COVID-19 and the State of Marketing
https://www.ama.org/marketing-news/5-marketing-opportunities-in-the-covid-19-era/
5 Marketing Strategies—and Missed Opportunities—During COVID-19
The top emerging marketing strategies and missed opportunities from the special COVID-19 edition of The CMO Survey
As a company’s meet-and-greet function, marketing’s most important job is to identify, engage with and convert customers into valuable assets that create long-term cash streams. This role has been upended during COVID-19. Marketers have had to rethink their strategies in an era of homebound customers, social distancing, and an unpredictable environment that has forced many companies into crisis management.
Against this backdrop, The CMO Survey conducted a Special COVID-19 Edition, asking marketing leaders at U.S. for-profit companies to share their survival strategies, KPIs, and predictions about the future. What emerged was surprising: While marketers acknowledge the present challenges, they also spot emerging bright spots. In fact, most marketers agree that the marketing strategies they have developed and used during the COVID-19 pandemic will be important opportunities for their companies over the long term (5.6 out of 7). We share the most surprising (and missed) strategies—and missed opportunities— from the survey below.
Emerging Marketing Opportunities
1. Customers prioritize trusted relationships
Marketers identify trusted relationships as customers’ highest priority over the next 12 months. Impressively, the highest percentage of marketers expect customers to focus more on “trusting relationships” than “low price,” despite the economic downturn. This is not a fluke: Customers’
focus on trusting relationships has increased by 47% since this question was first asked in 2009.
This finding represents a significant opportunity for brands to try new products, services or go-to-market models on willing customers who trust their brand and are less price-sensitive than before. When asked which consumer behaviors they had observed during the pandemic, only 43.3% note an unwillingness to pay full price while just 24.9% note weaker loyalty levels. Furthermore, marketers believe that willingness to pay full price will return to normal levels over the next six to 12 months. The strength of a trusting relationship may lie, in part, in the company’s corporate social responsibility (CSR) initiatives and 79.1% of marketers believe that customers are monitoring their social activism, outreach and investments during the pandemic.
The challenge for marketers is to exercise this trust opportunity to create brand attachment that delivers purchases for the company into the future.
2. Online and digital bets pay off
Online sales have grown to the highest level in The CMO Survey history. They now constitute 19.3% of sales—a 43% increase over just three months ago. Small companies (those with fewer than 500 employees) are taking advantage of selling online, with ecommerce accounting for 26.1% of sales.
Marketers view these outcomes as reflecting customers’ openness to digital offerings (85% agree) and digital experiences (84% agree). Importantly, marketers expect this increased focus on digital to be a permanent shift from pre-pandemic days. As a result, marketers are adjusting their offerings and pivoting their businesses to meet these new expectations and opportunities. Some 60.8% indicate they have shifted resources to building customer-facing digital interfaces and 56.2% are transforming their go-to-market business models to focus on digital opportunities.
The rest of the C-suite appears to support ongoing digital marketing investments. Even as marketing budgets are shrinking, marketers still expect an 8.4% increase in digital marketing spending over the next year. The challenge for marketers is how to use their digital dollars wisely to impact the customer experience. They seem to understand this, as CX expenditures as a percent of marketing budgets increased 10% over the last three months.
3. Social media steps up—and pays off
When asked what objectives they are focused on during the pandemic, the No. 1 and No. 2 responses from marketers were building brand value that connects with customers and retaining current customers.
Social media has been an important tool for marketers to stay engaged with consumers: Some 84.2% of marketers say they have used social media for brand building and 54.3% say they have used it for customer retention during the pandemic. Given this focus, marketers have increased their investment in social media budgets by 74% since February—increasing as a percent of marketing budgets from 13.3% to 23.2%. Marketers believe this strategy has paid off: For the first time in CMO Survey history, the rated contributions of social media to company performance rose—up 24% since February. This is an important finding because social media contributions have previously remained flat and at average levels since 2016, despite rising investments. Mobile investments are also up, but contributions to company performance are flat because stuck-at-home consumers turn to easy-to-use non-mobile options, such as laptops, for search and purchase. The challenge for marketers is to maintain and expand these successful social habits and migrate them across to mobile even as customers increase their movements due to relaxed state and local mandates.
4. Marketers do more with lower headcount
Some 62.3% of marketers report that marketing has become more important during COVID-19, reflecting the focus on using digital tools and interfaces to connect with customers. Pointing to marketing’s priority during this period, marketing budgets as a percent of firm budgets (12.6%) and revenues (11.4%) have reached all-time CMO Survey highs, even though many companies are experiencing diminishing revenues. However, 9% of marketing jobs have been lost, leaving marketing departments to do more with fewer people.
This is expected to continue into the next year, with planned marketing hiring dropping to the lowest point in CMO Survey history and going negative for the first time ever (-3.5%). These leaner marketing organizations have shifted their focus during the pandemic to important strategic activities. The challenge for marketers is to maintain their momentum as they continue to stretch their resources.
5. Marketers learn pivot lessons
When asked, “To what degree was marketing prepared to face the pandemic and its economic impact?” (on a scale of one meaning there was no plan and seven meaning there was a strong plan in place), marketing leaders admit that preparation was not a strength. Scores average 3.8 with 43% rating their preparedness between one and three. Respondents said that they improvised to generate new strategies during the pandemic (average 5.6 out of 7, with seven meaning a great deal).
This need has not been easily forgotten as marketers rate the ability to pivot as new priorities emerge as the highest-ranked skill that they will look for in future talent hires, followed by creativity and innovation skills and navigating ambiguity. Interestingly, highly touted marketing skills, such as a data science background and MarTech platform experience lag these pivot and innovation skills.
At the same time, marketers know that pivoting, agility and navigating ambiguity are challenging soft skills to learn in “normal” business contexts. Companies should consider the pandemic an opportunity to exercise development in this area. To do so, marketing training budgets will need a fresh look, given they dropped over the last year from 5.8% of marketing budgets to 4.4%. Marketers may also need to look to these internal groups to develop strong curriculums or put pressure on business schools to beef up their curricular offerings and noncurricular activities to foster these important skills. The challenge for marketers will be to maintain this pivot-ready mindset among their teams once things calm down.
Tech may be a good sector to study, as this industry improvised more than most. Several distinctive strategies stand out: Tech companies conducted rapid research with customers (82%) and performed website analytics (71%)—higher than any other sector. Tech companies also turned to employees to generate new product and service ideas at high rates (62%—only the education sector was higher).
Missed Marketing Opportunities
Several other survey findings highlight potential missed opportunities. Only time will tell if the data supports this view, but these five points stand out.
1. Marketers turn inward for COVID-19 problem-solving
When asked what types of information they use to guide their company’s marketing strategies during the pandemic, most marketers indicate that they turned inward. Some 82.6% rely on team members, 80.8% turn to top management and 70.1% lean on their sales teams for expertise. By contrast, only 59% perform research with customers, 53% view website analytics, study noncompetitor (52%) and competitor (50%) industries, 25% seek guidance from external consultants, or 22% analyze COVID-19 responses in overseas markets.
This inward focus may have been driven by a combination of the speed necessary for decision-making, survival fears and the view that no one knew what would be a good decision. Regardless, it’s likely that marketers missed out on important insights that might have emerged from a broader learning lens. One example of looking outward is Texas grocery store giant HEB, which reached out to Chinese retailers in January 2020 to determine how it should respond if the virus hit the U.S.
2. Customer acquisition
Survey results indicate that 65% of marketers believe new customers have been attracted to their products and services, but only 14% of marketers rank customer acquisition as their No. 1 objective (and only 22% ranked it No. 2). This contrasts with retaining current customers (ranked No. 1 at 33% and ranked No. 2 at 26%) and building brand value (ranked No. 1 at 33% and ranked No. 2 at 24%). Consistent with this, marketing employees were leveraged more for getting active online to promote the company and its offerings (69%) and reaching out to current customers with information (65%), compared to generating new products and service ideas (44%) or making contact with leads (30.4%).
In the mad scramble to keep businesses afloat, we think marketers may have missed opportunities to reach new customers. In technology, some 61.5% of companies used marketing employees for this purpose, as did 59.1% of professional services and consulting firms.
3. New partnerships put off
Partnerships help companies reach new markets or secure resources they cannot build on their own. The pandemic may be a good opportunity to leverage partnerships for new opportunities, yet the reality is that the urgent nature of the crisis precluded this approach for most. When asked how they were using their employees during COVID-19, most marketers highlighted advertising, promotion and digital engagement. Only 31% said they were leveraging staff to explore new partnerships. Moving forward into next year, some 47% expect to use this strategy over the next 12 months, especially services companies.
4. Marketers move too fast for experimentation
Marketers reported a need to pivot, with respondents rating their level of improvisation as an average 5.6 out of 7 during the pandemic. Despite increased improvisation, there has been a decrease in experimentation, with only 31% of marketers reporting that they conducted experiments—varying some marketing actions and observing effects—to understand the impact of their marketing actions during the pandemic. This indicates that marketers are implementing new, improvised strategies frequently, but without fully understanding their effects.
Consistent with this, only 29% of marketers report investing resources in research and experimentation capabilities. Marketers in the technology sector were the most prolific experimenters, with 45% saying they used this strategy. Meanwhile, energy, consumer services and technology companies report the biggest shift toward improving their research and experimentation capabilities.
Conclusion
COVID-19 has required marketers to rethink how their companies go to market and engage with customers. Those marketers who can leverage digital, social and trusted relationships should be well-positioned to navigate ongoing disruptions. However, marketers across all industries should move beyond crisis management to embrace lessons and investigate missed opportunities to create more value for their customers and companies. To that end, the lessons shared here are offered to help marketers identify areas they need to improve.
While much remains unknown about the months ahead, we feel certain that COVID-19 will be a pivotal time for marketers, enabling them to serve as fellow strategists and valued partners in the C-suite as they charter their companies’ futures.