CHAPTER
20

That's Great . . . Now What the Hell Do I Do Next?

What's next? The short answer: anything. Something. The longer answer is to make a genuine and earnest commitment to change. Make a pledge or take the pledge to Z.E.R.O. Embrace your heresy. Define your legacy. Challenge your internal team, your constituents, and your external partners to bring new ideas to the table, to fire themselves before you fire them, to reboot as Mitch Joel would have you do.

The opportunity cost of doing nothing is armageddon. The stakes are ultimately survival, but death by a thousand paper cuts—or, in this case, a thousand thousandths of a percentage point of market share translates into millions of dollars of revenue lost.

Hey, Chubby, Get into That Gym

This book begins by discussing the obesity epidemic, and here we are at the tail end of the book talking about your seat once again—the seat of your derriere, the seat at the strategic and decision-making table, and the seat at your consumer's consideration set table.

Paid media's waste has become nuclear, and it's time to figure out ways to address the problem and concoct a series of triangulated solutions, be they defensive (“What if we're wrong?” aka protecting the cash cow) or offensive (“What if we're right?” aka sacred cow burgers).

We chose to go straight for the jugular instead of pussyfooting around the elephant in the room. We aren't doing you any favors by telling you what a great job you're currently doing. (By the way, have you lost weight?) We're not yes men, and if you hire us to help you at some point, whether it's for a keynote speech, communications planning audit, or innovation assessment, we're still not going to stroke your ego. What we will do, however, is guide you toward what we think is a safe haven amid a turbulent sea of violent change, clutter, and competitive pressure.

Work Out Workshop

It begins with a workshop, not dissimilar to any workshop you've done before in the past, in that you invite key stakeholders and external partners to attend. We'd recommend dividing the day into three parts that mirror this book's approach:

1. The problem: This is where you assess threats and determine from a probability standpoint what will happen, what won't happen, and what may happen. This is where you contingency plan and discuss your heresy and legacy.
2. The solution: Z.E.R.O., aka ground zero. It's time to lay the table with the four pillars of advocacy, innovation, customer centricity, and real estate. This is where you discuss in great detail exactly how you intend to activate and invest accordingly. To be clear, you're not building a three-legged table; that's called a tripod. You're also not building a table with different-sized legs; that's called a mess.
3. The action plan: Now it's time to be actionable, practical, and even tactical. Our feeling is that you have a choice across the spectrum to (1) evaluate, (2) prioritize, and (3) deploy accordingly. Our recommendation is to come up with both a laundry list of to-dos and a resulting project plan for each selected action item. Once this is in place, we recommend doing just one at a time—no point in boiling the ocean. Rank and rate the 10 action items, as well as the plan to roll them out. Perhaps you'll give priority to what is actually possible, as opposed to theoretically achievable but realistically impossible.

Forrester recently conducted a Global Marketing Innovation Study (May 2013) and segmented companies into four categories, based on their marketing innovation cultures. Eight percent were classified as “Risk-averse,” 61 percent as “Pragmatists,” 27 percent as “Experimenters,” and only 3 percent “Customer-obsessed.” The description for Pragmatists was essentially reactive, slow-moving and conservative, and when combined with the Risk-averse, represents a whopping 7 out of every 10 companies.

So which one are you? Don't answer that!

There are two clear takeaways here:

1. Roughly one-third of companies have an inside shot at pulling away from the pack.
2. Experimentation is the bridge or conduit toward this differentiation.

It's time to become a lean (brand), mean experimenter.

Jaffe and Albarda's Law of Z.E.R.O. Motion

With apologies to Newton's “for each action, there is an equal and opposite reaction,” we believe that every action you take needs short-term wins, medium-term metrics, and long-term sales baked into the ecosystem and infrastructure.

When it comes to zealots, for example, start at the beginning:

1. Do you know who your raving fans are?
2. What are you doing to grow this base of promoters?
3. How are you activating the advocates?

With respect to innovation, start with an internal mandate to conduct four experiments over the course of the next calendar year. That's one per quarter. Or, if you need a little more breathing room, go with three over four-month intervals. It probably helps to benchmark your digital progress to date. At Evol8tion, we do this through our signature Innovation Assessment score. Feel free to use your own if you like; this is not a bait and switch.

On the customer service side, it's time to implement the new rules of customer service against a segmented customer base. Do the exercises. Calculate:

1. The revenue split by the number of returning customers (retention) versus the number of first-time buyers (acquisition) bucket respectively
2. The investment against these two segments and, with it, the opportunities for optimization
3. The breakout within the retention bucket (the 80/20 rule), which isolates and highlights the power customers

The final exercise is to map this against the influencer evaluation, namely, those who buy a lot, talk a lot, and do both. How can you scale this?

Finally, it's time to take your real estate test if you truly want to get into the landlord business. It begins with a full audit of all your assets: owned, leased, and rented. Where are the gaps to migrate or upgrade from leased to owned? To what extent are you fully integrating and optimizing the potential of your suite of assets: your people, packaging, stores, website, and apps? Where are the opportunities to move from indirect to direct engagement? What are the possibilities of transitioning from tenant to landlord?

You Have a Long Way to Go

A Forrester and Heidrick & Struggles report suggests that there is still too much lethargy built into the model. Put differently, you have a long way to go. As Figure 20.1 suggests, you're still obsessed with acquisition above all else (what's the point in fishing when your net is full of holes?). You're still too focused on your reflection, you're not customer-centric, and innovation is too low on your priority lists.

Figure 20.1 Obsessing on acquiring customers

When You Come to a Fork in the Road, Take It

In the second quarter of 2013, we were treated¹ to two very intriguing—and yet seemingly contradictory—pieces of research concerning the state of marketing and the relative health and wellness of its fearless leader, the chief marketing officer (CMO).

As mentioned earlier in this book, a Spencer Stuart study reported that the average tenure of the CMO has doubled, from 23 months in 2006 to 45 months in 2013.

Contrast that with an Accenture study that reflects a whopping 40 percent of marketers feel they are ill-prepared to meet their objectives. The study listed key impediments to marketing performance being inefficient business practices (19 percent) and lack of funding (17 percent).

Cut to Spencer Stuart crowing about how chief executive officers (CEOs) are finally coming round to giving credit to the tough job of CMOs (after giving them such a tough time previously!) in these current recessionary times, combined with credence on the responsibility associated with a CMO's burgeoning portfolio to include so many more technology-enabled components perhaps previously associated with information technology—along with an expanded role including the mission-critical specialties of customer service, social media, and the like.

And back to Accenture, indicating that 48 percent of marketers will spend more on managing customer data; 40 percent will increase spending on Web analytics; and 39 percent will boost spending on marketing analytics—with their limited, insufficient funding, of course. Furthermore, half of the respondents indicated they would begin an internal reorganization to become more digitally savvy, and 52 percent said they would be hiring more digital talent.

So let me see if I've got this correct: CMOs are living large and enjoying unprecedented job security and tenure in a time of unprecedented economic pressure, organizational upheaval, business volatility, and technology-enabled change, despite the fact that they don't have enough processes, budget, and/or talent to do their jobs effectively.

And then there was the Fournaise study from Chapter 3 that concluded that CMOs have lost certain decision-making powers (pricing, distribution, cost of goods) to other department heads. Perhaps the real reason they are lasting longer: they are making less business mission critical decisions.

Is it just me, or is something a little off here?

I've tried to reconcile these insights in an effort to come out with a warm, fuzzy, glass-half-full outcome. My feeling is that this is a classic case of lesser evils. On one hand, we have CEOs giving CMOs a little more respect and autonomy to do their jobs. This is a good thing, a very good thing, in fact. It's imperative that CMOs have enough time to execute on a longer-term vision and mission.

On the other hand, this may just be a signal to essentially throw in the towel, with CEOs conceding that scapegoating CMOs is not necessarily a sustainable practice while at the same time not exactly shaking up the status quo to empower CMOs to do their jobs and achieve their goals with appropriate budgets, talent, and/or resources.

Arguably, the one common thread that connects, unifies, and even explains these two disparate findings is the acceleration and proliferation of disruptive technology-based innovation in the marketing world. The goalposts continue to shift and become elusively more challenging to reach from month to month.

Put metaphorically: We're still chasing our own tails; the only thing that has changed is the frantic and frenzied (read: manic) pace at which we're doing it.

Firing the CMO does nothing more than place the organization even further into an arguably insurmountable back foot posture and laggard position. That said, without implementing dramatic changes associated with the egregious gaps in investment and talent, the company is no closer to exponentially adapting and powering forward. Restructuring may help, but only if it's painfully cathartic, profound, and sustained.

The solution? I'm afraid I don't have a silver bullet, but giving CMOs more room to breathe is a definite start, if—and only if—CMOs take this as a golden opportunity to effect meaningful change within their business unit, company, and even industry.

Perhaps CMO should stand for chief muddled officer or chief morphed officer. Which one are you? The latter is a new brand of officer for a new world of brands, a new age marketer incorporating equal parts chief listening or conversation officer, chief customer or experience officer, chief innovation officer, chief data officer, and pretty much anything else a consultant or author can throw at you. The chief morphed officer is both a generalist (jack-of-all-trades) and a specialist at one: marketing.

Marketing is everything.

Embrace Your Inner Masochist²

I had the opportunity to deliver the keynote speech at Compete's Annual Digital CMO Conference in 2013. After the sessions, a small group of senior marketing executives had an intimate lunch and discussion about organizational change and cultural transformation.

One of the paradigms and frameworks we discussed came from Stephen DiMarco, Compete's CMO, who referenced a very simple matrix of pain and pleasure as motivational forces and catalysts of change. The continuum looks something like this (in order from most important to least important):

Pain now

Pain later

Pleasure now

Pleasure later

What struck me with this very simple and yet effective breakdown is how pain trumps pleasure—both in the present and future.

Intuitively, this makes sense if you think about disrupting norms and the status quo: Fear of failure (losing one's job, being lambasted by the trades and blogosphere, market share loss) is the known devil versus the unknown devil of wild success (new revenue streams, competitive advantage, viral mania, and best-in-show creative).

And yet, it makes no sense at all. The downside is always known and somewhat finite. Our goal here is to minimize or mitigate the cost of failure. On the flipside, the upside is limitless and infinite. And yet, we resist or choose to stick with the tried and tested instead of framing inaction as an opportunity cost—the cost of doing nothing.

The second surprise from this breakout is how pain later trumps pleasure now. One would think the pecking order would place pleasure now just above pain later. The result is the quintessential rock and a hard place—a purgatory or limbo of sorts between the pain of clutter, confusion, and lack of metrics with the looming noose of missed goals. I guess this is where the phrase paralyzed with fear comes into play.

Completing the matrix in Table 20.1 is definitely a helpful exercise, but I think it's time we also flip the matrix by redefining pain and pleasure and rethinking time frames, thereby separating fear from failure.

It is widely held that change happens (action) when the cost of not changing is greater than the cost of changing. Put differently, when the pain associated with inactivity outweighs the pain (risk, fear, uncertainty, etc.) associated with venturing out of one's comfort zone.

The problem is that we typically either misinterpret these signs or don't always act in a smart, strategic, and holistic way. Cases in point: A bad Twitter experience results in closing down an account or joining Twitter in the first place, respectively.

Today, we are surrounded by forces of change that jolt us into action. Often, these are sadly knee-jerk reactions that are forced rather than voluntary and mired in short-term thinking and instant gratification.

If it is true (and it is) that the incumbent paid media world continues to erode—both in terms of efficacy and efficiency—and if it is true (and it is) that the emerging digital landscape continues to expand and evolve, then surely now would be the time to rework the matrix to essentially blend together both pain and pleasure as positive stimuli, working in tandem under the unified banner of innovation.

Table 20.1 The Pain-Pleasure Matrix

Table 20.2 Z.E.R.O. Pain and Pleasure

The takeaway here is to embrace pain now in order to avoid it later but equally to embrace future pleasure in order to avoid the soft, artificial, and increasingly temporary appearance of pleasure now (status quo).

Slay the Sacred Cow

We challenge you and your partners to justify every single line item and colored rectangle on your flowchart with real and meaningful data and metrics. We don't mind if they are short-term wins, medium-term metrics, or long-term sales validation. Everything that cannot earn its place should be on the chopping block.

By the way, calm down—we're not telling you to hemorrhage the system. Prioritize and plan accordingly. Start small, but get bigger quickly. Start slow, but speed up quickly. Start safe, but take on more calculated risk quickly.

Robin Hood Marketing

We agree, Robin Hood Marketing is a great-sounding name for our next book, but for now, it speaks to the fact that all four pillars of Z.E.R.O. have optimization implications, and we're being very clear that the money you need to properly and sufficiently invest in these four areas must come from paid media.

We recommend looking (you won't need to look too hard) for these entry points—from obvious and glaring wasteful line items to less obvious inefficiencies.

Vertical or Horizontal Routes

Of course, you can take the Chuck Fruit approach as well. Chuck, in his tenure at both Anheuser-Busch and then Coca-Cola (just like coauthor Maarten, only Maarten did it the other way around), mandated 5 percent of all television network budgets go toward cable. It soon became the kind of stake in the ground that was the norm in the industry. If you are creating innovation budgets, improvised budgets, or speculative or opportunistic budgets, remember that although imitation is the sincerest form of flattery, in the world of marketing it becomes white noise. Rather, consider putting that same stake through the heart of your competitor. Business transformation is not as effusive as you think.

Today, when you look at the failing networks losing ground by the day to basic and premium cable networks, Fruit looks like the greatest genius in somewhat-modern-day media. And Bud TV doesn't seem as silly nowadays as it did then, although I suspect it still stings as bad.

First mover advantage counts more than ever before. Bonon Buugh is doing a Chuck Fruit by mandating 10 percent of media budgets should go toward mobile.

Press. Press. Press.

You'll never win at blackjack if you don't have a betting strategy. The house will always win if you don't press your advantage, especially when the perceptual wind is in your sails. Doubling down and splitting in less obvious circumstances, placing additional chips on the hand to capitalize on momentum, or even unpredictable betting can help pull one over the dealer without being thrown out the casino. What would have happened if Budweiser had doubled its commitment when everyone else dabbled around the 5 percent ceiling?

The best way to keep innovating—is to keep innovating.

Setting an innovation budget is one thing; keeping it is another. By properly managing expectations throughout the process and getting the buy-in from the very top down, as well as middle out (beware the middle manager) and outside in (those pesky agencies and media companies can be quite persuasive), Z.E.R.O. budget setting and investment becomes a cultural imperative and strategic mandate for the business and brand.

Translation: When Budgets Are Cut, It Is Not the First to Go, but the Last

The very same justification for setting budgets up in the first place (the waste) should be the same reason why they are protected and insulated against short-term and reactive thinking.

One More Thing: Z.E.R.O. Is Not Free

With thanks to Jeff Rohrs, a fellow thought leader and newly minted author of Audience, who, in a conversation on the twentieth floor of the Hyatt Hotel in Sao Paulo, Brazil, scratched his head and said something to the effect of, “The genius is that Z.E.R.O. does not necessarily mean free, right?” I pretended to be completely on the same page and then exhaled a sigh of relief knowing that I almost omitted one of the most important takeaways from this entire book!

Z.E.R.O. is most certainly not free. That's part of the problem in the industry, which is to justify wasteful paid media with the crutch and three-card Monte of earned media, aka free media. Z.E.R.O. asserts that in a perfect world, brands would not need paid media because of the value derived from their existing customers and investments in technology, service, and/or owned assets. None of these investments are negligible, but they are almost always certainly more valuable, cost-efficient, and cost-effective than the incumbent alternatives. All can be considered investments, rather than expenditures. In some cases, they even become revenue generators, which flips the entire model on its head.

Keep It Simple, Stupid (KISS)

Just in case there is any ambiguity with your marching orders, here is a final summary: Media is a subset of marketing and is thus smaller than marketing. To make sense of the shifting media world, we gave you the acronym P.E.O.N. and four directives associated with rethinking how you plan, buy, and optimize dollars.

P.E.O.N. is a means to an end—and that end is Z.E.R.O.

Putting It All Together

There's a money slide in this book and it's coming up shortly. To set it up, let's go back to the Marketing Bowtie and consider who we're delivering against it.

Figure 20.2 shows where we are today, and the report card is not encouraging at all. Essentially, we are delivering predominantly against P.E.O. or paid-earned-owned.

Figure 20.2 The Marketing Bowtie Scorecard

Four key takeaways from this analysis suggest a way forward:

1. We are completely absent at P.O.P. (Point of Purchase, Place of Purchase, Proof of Purchase).
2. We are completely underrepresented at the reward and recognize stage of the flipped funnel.
3. We are at absolute baby steps in terms of formalizing any sense of community.
4. Until steps 1 through 3 are met, the vision of a customer-centric ecosystem powered by technology cannot be reached.

We believe that Z.E.R.O. represents the final pieces of the puzzle (together with a profound investment and prioritization in nonmedia or human capital [aka talent]). See Figure 20.3.

Only one more step is required, and that is to synthesize and overlay both P.E.O.N. as it relates to media and the traditional funnel, and of course, Z.E.R.O., which not only gives us coverage across the flipped funnel but also provides support at the point in which the two funnels come together (P.O.P.). In addition, Z.E.R.O. reaches out across the aisle and, in doing so, does not neglect the final mile in the acquisition cycle leading up to purchase (Figure 20.4).

Figure 20.3 Z.E.R.O. fills the gaps across the Marketing Bowtie

Figure 20.4 P.E.O.N. + Z.E.R.O. = Hero

This is the true connected ecosystem in action.

When All Else Fails, Don't Panic

Douglas Adams said it best in this line from The Hitchhiker's Guide to the Galaxy. He also said the magic number was 42, which is why we think you should move toward investing a minimum of 42 percent of your budget in direct versus indirect means. That number is completely arbitrary, of course. You'll need to determine your own benchmarks and milestones, but we do want to reassure you that things will be okay. Do not panic, especially if panic manifests itself in paralysis.

Z.E.R.O. represents, in our humble opinions, a bold and visionary approach to staying out in front of all the waves of innovation and change hitting us with increased regularity (see the innovation continuum in Chapter 17). It incorporates new budgets and significant shifts from acquisition to retention (a directional absolute 20 percent, or, put differently, a 25 percent reduction in acquisition in favor of retention), which would include the formalizing of advocacy and establishment of ambassador-type programs. This represents a firm stake in the innovation ground, including collaboration with entrepreneurs and their startups (up to 10 percent of your budget using the 60/30/10 rule), a rethink on content (assets versus media), and an evolution toward ecosystems powered by technology.

Shift Happens

Begin with whatever shift you prioritize as being the most important to the future of your business. Even if you follow Adams's lead and go with 42 percent, you won't lose. There's too much fat built into the model to allow you to fail by making these shifts. Give it a one-, three-, and five-year plan if you like, corresponding to short-, medium-, and long-term goals. Anything longer than that is just plain silly.

We're always just a tweet or text away if you want to bounce anything off us. We've seen Z.E.R.O. work before. It can work for you, too. In fact, it is already working for you. You have customers, right? Good. Stop wasting your time talking to us and get cracking.