More than a House of Cards

Tomorrow (11/2/18) marks the release of season six of the Netflix history-making show, House of Cards. Loyal fans of the show know that absolutely nothing is as it seems. Things only look to be in order…

It’s not only on TV that everyone positions and angles for power of some sort.

Know the feeling? The one where you wonder if so much of what you’re doing could all come crashing down at any moment?

Six months into a new CEO position, a Rogue Marketing client found himself facing a dilemma. It turns out that the previous ownership group had overstated their sales pipeline, customer retention rates, and growth projections. Due diligence was done of course… and all of the fundamentals were in place. P&L, balance sheets and income statements all indicated continued growth. Or so it seemed.

What separated the financial statements (focused on the past historical performance) from the future-looking marketing/analytics reporting? The growth was artificial.

If you don’t know what you’re looking at, any data can look positive.

Why was something being built that wasn’t really there? There were a few key components:

1. False-positives – Previous quarters did not  represent reality. Recent customers were held over from the previous year. Implication: The company invested in artificial web traffic through paid media and held closed sales until a more opportunistic time.
2. Activity ≄ Success – Marketing efforts were focused on tactical execution and not investments focused on growth. Implication: Short-term thinking and a culture of doing things/checking the box have stalled the company growth.
3. Operational inefficiency – there were challenges moving prospects from lead generation to closed sales and retention. Implication: Lack of CRM and marketing automation platform crippled visibility and an ongoing dialogue.
   
   In short, the company was built on a house of cards.

“Look for these things prior to making an acquisition or being held accountable for a turn-around.”

The story above had a happy ending. The CEO was able to overcome the initial challenges, resulting in a profitable sale. However, others aren’t always as lucky. Let’s dive into what’s important to look for and where potential CEOs and Private Equity firms should dig deeper before making an acquisition or being held accountable for a turn-around.

To Change Your Strategy, Change How You Think

Ask these questions beforehand:

• What are the current/projected customer acquisition strategies?
• What are the current cost/acquisition (CPA), cost/lead (CPL) and churn ratios?
• What percentage of budget is allocated towards customer acquisition/retention?
• How is the company investing in technology (IT, development, marketing automation)?
• How do the current marketing strategies align with the  current revenue model?

Look for tools and resources like these to already be in place:

• Value proposition structure
• Buyer journey framework
• Messaging architecture
• Revenue roadmap
• Marketing automation technology stack

Consider these questions for the future:

• Where is the company focusing customer acquisition efforts over the next 2, 3, 5 years?
• What changes/pivots within Facebook, Amazon, Apple and Google have a potential impacting on the companies ability to connect and engage with customers?
• How will the company remain competitive in a quant-driven marketing world?
• How have recent events in online privacy impacted the companies digital marketing strategy?

Ensure Organizational Alignment

In order to be effective in marketing today, brands require more focus and more discipline. There are a thousand marketing choices available. Most focus on just doing things. With all the marketing choices, it is far too easy for marketers to get distracted; therefore their time and budget are easily fragmented and watered down. The impact is short-term results (at best) that address the symptom, not the disease.

The only way to gain alignment is is by having a simple, clear, and actionable strategy that everyone understands. Marketing isn’t viewed as competing against sales. Investing in IT and development isn’t seen an expense. And so on.

Organizational alignment allows stakeholders across the organization to make rapid, daily decisions that are connected to the strategy and that reinforce the brand’s promise to its’ buyer. In a split second, stakeholders need to be able to say, “This fits the strategy” and, more importantly, “This does not fit the strategy.”

“Stakeholders need to be able to say, ‘This fits the strategy’ and, more importantly, ‘This does not fit the strategy.’
”

Seek Out A Complete Picture

Understanding where the company focuses its effort and investment is directly correlated to your future success and ability to move the company forward.

One of the key indicators is companies that invest (or don’t) in an optimized marketing technology stack. You should also look for those that have developed a revenue roadmap, created a cap-x table for short/long-term marketing investment, and are invested in an appropriate level of infrastructure (customer data, technology, brand discoverability/accessibility)

Season five of the popular Netflix show ended with Claire Underwood looking directly into the camera to say, “My turn.”

She’s all set to take the reins, what about you?