No member of the C-suite has a riskier or more-short-lived term than the chief marketing officer (CMO). The average tenure of a CMO at the ‘100 most advertised’ US brands is 28.4 months, according to recruiting firm Spencer Stuart in a recent Advertising Age column by John Quelch. In fact, as a marketer, few things are as much of a sure-fire, eventual career killer as being named CMO. Strange … you’d think that getting to the top of marketing hierarchy would be the pinnacle of one’s career.
The challenges faced by the CMO speak to many of the fundamental strategic problems underlying marketing organizations and marketing science today and that are linked to a permanent shift in power from brand-company to customer and to a proliferation of communication channels and information sources.
For CMOs to succeed they must sit at the top of a newly-agile marketing organization, built from the ground up with sophisticated, financially-savvy and technology-empowered closed-loop systems and processes in place that can scale, that can manage increasingly complex and customer-centric communication execution and that can provide necessary transparency into multi-channel program performance. And this transparency must provide other C-suite colleagues with the real-time status of key performance indicators (KPIs) and on the return on investment (ROI) of marketing programs in net present value (NPV) terms. “[F]inancial accountability of marketing is here to stay,” argues Quelch in the Advertising Age column. “[I]mproved accountability requires CMOs to be financially literate, to understand the balance sheet as well as the income-statement effects of marketing initiatives.”
Too often, though, such an organization does not exist. “Although the marketplace has changed beyond all recognition due to Web 2.0 and the explosion in digital – marketing technology and process have not kept up with the changes,” commented Bob Barker, VP of corporate marketing at Alterian, in a recent post on DM News.
The imperative for the CMO, thus, is to drive change.
And that change must be focused on building just such an organization. It is not sufficient to manage execution of the existing organization or to believe that your company is already ‘getting it right’ today. There is no room for complacency or incremental efforts. Marketing is a dynamic practice that keeps an organization in check with the dynamic needs of its customers and of the marketplace. CMOs must drive change because their organizations must constantly change to remain competitive – a fact that was validated in a recent CMO Council report, which noted “… 61% of respondents believe that marketing operational transformation will be an essential area of focus for them in the months ahead.”
So how do CMOs do this? And where should they focus their efforts to transform the marketing organization?
First, the solutions should be driven by the strategic goals marketers are trying to achieve. What are CMOs’ priorities? A recent JupiterResearch (now Forrester)/Verse Group survey of marketers at some of the largest corporations in the US helps better understand their challenges and opportunities … and begins to speak to some of the solutions:
Two major themes are emerging.
The first is the need for greater accountability in marketing. With corporations cutting costs everywhere, marketers will have to prove that a dollar spent on marketing will provide a greater return than a dollar spent elsewhere in their company.
The second is the need for a better method to manage brands across multiple platforms. While it is true that digital media is growing, traditional media is not disappearing overnight. Therefore companies need to create a coherent brand experience across all platforms and customer touch points.
The following are the top 5 priorities that CMOs and senior marketers have for 2009:
- Achieving measurable ROI on marketing efforts (50%)
- Developing marketing programs that integrate online and traditional media (43%)
- Translating brand experience across different touch points (32%)
- Cutting marketing budgets without cutting performance (31%)
- Optimizing [the] portfolio of brands (26%)
Second, driving effective change and achieving these goals requires attacking the problem on two fronts – and it’s critical that marketers address both:
- Organizational change: Part one is holistic and gets into issues of how marketing is organized and operates, how it defines its objectives and how it integrates with sales channels and the rest of the enterprise.
- Technological change: Part two is technology-focused and gets into the topic we’ve covered on this site over the past several weeks – the need for CMOs to make sure their marketing information systems are up to the task of dynamic, scalable and integrated marketing management.
What is the change CMOs must drive in how they organize and manage their marketing organizations?
> Customers must be moved to the center, not the periphery; brands must be re-invigorated in terms of aligning the company with its customers’ needs: Despite the lip service paid to customers, we must all admit that most corporate processes and systems are designed to make the company more efficient, not necessarily make the customer’s experience better. We are optimized to deliver products and services as efficiently as possible, and we likely define our companies in terms of industries and categories, not customer segments. The modern concept of the holistic ‘supply chain’ focus on improving efficiency of existing channels and routes to market, rather than challenging the underlying logic of the channels and routes, themselves. CMOs must be the voice inside the company that challenges this and that re-orients the company’s processes and systems around the customer.
This product-centric versus customer-centric bias can also be seen in terms of how we define our brands. Again, we think in terms of categories and competitors’ products and services. But gone are the days when a tagline or a logo naively defined a brand. Academics that study marketing science are learning more and more that brands are living, breathing assets, defined by customers and playing a role in how customers define themselves and their social networks. CMOs must re-position and re-invigorate their brands with a sense of customer purpose.
“Companies have let profits replace purpose. As firms optimize left-brain management techniques for squeezing out additional profits, they’ve lost something very important — their raison d’être,” argues Forrester analyst Bruce Temkin on his Customer Experience Matters blog. “ True brands are more than just marketing slogans, they’re the fabric that aligns all employees with customers in the pursuit of a common cause.”
> Revenue must become part of the marketing mission and the link between marketing and sales; brand must be re-framed as an asset: I had a great conversation via telephone this past week with Mike Pilcher, VP of sales at marketing software vendor Marketbright, and his ideas resonate with how the CMO should reframe the goal of their marketing organizations. Pilcher argues that one of the greatest disconnects among marketers, especially as marketing takes on a greater responsibility in demand generation, is a recognition that the primary KPI for marketers must be more than pages views, engagement, leads or brand awareness; it must be revenue. “What needs to happen is marketing needs to be as influential in the revenue process as sales. … Marketing needs to understand they need to be part of that,” noted Pilcher. And this is more than just a way to reinforce the importance of ROI. It must be a critical component of how marketers are evaluated and compensated. “Marketers have to embrace the risk associated with the revenue generation process,” adds Pilcher, if they are going to be positioned to succeed against this goal. Such positioning also will help improve collaboration between marketing and sales as both teams have a common goal. CMOs must ensure not only that every marketer in their organization embraces this idea, but also that they are compensated to live up to this idea.
Where does brand building fit into this? CMOs are often charged with being stewards of the corporate brand and/or the total brand portfolio. Let’s be clear, brands are critical. They are, arguably, a corporation’s most-valuable asset, but as marketers we too often fail to frame the brand in this context. It’s not bad to build the brand … a stronger brand provides more leverage in revenue generation. But building the brand, per se, will not lead to revenues; instead, it will provide us with a critical asset that we must understand how best to leverage.
> Best practices must BE practices: No marketing organization should have a separate set of ‘best practices’ that somehow are a step above day-to-day standard operating procedures. Often CMOs are tasked with defining and promoting best practices, but it’s necessary to take this a step further. CMOs should set the standard for how marketing organizations operate – defining both culture and processes. These must be backed by goals and metrics … and compensation … that can be understood and acted on by marketers at every level of the organization. CMOs must raise the bar for their organization’s marketing practices and make sure that this standard is pervasive.
> Creative/abstract approaches and an analytical/concrete mindset must be guided to equilibrium: Marketers are asked to do the unthinkable – taking a daily leap of faith as they tie together that which is easily measured and known with that which is not easily measured and is largely unknown. Smart marketers must do the unthinkable in abstractly visualizing the potential for something in the future that may have no precedent in the past; moreover, marketing and sales must be the sole optimists in a sea of corporate pessimism. Yet, interfacing with counterparts in other parts of the enterprise and being a responsible architect of sustainable marketing programs requires some discipline. Marketers must find a balance between creative/abstract thinking and analytical/concrete thinking. Marketers must spend more time balancing their brand vision with a sense of the NPV of marketing programs. CMOs must actively cultivate this equilibrium, through hiring, training and cultural imperatives.
> Marketing technology and marketing systems must be viewed as a strategic asset, rather than a ‘problem for IT’: Let’s not pass the buck. As marketing becomes more complicated, and as our communication channels with customers become more Internet-centric, it’s time for marketers to dive in and re-think our skill set. Our marketing data, and the systems that collect, manage and leverage this data for planning, targeting and execution, are critical to our roles as marketers. Scott Brinker, who writes the Chief Marketing Technologist blog, and who had a great, recent post on the new set of skills marketers must embrace in this Web 2.0/3.0 world, commented on this new impetus: “In a wired world, marketing must be technology-savvy for a business to compete.” CMOs must be the champion of a technologically-savvy, data-centric marketing culture.
> Marketing system ‘architecture’ must reinforce marketing sustainability and be designed with a longer-term perspective: In driving change, CMOs must look beyond achieving quarterly objectives and think about the longer-term. They should have a sense of building a dynamic but supportive system architecture – i.e., placing elements and capabilities that can continuously listen to and learn from customers and, in doing so, better drive revenues from meeting their needs. This is in part a cultural and people-process issue, but it also is in part a technology issue. CMOs should also have a sense of ensuring the sustainability of that architecture. This is where the balance between building the brand asset and driving revenue must be recognized. Examples include choices of how marketing organizations engage their customers via Internet – avoiding short-term ‘buzz’ and instead focusing on building long-term community and brand advocates (an issue I’ve written about on this site in the past). CMOs must focus their companies on investing in and building marketing organizations that do not sacrifice longer-term opportunity for short-term gain and that can scale delivery to customers in a repeatable and value-added way over time.
What is the change CMOs must drive in their marketing technology infrastructure?
> Breaking ground and leading the charge on enterprises’ build-out of customer-centric information systems: Paul Greenberg, whom some refer to as the ‘godfather of CRM,’ writes in his book, CRM at the Speed of Light, that the time has come for enterprises to recognize that their existing information systems really only capture half of the equation – i.e., that ERP and holistic supply-chain-management is a product-centric view of the world. What is missing are the customer-centric systems – the peer of ERP – that facilitate the assessment, modeling, intermediating with and management of constantly-changing customer demand. The goal is to help enterprises focus on responding to customer ‘pull’ rather than working harder to ‘push.’ “ERP was the methodological omega point for the product-driven corporate ecosystem,” explains Greenberg. “It took the MRP systems and expanded them to include other critical business departments such as human resources (labor) and finance (capital). … But it was still based in a world that was driven by product creation and consumer demand, though a computerized, much more flexible version of that world.” The CMO must be the chief advocate for not only transforming his/her company into a more customer-centric organization but also for ensuring that enterprise systems mirror this objective, rather than hindering it or sacrificing it to short-term profitability.
> Focusing the spotlight on strategic vs. tactical marketing technology: The most telling insight I’ve garnered from my writing and research over the past year is the fact that marketers are unquestionably engaged with technology today; however, that engagement is primarily with tactical, communication-channel-specific technologies, and they are overwhelmed by the proliferation of Web 2.0/3.0 data streams. Never before have marketers needed to take a step back and survey their marketing systems and communication channels. It is certainly important to drive excellent tactical execution (and to be knowledgeable about the nuances of each communication channel), but it also is critical to map this back to and to manage against a total, systemic sense of revenue-generation and brand-asset-building goals. Balancing tactical execution with strategic goals and objectives is certainly an organizational imperative, but too often it is not the reality in marketing systems. CMOs must question their organizations’ existing marketing systems and push for investments that balance priorities and help achieve what I like to refer to as ‘holistic agility’ – i.e., effective and detail-oriented execution at the periphery that remains constantly guided and bounded by the strategic whole. (One way to do this is via investing in an integrated marketing management platform, covered next.)
> Investing in an integrated marketing management platform: Despite what is without question a very complex challenge in bringing together disparate marketing processes, communication channels and data sources into a centralized system, it’s a complex problem that requires a complex solution.
“[I]mprovements can only be brought about if driven by integrated marketing technology that is designed for the speed of marketing and the scale of the Internet,” comments Bob Barker in his DM News post. “If marketers can pull together all of the data, users, channels, analysis, execution and reporting, not only does the marketing department become more streamlined, process-driven and accountable, but the CMO has access to analytics to drive both decisions and execution.” In fact, the CMO Council backed up this statement in its report: “A single-platform solution – the CMO Council would argue based on the findings of Calibrate How You Operate and other recent studies conducted by the Council – would yield these benefits, as well as serve to integrate and unify the diverse operational processes and systems marketers must manage.”
This is an issue I’ve been addressing in my multi-part series on integrated marketing management platforms over the past month. I commented on this in the first part of the series:
From a business-process perspective, I believe these platforms really have four ‘holistic’ goals — (1.) driving new revenue growth and profits, (2.) maximizing return on marketing investments and resources and (3.) supporting a holistic brand experience (thus, building brand equity) while (4.) maintaining customer-focused dialogue and delivery of products and services. …
This may make an integrated marketing management platform sound as monolithic as corporate ERP systems. Yes and no. The truth is that business processes are complex and ugly … and unraveling them via software is no easy task … . But marketers need more than to get their arms around the problem, they need to gain leverage and strategic advantage.
I am not arguing for such a monolithic, single-vendor solution, but I do argue for a system approach that has as a goal building such as unified, singular system; moreover, I believe that technology vendors will benefit by enabling marketers to easily and rapidly integrate these resources via cloud services. Today there are three primary ‘camps’ that are attacking this problem – (1) demand generation, (2) marketing automation/enterprise marketing management and (3) ‘advanced’ customer relationship management (which Paul Greenberg has been referring to as CRM 2.0 and which also touches on the related concept of ‘social’ CRM). Each has a different history and original aim, but they are all converging on the same issue, as I also noted in the first part of this series.
CMOs must work to understand and champion investments in these systems. They are critical to the success of their marketing organizations in responding to a dynamic customer environment; they are a key step toward becoming more customer-centric; and they are the critical link to ensuring real-time accountability of marketing. Plus, “[i]t’s insurance for the CMO,” commented John Rotheray, a friend and mobile software entrepreneur, via phone. I might take it a step further: An integrated marketing management framework is the strategic infrastructure a CMO requires to succeed.
> Making sure business intelligence and predictive analytics are pervasive throughout marketing systems: Marketing systems must be built not only to facilitate process improvement and dynamic execution but also to enable analysis of processes and execution. To do this, business intelligence must be a pervasive element of the system architecture, and the goal should be to increasingly approach a continuous state of predictive analytics – i.e., leveraging your total data set to make smarter, real-time decisions at all levels from the C-suite down to the call-center level. If a key goal for the CMO is finding the ‘right formula’ for the company’s aggregate marketing mix, (s)he needs the right tools to analyze the inputs into and the results of this formula. CMOs must be aware of and push for business intelligence and predictive analytics being a critical element of their marketing technology infrastructure.
> Pushing for a balanced picture of both online and offline marketing activities: An unfortunate effect of our current Internet-centric world is that we tend to forget that what happens offline may be more critical than what happens online. It’s critical to take any given marketing data set and ensure that its proportionality is taken into account. For example, cash-register data may be a fertile source of transactional behavior information, but it doesn’t tell us anything about the process a customer went through to make a product selection at the aisle level; thus, it must be analyzed with a sense of proportionality, and a push must be made to collect and integrate data that rounds out the picture. CMOs must push for marketing technology infrastructure that balances the total picture and integrates both online and offline pictures of customer-brand interaction.
> Integrating with other enterprise systems: Marketing does not exist in a vacuum; moreover, the picture of a customer is much more robust when it is a total picture. To achieve this and to improve the level of accountability John Quelch argues marketers must face, marketing technology infrastructure must be integrated with other enterprise systems. So while it’s important for marketers to embrace technology and take the lead in building their systems, they also need to ‘play nice’ with IT and the rest of the organization. CMOs must lead the charge on this integration and remind their peers that the type of real-time insight they demand into marketing activities is not possible without total integration.
What’s next? What do you think?
As always, this dialogue is just beginning.
- What are additional areas of organizational or technological change you believe CMOs should drive?
- How can CMOs better position themselves to succeed and to deliver value to their organizations?
Great thoughts about marketing, organization and techonology, really a breakthrough by thinking deeper, structuring both big picture and interrelations, and giving valuable recommendations.
Moreover, the idea about reframing brand value as an asset addressed a long confusing question to me. Brand asset is not new for a company’s accounting reports such as the balance sheet in which brand value is shown as a part of intangible asset. But, in real business operation, do we really apply it for our marketing/ business decisions?
For myself as a person working in marketing for many years, I have been struggled for many either top-down or have-to marketing decisions to compromise brand building for budget saving or short-term goals. Sometimes it is hard to argue when facing the high pressure on annual sales or profit targets. Frequently, companies cut advertising budget for better EBITA or convert it into huge trade promotion for short-term and quick sales performance. Usually marketers making these decisions know that they are sacrificing their brand value. But why we continue doing so?
Maybe because we never ask how much we compensate on brand for these gains and how we can evaluate that? If marketers take more financial responsibilities as well as involve more in financial decision makings, and apply “brand asset” into marketing decisions and related “calculation and valuations”, many disappointing business actions could be avoided.
@ Jeffrey – This is great insight on this issue. Thank you.
I really believe it gets down to this core point: If marketing is going to fully participate at the table and serve as the go-to-market leader and customer advocate in the corporation, it’s got to be talking the same language as the rest of the corporation. Everything we do needs to be re-framed in terms of investment, return and resultant revenue and assets. This is the lingua Franca of shareholders. This lens is incredibly powerful for the CMO.
But (s)he also requires the right systems to back up his/her case, and that’s the other point here that I think is critical to be made. The ‘holistic’ supply-chain of most corporations — often via ERP software — is light years ahead of marketing. Marketing needs to drive demand-centric/customer-centric systems that can complement this picture and back up what marketers have known in their gut for ages but too often didn’t have the concrete data to back up.
Great dialogue!
[…] – Driving Organizational and Technological Change,” on the Propelling Brands blog. Click here to read the full […]
That isn’t good!!! I have just assumed the title of CMO within our organization!!! Time to buck the trend! 🙂
Making sure predictive analytics are pervasive in marketing systems, indeed in marketing decisions, requires companies to get serious about centralizing the management of customer treatment decisions. Focusing on the decisions that drive marketing and customer service alike, analytics can be systematically applied to make those decisions smarter and more “aware” of the future probabilities.
JT
James Taylor
Sounds like revenge of the quants (on the marketing department)
>>For CMOs to succeed they must sit at the top of a newly-agile marketing organization, built from the ground up with sophisticated, financially-savvy and technology-empowered closed-loop systems and processes in place that can scale, that can manage increasingly complex and customer-centric communication execution and that can provide necessary transparency into multi-channel program performance. And this transparency must provide other C-suite colleagues with the real-time status of key performance indicators (KPIs) and on the return on investment (ROI) of marketing programs in net present value (NPV) terms.<<
Oh, yeah. What's the buzz word count on that one?
Having consulted in marketing for 20+ years, it never fails to amaze me how the quants think everything can be boiled down to some ROI equation or formula. You won't find Steve Jobs doing that – and he has hit it out of the marketing ballpark on more than a few occasions.
Conversely, what is the ROI on timely market intelligence (aka market research) that shows a planned major product investment would be a marketing disaster, and is subsequently not undertaken? That's like trying to prove a negative.
A lot of these financial metrics only work in a linear environment – and marketing is often far from linear. Sure – they can measure the number of clicks for the amount spent on ads, but where guidance is needed the most – charting the unknown as in making a decision on new markets – they are worthless.
A good chunk of marketing is experience, being a veteran of industry cycles, having a good sense as to how to get timely market information and spotting trends early-on.
If an equation or ROI metric is developed to do that, let me know. We'll test it on Steve Jobs.
An interesting recent Ad Age article on applying the 7-S model from McKinsey to a CMO’s role.
Check it out:
http://adage.com/cmostrategy/article?article_id=136956
@ Mike – We’re here for you, brother.
@ James – I agree. This means that a major role for marketing is in tying all of this information together … not just analyzing it ad hoc.
@ J. – You make some good points, and I don’t disagree that there is an art to marketing.
But I don’t think the art side of marketing is what has been neglected; instead, I think it is the science side. And CMOs need help. Seriously. Their major pain point today is not related to design and new products, nor to smart art direction in ads … the major pain point for CMOs is around making smart, targeted and correlate-able investments to tune marketing tactics and campaigns … along with some in-process metrics to let them know how they’re doing.
I would not make this about ‘quants’ versus the art/design gang; instead, I believe it’s critical that we turn out a new generation of well-rounded marketers that are capable of doing both.
Thanks for the feedback, guys. Good dialogue, as always.
[…] There is growing evidence that technology systems – now a critical element of other parts of the enterprise via, ERP and other strategic IT frameworks – are becoming an increasingly pervasive element of the role of the CMO. In fact, I tackled this topic in a past Propelling Brands blog piece that addressed “A CMO’s Dual Imperatives – Dri… […]
[…] is the issue that B2B marketing leaders – especially CMOs – often can’t put their finger on, but that is at the core of much of our modern challenges. […]