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Marketing 2.0 – The Future CMO: customer’s attorney or being caught in the “lack-of-evidence-trap”?

As companies strive to ensure future growth and profitability – in particular in today’s economy, they are turning to their marketing organizations to accelerate and guide their paths. Marketing is expected to provide a competitive advantage in shaping not just brand and corporate positioning but also in driving corporate strategy and setting the agenda for innovation and growth. This is as true in organizations for which marketing is a relatively mature discipline as it is for companies that have recently adopted a more strategic approach to marketing. This is occurring at a very precarious time for marketers, who are simultaneously witnessing fundamental change to the channels, tools and measures that have defined their craft for generations.

In this vein, the role of the Chief Marketing Officer (CMO) has become to be one of the most important, dynamic and yet misunderstood positions within the corporation. On the one side, marketing is expected to be the driver of market-oriented corporate governance, “the customer’s attorney” and receives highest level of interest from upper management (CEO, managing director’s confidant). On the other side, the same persons complain about high costs of marketing (activities, staff), often unclear key performance indicators (return-on-marketing) and a non-evident connection with corporate strategy (image) … while marketing at the same time is said to be the guide for finding ways on how to deal with Web 2.0 and a true “information seeker”. This “information seeker” utilizes the newly arising market transparency to become a well-informed (independently), differentiated and less retailer-loyal consumer, (declining loyalty to sales channel). In parallel, most recent studies show, that not only the loyalty towards the sales channel is in decline, but also towards product brands. A most recent study from the CMO Council demonstrates that Loyalty erosion and consumer defection are pervasive and costly problems also for big brands, and their impact is increasing dramatically in the current economy. As an example, for the average brand, 52% of highly loyal consumers in 2007 either reduced loyalty or completely defected from the brand in 2008. Only four out of ten brands retained 50% or more of their highly loyal consumers from year to year. The current economic downturn is having a significant impact on brand loyalty: Many leading brands experienced a drop in the total number of highly loyal consumers since 2007.

So … the role of the CMO is under pressure like never before. Or, as Hans-Peter Cohn, the CEO of Vitra, the producer of stylish office furniture, argued some months ago in one of our CMO Community meetings: “the role of the CMO is probably one of the roles with highest desirability on the one side, and the most pain on the other side. Everybody has an opinion and knows better what to do than you in marketing”. Following the discussions we had around the CMO Community over the last months, the reasons and the root-cause is quite often plentifold:

  • A marketing planning falling behind far behind expectations (e.g. in terms of being detailed enough, containing precise KPIs and aligned with corporate strategy);
  • A lack in internal communication and evangelism about the business value of marketing … or sometimes simply to demonstrate how marketing supports top-line and bottom-line growth;
  • A lack of steady reporting on the key marketing KPIs, linked into corporate strategy;
  • A lack of focus on key processes and how overall to make Marketing as efficient as possible – a lack of interest on how best to streamline marketing processes down to the level of the Total Customer Experience, orchestrating all customer touch points with the firm and the product;
  • Backed with a lack of interest in modern IT solutions and applications supporting marketing processes and providing a real 360 degree customer view;
  • The lack of experiences and heritage in sales (P&L responsibility).

However, critique of the functionality of marketing and the arguments mentioned here are not new at all. Such criticism was made as early as 1980 – but a sustainable solution has not been found until now. And as early as 2000, Doyle similarly referred to the “marginalization of marketing professionals”. Saying this, we see a strong tendency in many industries that marketing get reduced to pure marketing communication, sometimes organisationally combined with corporate communication and PR.

What can be done about it? Following all discussions over the last couple of months, we assume that a lot can be done to change the situation … with some simple imperatives, such as:

  • Establish a precise, content-driven marketing planning – with precise and trackable KPIs behind all activities and tactics;
  • Align marketing planning with other internal organisational units – such as sales or corporate strategy;
  • Start a marketing transformation asap – in terms of analyzing all marketing processes and to decide which processes might be insourced vs. outsourced;
  • Ensure to make the most use of marketing automation IT applications, wherever possible;
  • Make sure that you understand your customer precisely – who is your who? … and act accordingly; this stretches from customer segmentation to focus groups, down to the level to have marketing managers best to work on customers or channel partners side for some time. We have seen many examples where the best customer information lays directly on the doorstep of the respective firm, e.g. utilizing text mining technologies to understand the compound perception and sentiments of your target group;
  • Establish an organization which supports true 360 degree campaigns … means: break down barriers and walls between functional silos such as Brand/Media, Online, or CRM … which certainly also applies for your agency.
  • Start exchanging best practices with your peers in the industry – such as in The CMO Community – … pretty often a colleague has already developed a best practice and happily might allow to share that and to discuss further.

Following the discussions so far with CMOs around the globe on that matter, we have decided to conduct an analysis with interviews of CEOs in order to better understand what CEOs (as the client of the CMO) expectations are towards the CMO. Further perspectives on the “Future CMO” will be provided after we will have conducted ca. 40 in-depth interviews with CEOs. … Stay tuned …

This blogs series “Marketing 2.0” addresses topics that have come into the forefront of importance for marketing and must be tackled immediately… stay tuned for the next blog!

Further interesting readings:

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  • Lack of precise measures have long been a problem in marketing – and I have seen horrible business cases being presented to decision makers to secure funding for marketing. In a good number of cases, the only KPI they track is – how much of the budget has been utilized at a point in time, without any thing that indicates what these $$ have done to generate demand or brand awareness etc.

    Marketing is not the only thing that an organization plans for a year – it is one of several areas like cost center planning, revenue planning and so on. The process that works with other functional areas almot never works with marketing, unless the measurement is made on simple (and usually low value) parameters.

    Every year – we have seen new studies, and focus group results that highlight the same old problems (most of which yo presented in this blog) and this, to me, shows a serious lack of good thought leadership and execution in this area.

    • you are more than right. The root-cause we have found is pretty often a a) lack in marketing planning … if the marketing planning is not differentiated enough, not content-rich enough and detailed from programs and campaigns down to the level of activities and respective KPIs behind, marketing and the role of the CMO will per default fall behind expectations. Second, b) a lack in transparent KPI measurements, c) the quail to really dive into all marketing processes. Also: this is not new … why has it not been resolved over the years ..? In many cases we have seen the CMO gets called in to fundamentally transform marketing, while at the same time everybody only judges him on his creative and attention driving campaigns (mostly media campaigns) in a short period of time. So the fundamental disconnect from my perspective is to ask the CMO for a fundamental transformation, while directly measuring and asking him on something totally different.