THE PATH TO LONG-TERM
Because we strongly believe companies need to be customer-centric,
a topic we’ll delve more deeply into, the wheel begins with insights
based on customer, market, and competitive intelligence. These
insights help businesses decide where to place their best and extend
their victories, as well as what to protect or jettison. Armed with these
decisions, organizations can determine what they need to accomplish
to declare success. These outcomes are what enable organizations to
achieve their financial targets.
Once outcomes are defined ideally in customer-centric terms—where
your customers rather than your product are at the core of your
business—you can craft strategies, innovate, and position solutions
that will address customer needs, create customer value, and achieve
customer success within the market segments where you can best compete.
These first few spokes of the wheel fall squarely in what we refer
to as upstream Marketing.
In his book, Profitable Growth is Everyone’s Business, Dr. Ram Chara,
who has taught at Boston University, Northwestern University, and
Harvard’s Business School, explains the difference between upstream
and downstream Marketing. Upstream Marketing, Dr. Chara says,
refers to “the strategic process of identifying and fulfilling customer
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needs.” He posits that developing clear customer segments, along with
analyzing how the customer uses the product or service and what
competitive advantage will be required to acquire the customer, are the
focus of upstream Marketing.
Dr. Chara defines downstream Marketing as efforts such as advertising,
promotion, brand building, and other forms of communication
and engagement, including PR, events, and content. He proposes
that the purpose of these efforts is to motivate customers to adopt
existing products and services. Perhaps this helps clarify the difference.
Downstream Marketing supports your company’s value proposition,
while upstream Marketing defines your company’s value proposition.
Downstream Marketing delivers programs to support product adoption.
Upstream Marketing directs the innovation process to ensure
long-term sustainable growth.
Upstream includes everything from deciding which markets and
customers to pursue, what method is needed, and where and when to
pursue to what offers and messaging to use. Upstream Marketing requires
a longer-term investment and keen focus on performance management.
It also requires delving into a different level of data—gaining
deep customer insights and competitive intelligence by investing in
research; understanding the principles of segmentation, positioning,
and differentiation; and distilling this into a strategy and plan for
growth that is aligned to the business. If you’re looking for long-term
organic growth—which requires innovation, category ownership, and
customer lifetime value to build a business that lasts—you need to
invest in the upstream.
Upstream Capability Requirements
Upstream Marketing is what earns Marketing the capital “M.”
(Did you read “Why and When to Capitalize Marketing” in the
Upstream Marketing 17
Introduction?) Marketing organizations that earn the capital have four
1. They understand the needs and wants of the market and
customers. I remember a mentor years ago telling me “it is
better to be an aspirin than a vitamin.” Upstream Marketing
aims to solve headaches and know which headaches go with
which market segments. This requires conducting formal and
informal research—the focus of our next chapter. Research
starts with a hypothesis or educated guess. A hypothesis
typically takes the form of a question that surfaces as a result
of observation, e.g., we’re not seeing the adoption rate of our
product or service as we anticipated, so what do we need to
address to improve—feature set, messaging, delivery, etc.?
Which one of these will have the greatest impact on the rate?
You might even have an initial theory, such as you may believe
an additional function or capability will improve the rate of
adoption. The only way to verify your guesses is to conduct
experiments, analyze your data, and draw conclusions from
it. This approach can be used for nearly every aspect of
Marketing, such as a hypothesis that customers prefer a particular
medium for learning about your products or a specific
option for getting help when they’re having trouble solving
a problem. Being able to frame the question takes collecting
data—talk with prospects; attend industry events; and read,
read, and read some more (industry articles, analyst reports,
experts’ blogs, etc.). We live in a dynamic world where needs
change. For example, Kodak never evolved to embrace digital
photography. Blockbuster (and all video rental stores) couldn’t
compete with on-demand options such as Netflix. Or consider
the Toys ‘R Us stores closing as they tried unsuccessfully to
compete with online and big-box stores. Your research needs
to be ongoing so you can zig and zag with the market. It’s the
only way to avoid the fate of these failed brands.
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2. They gather and validate the market requirements to
create innovation—differentiated solutions, features, and
benefits that will resonate with buyers. What is the minimal
feature set your offer needs to ease the headache? Of course,
everything about your offer matters to you. The key is to focus
on what matters to your customers. Focus is paramount.
Drill down on the one or two most important differentiated
benefits. Note the word “benefits”—upstream Marketing
speaks from benefits, not features. Features are your evidence.
Consider employing a new product development (NPD)
process, such as Stage-Gate, as part of this process. It prepares
and implements a launch plan that will entice customers
to purchase. The launch plan should be prepared well in
advance of the launch and is just as necessary as any of the
main features of the new product. We tackle this capability
in Chapters 5 and 6, which focus on the all-important wheel
element of Innovation & Strategy.
3. They determine the personas of buyers and approach segmentation
beyond the traditional methods of demographics.
This capability takes more than monitoring social media
platforms to develop personas. Conversations with buyers are
your best source for personas. This means Marketing must
engage directly with customers—ideally in person. This step
isn’t about pitching; it’s about listening to customers and
learning about their problems, challenges, aspirations, etc. Pay
close attention to the words they use. Their language needs to
become your language. This is the focus of Chapter 7, which
addresses the Segmentation & Positioning element.
4. They recognize that Marketing must be agile and facilitate
agility. The market research company Forrester defines business
agility as “the quality that allows an enterprise to embrace
market and operational changes as a matter of routine.”
Upstream Marketing 19
Achieving agility depends on operational and performance
excellence—which are addressed in the final chapters—and it
requires building the infrastructure and activating processes,
systems, and tools. The benefit of doing this at any organization
is that it helps you increase the execution speed of your
Upstream and Downstream Coexist
Clearly, you need both upstream and downstream Marketing, and a
way to pivot from one to the other. Routes-to-Market (RTM) and your
Operational Plan become the transitional spokes between the two.
Execution is all about the downstream, with measures, metrics, and
Key Performance Indicators (KPIs) derived from the outcomes, strategies,
and plans. Downstream is all about the execution. Downstream
Marketing suits the world we operate in: sales NOW. It plays to the
call for fast ROI. It is about speed and financial management. The
downside is that without being grounded to the upstream, the downstream
Marketing budget is always at risk.
As the plan is executed and performance data captured, an organization
can assess whether to stay or adjust course and what additional
insights are needed to stay or accelerate the growth trajectory. Thus,
the wheel continues to spin—upstream Marketing building the momentum
for its downstream counterpart.
Achieving Organic Growth via Marketing
We hope the wheel helps you understand the importance and power
of upstream Marketing to the growth process. We truly believe
Marketing should take the lead for successfully achieving organic
growth. While corporate leaders need to drive the organic growth
initiative, Marketing plays a defining and major role. Identifying
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markets and customers to pursue falls squarely in Marketing’s domain.
It is Marketing that can provide the insight and guidance to answer
questions such as whether the opportunity present is to grow share of
wallet among existing customers by offering more ancillary products
or developing a new offering to penetrate a new market and attract
Value-creating marketers see themselves in the business of creating
new benefits for current customers, finding new customers for existing
products, and driving innovations that will keep their business ahead
of the competition.
As the pressure for companies to improve organic growth increases,
Marketing is in the ideal position to step up and take the lead by
developing and orchestrating a disciplined process for selecting the
best organic growth initiatives. The Circle of Traction is one tool.
Ultimately, however, Marketing is going to need a way to identify
and select the best options for organic growth. A useful approach is
to begin with a realistic assessment of the gap(s) between the goals
for growth and current rate of growth based on current strategy plus
the projects already in the portfolio of growth initiatives. Will the
current sources of growth close the gap? If the answer is no, you can
put the Circle of Traction in motion. It’s designed to help you focus on
answering these important questions:
• What do you need to know about your markets, customers,
and competitors that will help you close the gap?
• Can you close the gap by penetrating deeper into your
current customer base or market?
• Can you do this with your existing product/service portfolio?
• Do you need to innovate or go into new markets? How
real is the opportunity? In what time frame? What is your
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likelihood of success and how much is the opportunity
• Do you have the market’s permission to grow this way?
How you answer these questions will help you define your priorities
and how success will be determined. These two things serve as the
basis to establishing your business outcomes and the corresponding
strategies you will need to develop and deploy.