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"This idea of doing things holistically for one common goal may not seem that crazy of an idea, but show me someone who's really doing that. Very few large organizations — especially in CPG today — are." — Chris Perry, co-founder and chief learning officer at firstmovr
Brand manufacturers are looking for more ways to drive growth and profitability. While they could acquire more customers or launch new products, looking inward may be the best solution to their dilemma.
For far too long, brand manufacturers have operated their business in a siloed fashion, but ecommerce disruption now demands greater collaboration and integration across the enterprise, especially between marketing and sales ecommerce and brick-and-mortar.
Digital and physical shelf teams shouldn’t operate as separate functions but should work seamlessly together to support total growth accountability.
To understand exactly how and develop a new set of best practices for the digital era, Molly Schonthal, founder of the Digital Shelf Institute (DSI) Executive Forum, and Chris Perry, chief learning officer at firstmovr, collaborated on several research projects for the DSI.
Total growth accountability is the result of these efforts.
Total growth accountability is the practice of measuring and making holistic decisions and investments that drive overall business growth and performance versus separating your ecommerce growth strategy by marketing versus sales or online versus offline.
"This idea of doing things holistically for one common goal may not seem that crazy of an idea, but show me someone who's really doing that. Very few large organizations — especially in CPG [consumer packaged goods] today — are," Perry says.
There are several reasons most brand manufacturers aren’t focused on total growth accountability. One of the main ones is that defined classes of trade meant that brands often have taken traditional routes to market via channels such as grocery, dollar and drug stores, and wholesale clubs. Each of these channels had its own guardrails and codes of conduct for how brands would go to market.
But ecommerce has led to the emergence of new channels, like retail marketplaces, direct-to-consumer (DTC) sites, and last-milers like Instacart. Omnichannel is now the standard, and silos represent the biggest risks in this world.
"We’ve entered this world of platforms, not just partners and classes of trade," Perry says.
Schonthal argues the old models of doing business will no longer work for brand manufacturers because commerce is more than a single-function practice and requires sales and marketing collaboration for success.
"Functional leadership is dysfunctional," Schontal says, adding that traditional growth philosophies contribute to significant challenges for brands because they’re spending at the top of the funnel, bypassing the middle of the funnel, and ultimately doing very little to bring consumers back in.
"In a world on the digital shelf where repeat rate is a quantifiable advantage, and mechanisms like ‘add to basket’ can result in a significant decrease in the cost of acquisition, and lifetime value is a real thing, a traditional mode of operation focused on the top and the bottom of the funnel will no longer be completely effective," she says.
Instead, brands need to have a true full-funnel strategy and invest to grow, rather than making media investments to maintain their current market position. They can start moving in this direction by taking proactive steps to integrate sales and marketing.
Cross-functional integration is essential to unlocking total growth accountability.
Traditionally, marketing has owned the consumer and brand equity, innovation, and go-to-market strategy and had longer-term accountability. Sales owned shopper, trade, and retail activations in the market and had short-term accountability. Both functions would collaborate, but they had separate key performance indicators (KPIs).
"It was sort of like a relay handoff. You would say that you were integrated with sales if you were on marketing, and vice versa with marketing if you were on sales, but it was really more of a handoff than it was a tight integration." — Molly Schonthal, founder of the DSI Executive Forum
Schonthal says this church-and-state approach is no longer effective when parts of the digital and physical shelf cross each of these domains. Instead, brands can realize greater ecommerce success if they bring these two functions together.
Schonthal and Perry say the brands who are most successful at implementing total growth accountability combine marketing and sales under one team, most often with sales reporting to marketing. They also ensure the fundamental marketing and sales elements are part of their everyday operations.
Other brands can implement a similar approach by centralizing decision-making and adopting common KPIs for this combined team. They also can measure by share of voice and sales on crucial channels to compare their performance to competitors. Most importantly, they should prioritize a seamless brand experience across all consumer touch points.
One DSI member brand already has made this shift. The brand has adopted a practice where it looks at its ad inventory as a percentage of total ad space available across digital channels.
The brand aims above its share of category sales to ensure it drives greater visibility versus competitors on its most important retail platforms. This approach also takes into account that customers will frequently switch across platforms and channels.
Using this practice, the brand was able to capture 75% of pandemic-related growth.
Marketing and sales teams, as well as digital and physical shelf teams, must be integrated to account for today’s omnichannel environment. Consumers don’t shop in silos, so brand manufacturers can’t run their operations in silos either. Instead, they must adopt total growth accountability strategies and take a more holistic approach to commerce.
By doing so, they can lay the groundwork for better enterprise collaboration and create a clear pathway for how to drive business growth and profitability.
To learn more about total growth accountability, download the DSI explainer, "Shift to Total Growth Accountability."
