and I can safely set aside the majority of the blustering from those shouting about the latest digital communications fad.
Malcolm’s many books
I’ve read many of Malcolm’s books over the years (but not all 43 of them). And reviewed a few. I’ve also been lucky enough to hear him speak at conferences and events. He’s an excellent UK contrast to the other great marketing guru – Philip Kotler from the US – who I’ve interviewed in the past.
As a former tutor on post-graduate professional marketing qualifications for the Chartered Institute of Marketing I always recommended Malcolm’s book on marketing plans. My copy is the third edition and I think it’s now up to the edition. It’s close to “The new marketing – transforming the corporate future” which he wrote with Hugh Wilson back in 2002!.
“Marketers are educators”
Malcolm sees himself – like many marketers – as an educator. He helps businesses to understand the power of world class marketing. He mentioned one of my favourite Italian sayings: “dolce far niente” (“the sweetness of doing nothing”) as we must relax, keep our minds open and encourage creativity.
“Shallow intellectual roots”
Malcolm was ruthless as he cut through the “shallow intellectual roots” of some of the 300 or so management “fads” which he believes has harmed marketing in the past.
He decried the obsession with digital communication which takes marketing away from the Boardroom. He mentioned the Mark Ritson’s article in Marketing Week (29 April 2020) which noted marketing’s drift towards communications and the incorrect view that marketers don’t need qualifications. Malcolm also remarked on the folly of broadcasting the same message across all digital channels so even communications strategies are failing.
“The role of marketers is to create value for customers”.
“Cost-cutting is not a strategy”
He urged us to make friends with the accounting and finance professionals to really get to grips with the numbers. And he warned against “Anorexia Industrialosa” where businesses cut back on expenditure so much that they die. “Cost-cutting is not a strategy” he said.
He pointed to the limited value of Profit & Loss accounts and directed our attention instead to Balance Sheet where we can justify investment in marketing assets. He mentioned the work of David Haigh at BrandFinance on the value of brands and invisible assets. He quoted the late Laurie Young too: “Products die, brands live forever”.
“Customers make profits – not products”
And while he still talks about the importance of market analysis and segmentation – he reminded us that segmentation should be needs-based and not solely relying on socioeconomic or geodemographic data.
He urged us to focus on the customer/client profitability (with nods to both KAM and ABM) in addition to product/service and market profitability. He shared an interesting story about the significant profitability differences for a wholesaler delivering to two leading supermarkets. (As an aside, I often use dinosaurs to explain client profitability analysis).
He was strong in his view that we should be measuring customer/client retention rates as well. He reminded us of business school figures showing that a 5% increase in customer retention can lead to an increase of up to 75% in profits.
“Financially-driven value propositions”
Marketers were warned about failing to develop financially-driven value propositions. Yet I know from personal experience that this is even harder to do in professional services than in other service businesses.
I can recommend his recent book on value propositions which – many professional service marketers will be happy to know – centres on the matrix marketing approach. It focuses on developing value propositions for each market/service “cell” of the matrix. It needs to be extended to individual client too though.
He repeated that there is often a disconnect between finance and marketing. And particularly with regard to shareholder value and enterprise value. And here his talk ranged across risk and the cost of capital.
His discussion of economic profit caused me concern. It’s an important measure but I know from seeing the work of my colleagues at Vysyble (who have done some fascinating work looking at economic profit of football clubs) that many people find it hard to understand and apply to their businesses. Vysyble kindly provide an explanation of the calculations for economic profit.
There was some great material showing the difference between excellent and weak strategies and on how to understand markets and clients better.
Rise of the informed generalist
It was reassuring to hear Malcolm speak of the rise of the informed (and qualified) generalist who can use joined-up thinking to drive better strategic thinking, analysis and decisions.
His summary of action points for the future:
1. Customer/market profitability
2. Customer retention measurement
3. Brand values
4. Financially-quantified value propositions
5. Needs-based market segmentation
6. Shareholder value measurement
Thanks for the pep talk Malcolm!
Other posts about Malcolm McDonald
Book Review: Malcolm McDonald on value propositions – How to develop them, how to quantify them (by Malcolm McDonald and Grant Oliver) May 2019
Marketing planning in a nutshell June 2017
Marketing needs to be more accountable – Malcolm McDonald December 2010
Malcolm’s article from February for the Worshipful Company of Marketors on the decline of the influence of marketing in the Boardroom