When Strategic Marketing Fails

Right now, the new CEO of Ceridian is about to face a proxy battle.  The second largest investor in the company wants to spin of Comdata, the very profitable business unit of Ceridian.  The investor, a hedge fund, claims that the unit can do better on its own and not dragged down by the weak performance of the other units.  When the new CEO did not jump to make the change right away, the hedge fund moved to nominate 8 new board members to basically take control of the board.  So now we get to watch a good old fashion proxy battle if most experts are correct.  The hedge fund’s actions are not so much my concern here, it is how marketing failed to keep Ceridian out of this situation in the first place.  If strategic marketing had done a better job, it would be sparing the company this mess.


When a single business unit out performs all others, the CMO should be alarmed.  When a unit out performs, such as Comdata has, the other units, it becomes an attractive spin off.  However, if you look at Ceridian, and having talked to some there, Comdata is a key piece to the services mix.  Basically, without Comdata, the other units are going to take a very hard hit.  The overall brand and product offering mix is going to change in an extremely disruptive way if the hedge fund gets its way.  The financial performance of the whole company will take a major hit as well as the ability to pipe in other services to new clients, making future sales, even harder.


Long ago when Comdata started to rise, the CMO of the parent company, should have found ways to improve the performance of the other units as well.  Not keeping Comdata down, but ensuring the other business units and their brands, were keep pace in terms of performance.  If they could not keep pace, those units should have been re-branded or spun off.  It’s a lot better to spin of a product line or business unit that is at the end of it’s lifecycle than a rising star, which is what Ceridian is now facing.  The CMO also should have found ways to better integrate the product offerings of other units with Comdata’s product offerings.  As well as implement a best of practice program to get the other units up to speed in performance, ensuring whatever Comdata was doing to get results, the other units would do too.  This would have ensured at least in the interim, that the situation would be a little more stable until a better solution could be found.  In any case, the CMO did screw up on this one.  It may not be the CMO’s total fault, many companies have an under appreciation for marketing or a lack of understand of marketing which ends up getting them later (more on that next article), At the level I’m describing, Ceridian should have focused a lot more on operational branding and tying in better marketing metrics to measure performance and keep a balance on the product portfolios performance.  It didn’t and now, its bread and butter business unit may be walking if the hedge fund gets its way.  Its other divisions also should have been put the flame to be more aggressive in growth and new product offerings.  Having used some of those products, they are not impressive and not market leading products, they don’t drive the marketing, they just play in the market, that’s not good.


Overall, someone dropped the ball on this one.  How much will this cost the company as a result?  That actually can be measured, I wonder if anyone did a what if analysis on that?  Chances are no, I’ve actually only ran into two companies that do this from a marketing impact point of view and one of them, I introduced to procedure to them.  This is another aspect of the puzzle, was marketing measuring the financial impact of it’s actions and its performance within the market place?  I have a binder on my book shelf with over 150 marketing analysis tools for that.  I could have used 6 and given them an answer in less than a week.  Why more companies don’t do it, I don’t know, but Ceridian is finding out the hard way that maybe it should have done that.  This is a great lesson on how marketing can fail a company in a big way by not alerting it to the possible dangers up the road.

Time will tell how this plays out.

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