The Score Algorithm
Leading financial thinkers like Ray Dalio – who runs the biggest hedge fund in the world – increasingly use algorithms not just to make financial decisions, but to determine which financial decisions to make.
Why use algorithmic thinking to help make financial decisions?
Because the more closely you can track decisions, the more closely you can determine which decisions – made by which people – are accurate. Of course, the more accurate the decision, defined in financial performance, the more profitable the decision.
Here’s how it works: Dalio’s firm, Bridgewater Associates, built an app called Dot that lets employees score a decision, which the firm then ties to the ultimate financial outcome of the decision. The employees who accurately scored the decision are then given a higher authority score on that given topic – say Bitcoin – and their future decisions are weighted more heavily by the firm when making Bitcoin-related decisions.
In sum, the more accurate the people making the decisions, the more profitable the decisions Bridgewater makes.
We think every company needs its own version of the SCORE algorithm, and one place that B2B companies can start applying such an algorithm is in the production of thought leadership. According to research we did with Nielsen, only 18% of B2B buyers get value from thought leadership – and the same buyers suggest that the quality of thought leadership varies widely.
We think firms that use a structured, algorithmic process to judge the quality of thought leadership will produce consistently better thought leadership, which will lead to consistently more profitable marketing.
Each company should develop its own SCORE algorithm, but for illustrative purposes we’ve outlined a process that we use below.
S Is For Structure
Nearly all great creative is highly structured.
• All sitcoms have 22 minutes of acting and 8 minutes of advertising
• All movies can be categorized into 1 of 7 basic plots
• All comedians tell the same series of jokes (they switch the audience, not the jokes)
The evidence seems to confirm that almost no creative succeeds without a clear structure.
In B2B marketing, trends reports are an example of a structure franchise that clients can produce and that audiences will enjoy: Trends reports rank annually as some of the top-performing content on LinkedIn. Interestingly, trend reports generally replicate the same structure year after year, yet clients never seem to tire of these reports (much like they never tire of Hollywood franchises).
Trends reports offer another advantage: they get a little bit easier for a marketer to produce each year. The first year is always the most difficult year since you need to define the structure, interview the experts, and write the case studies. However, in the second year, you don’t need to spend any time on the structure and you likely have a data-informed understanding for what worked and did not work when doing the interviews and case studies. So the second year generally takes less time and generates better results than the first year. And the franchise flywheel gets a little bit easier every subsequent year.
C Is For Contrarian
Too much marketing is too similar: using similar words, ideas, and campaigns to describe similar products in the same category. This “commodity marketing” is generally the result of marketers who are competitor focused, not customer focused.
Don’t be commodity, be contrarian.
Talk to customers, talk to experts, talk to anyone who can help you identify what’s unique about your category, your process, your product. Then find ways to design that uniqueness into your product, marketing, sales, etc.
There’s another reason to be contrarian: we remember more easily that which is distinctive.
And that which we remember we tend to buy more often – at premium prices.
O Is For Ownable
As we just established, contrarian marketing is more memorable than commodity marketing and we are more likely to recall contrarian marketing – and the associated companies – first in a buying decision.
However, it is critical that companies heavily brand contrarian marketing so that the buyer remembers not just the idea, but the company as well.
How do you that?
By measuring your brand’s distinctive assets.
Companies need to understand which of their brand assets – colors, fonts, shapes, characters, sounds, places, etc. – buyers associate with their brand. And companies must measure the strength of each of those assets (by surveying customers and potential customers) to determine how famous each asset is and how unique it is to your brand.
In the below matrix, “fame” is measured by calculating how many surveyed buyers link your brand to a specific brand asset (e.g., nearly everyone links McDonald’s to The Golden Arches). “Uniqueness” is measured by calculating how many surveyed buyers link your brand – and only your brand – to a specific asset (e.g., almost nobody links any other brand to the The Golden Arches when asked, whereas the color red might be linked not just to McDonald’s but also to Wendy’s).
Companies should calculate fame and uniqueness for each core brand asset and place those assets accordingly on a distinctiveness matrix. Based on the results, brands will understand which assets to use in marketing today (assets both unique and famous) and which assets to invest in for future use (assets unique but not famous).
R Is For Replication
As noted scientist Seymour Epstein concisely explained: “there is no more fundamental requirement in science than the replication of findings.”
Just like replication makes for good science, replication also makes for good marketing. But replication is neither known nor practiced by the broader marketing community.
In fact, it is just the opposite.
Marketers actively seem most attracted to ideas that do not replicate. Marketing’s fascination with new ideas, with disposable ideas, with non-replicating ideas leads us to believe – and to assert – that there’s an even bigger replication crisis in marketing today.
Ideas like “The Dunk In The Dark Tweet” and “Whopper Sacrifice,” which can never be replicated (even by the brands that ran them originally), are the ideas du jour. These ideas are celebrated at Cannes and during Advertising Week. However, pursuing these ideas is no different than buying a lottery ticket. No one in their right mind would bet their annual salary on the lottery as a way to get rich, yet marketers at companies both large and small happily bet annual budgets on the luck of the draw every year.
If marketers looked harder, they would find strategies that have been shown to replicate for many companies in many industries over many years. One of replication strategies that we like is called the 60/40 rule.
The 60/40 rule, coined by marketing effectiveness researchers Les Binet and Peter Field, says that companies that grow the fastest (in both the short-term and the long-term) spend 60% of budget on brand building and 40% of budget on sales activation.
We have confidence in the 60/40 rule because the research looked at 10,000 campaigns in a variety of industries over a 30-year period. In addition, we’ve been able to replicate the results in our own marketing and so have our clients.
To be clear, brands practicing the 60/40 rule don’t just achieve marketing success. They achieve financial success, outperforming peers in market share, sales volume, profit margins, and cash flows. That’s marketing that even a CFO would support.
LinkedIn recently replicated the research results from Binet and Field for B2B campaigns, which I encourage you to read here.
E Is For Expertise