Transcript

Announcer:
You’re listening to Rattle and Pedal, Divergent Thoughts on Marketing and Growing Professional Services Firms. Your hosts are Jason Mlicki and Jeff McKay.

Jason Mlicki:
So Jeff, when we talked last time, we were talking about sort of the marketing around COVID-19 and what that meant. One of the interesting things that came out of that conversation was that we were sort of using marketing and communications as synonyms in a way. I was probably the culprit, but confusing the two to some extent for people. So we agreed that we really should take some time to break that down and talk about difference between marketing and communications and why it matters. That is what we’re going to do today.

Jeff McKay:
Do we have Ari Fleischer or somebody from the White House that’s going to help us?

Jason Mlicki:
Hope not.

Jeff McKay:
Oh, no!

Jason Mlicki:
I was thinking Sean Spicer, we should get him on.

Jeff McKay:
Yeah, or Sarah Huckabee or something. Yes, unfortunately, or fortunately, it’s just you and I.

Jeff McKay:
For our listeners who actually decided to listen to this are probably coming in with the question on their mind, what’s the distinction, and why is it even relevant? Aren’t you just splitting hairs? Isn’t it just all of it communication?

Jason Mlicki:
Yeah. Why do I care? What’s it matter?

Jeff McKay:
Yeah, and I think most firms probably won’t make the distinction. I don’t want this to sound condescending, but in true Jeff McKay form, it probably will be.

Jason Mlicki:
I’m already offended.

Jeff McKay:
Yeah. I think more sophisticated firms see it as different. The fact that they have those functions is indicative of the sophistication, not just size, because I think generally you would see a bifurcation in the larger firms. But I think there’s a mindset that’s applicable even to small and mid-size firms.

Jeff McKay:
The distinction is this, one of those functions manages risk. The other acquires clients. One of those functions manages risk. The other acquires clients. In my mind, corporate communications is about managing risk, and marketing is all about client acquisition, and you might even throw in retention on that as well. Very much in the Peter Drucker mindset, a firm has two functions, innovation and marketing. It’s all about getting and keeping a client. That’s the distinction I make. There may be others out there that disagree. You may be one of those people that disagrees.

Jason Mlicki:
No, I don’t. I mean, for the most part, the managing risk is interesting and I want to lean into that a little bit more. When you suggested we do this topic, actually, what came up to me was, I feel like marketing is about setting strategies, so it’s about determining where the firm is going to compete, what markets, what buyers, what products and services they’re going to provide, and then how they’ll win. What is their point of advantage, and sort of determining in a macro sense how we’ll connect with those buyers to build the business and sort of making those strategic allocation decisions around how are you going to grow, which I think is really the essence of what you’re saying.

Jason Mlicki:
I sort of saw communications, at least in my experience, being about helping to carry some of those choices into the market. So a lot of times it seems to me that the comms folks are called on to produce content against that strategy. If there’s a strategy that’s going to rely on some level of lead generation or campaign development and that campaign development has a content aspect to it, which often it does, then a lot of times that falls into their court.

Jason Mlicki:
Now, I think there are, as we talked in the pre-call on this, there’s outliers to that. I mean, thought leadership marketing is obviously a big thing and where does it live? I thought it was interesting you had tucked it under marketing and, generally speaking, I think that makes logical sense. It’s probably sits somewhere between the two, because it’s identifying problems and solutions and then articulating those through the written, spoken word. In a lot of larger firms, it sort of sits on its own. It’s sort of isolated from the two. It’s not even part of either one of those functions. It’s off on the side reporting up in a different fashion.

Jason Mlicki:
So anyway, my curiosity is peaked by the notion of managing risk, so I think that’s the part that I think is most interesting to lean into when you talk about communications. Because I think conceptually we agree, but talk more about what you mean by that. Is it avoiding mistakes? Is it mitigating risks? I mean, what are we asking of the communications person if that’s sort of the central expectation?

Jeff McKay:
Well, let me outline the differences. Then probably most important is, let me describe the overlap and I think where confusion generally occurs. We’re seeing this I think clearly exacerbated now in this crisis. The reason I think we’re seeing it in this crisis is most firms don’t have the disciplines or capabilities across both, and an acute crisis like this brings out kind of true personalities in a panic or in a desire to be responsive. Because people are running around chaotically just trying to be responsive, you start to see these distinctions really become more self-evident.

Jeff McKay:
So let me jump in. Corporate communications, in my mind … When I say corporate, I mean somebody sitting up in corporate, not a generic marketing communicator who has writing ability and can write white papers and can write ads and can do social media posts in any kind of written language. When I’m talking about corporate communications, I’m talking about that focus, that objective of informing stakeholders of corporate initiatives. So clients, communities, political bodies, regulatory bodies, of letting the general market know what the firm is doing from a very strategic level. Corporate communications manages executive, board, and employee risk. By that I mean, coming and goings, departures, bad employee behavior. If an employee ends up on the evening news and is associated with the firm, corporate communications is going to manage that by spinning any story like that in a positive light.

Jeff McKay:
We’ve talked about this on one of our podcasts about McKinsey’s marketing person getting fired because some stories got out about the firm losing its soul. To me, those are corporate communications issues, but marketing paid the price for it.

Jason Mlicki:
Yeah. So maybe a example, I’m thinking out loud. There was an article recently. I think it was a warehouse manager for Amazon somewhere in New York that … I haven’t read the full article, full disclosure. I was just told about it by a client. Anyway, that sort of was complaining that they needed better protections for their employees working through the crisis, because they’re having such a influx of demand and was summarily fired. So then there was a lot of negative publicity around that.

Jason Mlicki:
So communications’ job is to step into that moment and explain the decision and why they did it. Whereas, marketing at Amazon is all about customer acquisition. It’s how do you grow Amazon Web Services? How do you get more users into the Amazon Marketplace? I mean, all those things that marketing does, right? Is that a good example of kind of like separation of church and state, I guess?

Jeff McKay:
Yeah. Yeah, I think that’s a good example. This example of the recent Navy captain being relieved of command. To me, that’s corporate communications. You’re managing the risk, and it’s primarily political risk to that entity. We should probably do a podcast on this, the winners and losers coming out of this crisis.

Jeff McKay:
But I think you’re going to see a lot of affixing of blame to various entities, and one in the crosshair is going to be ventilator manufacturers who were charging $25,000, $30,000 and slowly producing ventilators for the market. Within one month, you get this American entrepreneurial ingenuity producing field-ready emergency ventilators for $100 using spare parts that are already in a hospital. They’re going to start to have reputational risk about why did it take so long and cost so much to produce something that several other organizations who aren’t even in your space are producing as viable alternatives? So those types of things.

Jason Mlicki:
That’s a great example. Of course, I think that’s a different topic. That’s the innovator’s dilemma in some ways. I think another good example of that is SpaceX and Elon Musk’s work around sort of deconstructing the rocket and basically producing a rocket for, I don’t know, 1/100,000th of the cost of a rocket, or something ridiculous. Where someone comes at it from a different angle and says, “Wait a minute, why are you doing it this way?” I am sure this is how their communications department would spin that and say, “Well, it’s not that we were taking advantage necessarily.” It was that they were locked into a certain way of operating, and they didn’t see the other ways to operate, because they never had the kind of pressure they have right now to do that differently.

Jason Mlicki:
But that’s a really good topic though, winners and losers and where blame gets placed. I think that’s a really interesting topic to talk about.

Announcer:
You’re listening to Rattle and Pedal, Divergent Thoughts on Growing Your Professional Services Firm. Your hosts are Jason Mlicki, principal of Rattleback, the marketing agency for professional services firms, and Jeff McKay, former CMO and founder of strategy consultancy, Prudent Pedal. If you find this podcast helpful, please help us by telling a friend and rating us on iTunes. Thank you. Now back to Jason and Jeff.

Jason Mlicki:
Why do I need both functions? You said it’s a function of sophistication, but what drives the need for that sophistication maybe is the question?

Jeff McKay:
Okay, let me delineate what marketing is in my mind so that we’re all on the same page. You to a large degree outlined this already. The focus, the objective of marketing to me is to drive growth and to be the voice of the client. Where corporate communications is the voice of the company, marketing represents the voice of the client and a deep understanding of that voice and, as you said, doing the things it needs in order to meet those needs of the clients or prospect that ultimately the firm thinks it can win. So that’s the distinction to me.

Jeff McKay:
Where people get confused, or I should say, where it starts to get a little confusing is when the two functions or capabilities cross over. They cross over when managing the firm’s reputation. In my experience, corporate communication manages the risk that are associated with events. And I’ll say events, because this like crisis is the event, the employee behaving badly or a CEO …

Jason Mlicki:
Unexpected events, not [inaudible 00:12:23] corporate event. [crosstalk 00:12:24].

Jeff McKay:
Yeah. [crosstalk 00:12:27] They fall outside of normal client delivery, and they’re somewhat expected. They’re understood, but they’re not really expected, if you will. Human beings behave badly, but we wouldn’t expect one of ours to behave badly. But if they were, corporate communications would handle it.

Jeff McKay:
Marketing manages the reputational risk that is created between a brand promise that we put into the market that says, “We are this, and we deliver this in this way,” and the gap in our ability to deliver that.

Jeff McKay:
Right now, you see that in very clear light as we all have to shelter at home. You’re saying, “Hey, I’m this type of firm, but I’m not delivering it.” That’s just one example of a gap. Now, people will understand that gap right now, because they’re [inaudible 00:13:26] But those gaps often open up, and it’s marketing’s job to attack those specific type of reputational risk. If you’re losing lots of clients, that to me is a marketing risk if it’s related to bad service or not having the right service to deliver.

Jason Mlicki:
I have a really interesting one for you. I want to interrupt you and just throw this example out, because I think it might be a really interesting one just to talk about for about three minutes.

Jason Mlicki:
Zoom. There’s been so much attention on Zoom and how this is a great opportunity for Zoom, because they went from like 90 million users to 250, something ridiculous overnight. All of a sudden, there’s so much visibility on Zoom as a platform and what it is. There’s been some really great interviews and articles from the CEO talking about all the reputational damage that they’ve now taken as a result of that. They brought on all these free users to help and then, of course, they’re getting Zoom bombed. That’s a phrase now, where people are coming in and posting all kinds of horrible things inside of student classrooms, in university settings, K-12 settings, corporate meetings. Now, the CEO is scared, understandably so, that they’re going to on backside of this lose some of their core business clientele, because now they’re damaging the people that bought the service in the first place for a certain specified use.

Jason Mlicki:
It’s a really interesting one, because there’s communications issues related to what’s really happening. There’s marketing decisions that were made. Then on the other side of this, they’re going to have to manage the fallout of those decisions that could have negative impacts on their client acquisition efforts, their marketing jobs, their marketing role. Anyway, random comment.

Jeff McKay:
No, that is an excellent example. I have a client who is in cybersecurity and IT support, and they’re dealing with that head on, head on. We can do a podcast on Zoom alone.

Jason Mlicki:
Yeah, yeah. It’s an interesting story. I want to get back to the one central question though, is what raises the need to delineate these things? The first thing that came to mind as you were talking is, is it visibility? Meaning that as a company just gets more visible and has a bigger reputation for whatever it does, the need to delineate these things becomes much larger, because the potential of a unexpected event that creates significant reputational risk has now gone up and people care. If you’re a small firm and you’re off the radar, nobody really cares if your CEO does something stupid. But once you get some visibility,-

Jeff McKay:
Right. Right. That’s very true.

Jason Mlicki:
… it’s a big deal. That story about Amazon that I share, that’s a big deal, because it’s Amazon. But that’s probably happened all over the country in all kinds of settings that [inaudible 00:16:02] pays any attention to.

Jason Mlicki:
Is that part of it? I mean, what else goes into that equation of sophistication, I guess, that makes me need to separate these things and think more deeply about them?

Jeff McKay:
Well, I think size of the firm; but more importantly, the size of the target on your back. Really, that’s what it comes down to. Sometimes there are benefits of anonymity or boring markets. As we know from our work in PR, if it bleeds, it leads. What that looks like really depends on how big the target is. So what’s the infraction or behavior? Does that become an industry story or a geographical story or a worldwide story really depends on a lot of different factors. But what’s most important, I think, is being able to understand the distinction between the two functions and what problem is happening right now. Is this a corporate communications problem, or is this a marketing problem, and how do we address it? Oftentimes, I think firms misunderstand that distinction, because it can be nuanced because of the crossover.

Jeff McKay:
Here’s why this is so important to me. In the end, the fact of the matter is both problems have the same result, and the result is the reputational risk hinders your ability to drive revenue. So if you have a bad press caused by behavior, people will disassociate with you. We saw this with Anderson when I was there. When the indictment came down, there were regulatory and legal issues that required people to leave; but firms left, because they needed to disassociate with Anderson. There is no way you were going to overcome that.

Jeff McKay:
But also, if you are losing clients because you cannot deliver on a brand promise, no marketing is going to overcome former clients saying bad things about you, because prospects are going to believe their peers before they believe your marketing. That gap between your promise and your actual client service delivery has the exact same result as bad behavior on a corporate level.

Jeff McKay:
So the result is the same, but how you solve it is different. I think that is why the distinction is so important. Whether you separate it into two functions or not, given your size, your sophistication, or ability to invest in separate functions, an understanding of the problem and the understanding the capabilities associated with those is the most important thing, because they do take very different skillsets.

Jason Mlicki:
Skillsets? Well, maybe the logical question to end on, and I’m curious about, and this comes back to the optimal marketing organization and organizational structure is, is one a subset of the other? In our years of work working with companies of all types and sizes, I’ve seen communications functions that are bundled under HR that are doing both internal and external comms, and it’s kind of a weird place to be. So is comms generally a part of marketing? Should it be a part of marketing? Should they be totally separate? What’s your thought on that? Does it matter?

Jeff McKay:
It’s a great question, and I’ll give the consultant answer, as you said. We had talked about this about building the optimal marketing organization, is every firm’s optimal marketing structure, communication structure, growth structure, is going to be different. There is no simple answer for that. It depends.

Jeff McKay:
You talked about thought leadership. Is it under marketing, or is it separate? Yeah. Could be all of the above. But I think ultimately because both of those functions exist to protect and extend the firm’s ability to drive revenue, corporate communications in my mind, and maybe this is my arrogance as a marketer, is subservient to marketing, because that reputational risk associated with corporate malfeasance is just as damaging as the gap in the brand promise and delivery.

Jason Mlicki:
One of the things we talked a lot about in this is the reputational risk that happens with unexpected events, and that communication’s role is to deal with that. But those things probably don’t happen if you don’t have growth and visibility and profit and customers, right? So it’s almost like you need growth and marketing in order to actually have the reputational risk in the first place. So in some ways, kind of has to lead the charge.

Jeff McKay:
Well, the other big distinction is the corporate structure. Are you a public company? Because if you’re a public entity, that takes you to a totally different level of exposure and target size on your back. Sometimes that trumps everything, because-

Jason Mlicki:
Your [crosstalk 00:21:30] introduces new stakeholders as well, because now you have extra shareholders, you have the community that cares about the decisions you’re making, all the ESG things that may or may not be as important in a privately-held entity.

Jason Mlicki:
Well, this was really good, actually. I mean, it was funny, because when we set up this topic … it’s an interesting topic; because on the surface, just like we opened it, it’s like, is it splitting hairs? Does it even matter? But I think once we got into it, it’s apparent that it absolutely does matter, and it’s really critical distinction for firms to understand both from a skills perspective and from a role perspective.

Jason Mlicki:
I think to your point, I think in this crisis that we’ve all been going through, you’re sort of seeing the gaps inside of firms as they’re responding. Because when they deliver poor … As I pointed out in one of my webinars, delivered just poor off-the-mark communications, that’s an indication of a lack of skills in a certain area. Or if they’re delivering irrelevant communications to the wrong audience, it’s an indication that they’ve got some tech problems or some segmentation issues. In some ways, it’s like because the microscope is on everybody right now, you’re sort of seeing those weaknesses inside of companies. It’s maybe a lens in the moment.

Jason Mlicki:
Well, this was great. Good to catch up. Hope the listeners enjoyed it, and I enjoyed it a lot. We’ll talk next week.

Jeff McKay:
Go save the world, buddy.

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Thank you for listening to Rattle and Pedal, Divergent Thoughts on Marketing and Growing Professional Services Firms. Find content related to this episode at rattleandpedal.com. Rattle and Pedal is also available on iTunes and Stitcher.