CMO 3.0

MARKETING IS NO LONGER JUST ADVERTISING

For over 100 years, marketing and advertising were conceived to be the same thing. The CMO didn’t decide on the product line or pricing or what the CSR policy should be. Marketing was essentially mono-dimensional, with the traditional measure being, “How much money are you spending on advertising?”

Only in the last 20 years we have seen marketing change from spending money to interrupt people with advertising to making a promise to people about what they should expect when they do business with you.

This means that, today, marketing, as a function plays a far more important role than ever in the success of a business. Now, more than ever, it is the time for the role of the CMO to rise... to be reshaped, redefined and recaptured by those business and brand leaders ready to take this new step.

THE CMO AT THE TOP

There is no corporate leader more connected to the marketplace than the CMO.. So as more companies become market-driven, it’s only natural for companies to seek skills in a CEO that CMOs possess.

In fact, 53% of business executives polled by Korn Ferry earlier this year, said that their current CMO could one day become CEO. Although this new trend is still in its early stage, as the CMO continues to own the customer across all channels—as well as the data that drives the business—the CMO quickly becomes a logical person to own the company’s growth agenda in the CEO role.

Some examples: In early March this year, McDonald’s former chief branding officer Steve Easterbrook took over as CEO. Campbell’s Soup awarded Denise Morrison, its former chief customer officer, the title of chief executive in 2011. In 2012, Mercedes-Benz USA tapped vice president of marketing Stephen Cannon for its top executive spot, while rival Audi USA promoted CMO Scott Keogh to CEO. The next year, Gilt Groupe recruited Citigroup CMO Michelle Peuso to lead the online retailer, Radio Shack brought on Walgreen’s marketing executive Joseph C. Magnacca to head the company, and former director of marketing operations Ben van Beurden took the helm at Royal Dutch Shell. The list goes on. 

“The aim of marketing is to know and understand the customer so well, the product or service fits him and sells itself.”.

Peter Drucker, management guru

It has been a few decades since Drucker put it so beautifully but the aim of marketing hasn’t changed.. What changed, though, is how marketing achieves its aim.

The call for more customer-centric strategies starts at the top. And this is where marketing executives excel. Why? Customer dynamics continue to change dramatically as consumers take even greater control over their purchasing decisions. In-depth knowledge of the customer is not a cost line item anymore. Companies have no choice but to better understand customers’ needs. It’s a necessity for success–and survival.

THE KEY IS ALL IN THE DATA

Today, more than ever, the divide between marketing and sales is becoming a conceptual nonsense, and technology has enabled a data explosion. Real customer knowledge and understanding has never been more within reach and an enabler of growth.

In fact, according to a recent McKinsey study, companies that make extensive use of customer analytics are almost three times as likely to generate above-average turnover growth as competitors, who evaluate their data only sporadically. Getting and owning the customer data first hand gives brands the advantage to proactively serve their customers and stay ahead of competition

Yet, notwithstanding the potential for growth, data is integrated throughout the marketing lifecycle in only 7% of Asia Pacific organisations, according to another study, this time by Adobe/CMO council.

This is, in our experience, due to the increasin complexity of the role. While the role of CMO has undoubtely become more important, it has also become substantially more complex; sometimes so complex that it has led to disaggregation (e.g., Chief Data Officer, Chief Customer Experience Officer, etc.). As an example, five of the twelve executives on the McDonald’s Corporate Leadership Team have some responsibility traditionally allocated to marketers, suggesting a splintering of marketing across different leaders. There are chief officers in the following areas: communications, brand, consumer and brand strategy, corporate strategy, and global digital.

INTRODUCING THE CMO 3.0: value creation, value delivery, value capture. 

The growing importance, scope and, consequently, complexity of marketing requires a new version of the role of the CMO, with direct accountability for real-time exposure to customers:

• from creating value through the development and promotion of compelling propositions, 
• to the delivery of value through unique and fantastic customer experiences 
• and, finally, to capturing this value, through effective sales.

The new version of the CMO features advanced marketing technologies and a new generation of talent. Together, they are the platform of growth for the business.

Most importantly, the new CMO is financially fluent and able to justify impact of marketing dollars spent on the top line. Marketing is the new finance. And data enables CMOs to do that.

A NEW APPROACH

Mastering such complexity requires a new approach to the market. We are seeing two fundamental trends that are affecting the traditional marketing operating model in a fundamental way.

1. From mass-communication to hyper-targeting

Mass-communication has led to a battle for attention.Media explosion and fragmentation as turned into cacophony.

Communicating in the new normal requires the smart use of data to ensure your brand stands out of the crowd and reaches the right audience with the right message.

This has led to a need for hyper-targeting. Marketing should be more human-centric to stay relevant to customers, connecting with them and not by elbowing logos into their lifes. Technology provides new innovative mediums that a brand can reach their audience, optimizing its presence and connecting with them in a more personal and meaningful way. 

2. From mass-production to hyper-personalisation

Mass-production has made customers more choosy, harder to satisfy. There has been a recent spike in customer expectations for bespoke personalisation across all brand interactions.

Interesting content and excellent service are, quite simply, demanded; engagement requires customer knowledge, and knowledge requires data. This has led to a need for hyper-personalisation.

Convergence of technology enables marketers to understand individual preferences about brands. Data about consumers is the key to unlock limitations. Consistent quality content and experience needs to be delivered throughout nonlinear user experience, with efforts to integrate online and offline channels.

A CONSTANT BATTLE FOR ATTENTION

Let’s talk about mass communications. There truly is a war for attention going on right now! Traditional marketing communications just aren’t relevant anymore. Buyers are checking out product and service information in their own way, often through the Internet, and often from sources outside the firm such as word-of-mouth or customer reviews.

We live in a media society, but what exactly does this mean? How does a world saturated by media images, technologies and texts influence how we live and work? How is the ever-changing mediascape affecting our understanding of society and our ability to shape its future?

Think of Black Mirror, a British television anthology series created by Charlie Brooker that features speculative fiction with dark themes that examine modern society, particularly with regard to the unanticipated consequences of new technologies. This is as been defined as a twisted parable for the Twitter age. In the show, mandatory advertisements are targeted at individuals, throughout the day. They cannot be dismissed or looked away from without incurring a fee.

How far in time do we think this is going to be? It has happened already, and here you can see an example (you can skip the first 20 seconds). 

We are moving from a world where computing power was scarce to a place where it now is almost limitless, and where the true scarce commodity is increasingly human attention. Microsoft recently published a study, conducted using both surveys and EEG scans, which suggests that the average human attention span is shortening. In 2000, it was 12 seconds, but by 2013 it was only 8 seconds (1 second shorter than a goldfish!). With news reduced to 140 characters and conversations whittled down to emojis, how is this affecting the way consumers see and interact with their worlds? Are they doing what people have done for thousands of years – evolve and adapt to new realities? And if consumers are evolving, is your marketing strategy evolving with them? 

"Nobody reads ads. People read what interests them, and, sometimes, it’s an ad."

Howard Luck Gossage, Advertising innovator and iconoclast

Getting people to notice you is not enough, as customers today have heightened expectations and demand more from your brand in exchange for their loyalty. They want to be engaged.

We need to stop interrupting what people are interested in and, instead, be what people are interested in.

Craig Davis, Chief Creative Officer of J. Walter Thompson

THE CUSTOMER EXPERIENCE BATTLEGROUND

Customer experience is the new battleground for a brand’s competitive advantage. Today, technology has enabled brands to engage with customers in ways that are more focussed, personal and fit for the situation - you can offer them what they need, when they need it.

Being able to manage real-time interaction with customers across omni-channel platforms is so last year. For example, today, retailers can use information from online buying behaviour to serve customers at the point of sale. This closes the gap between online and physical shopping, a known headache for a lot of retail brands.

Gartner has predicted that by 2017, 89% of marketing leaders expect customer experience to be their primary basis for competitive differentiation. This is the pathway to hyper-personalisation. 

Once considered better-to-be-forgotten geeks, data scientists are today the new rock stars of marketing, enabling the extra layer of customer intelligence to help brands deliver more personalised, more relevant, and more meaningful campaigns that suit individual customers' needs. 

Ikea is a good example of using customer insights to drive engagement and deliver a truly personalised experience. 

After doing a little digging into their customers’ habits, Ikea found that around 14% of customers bought a wrong-sized piece of furniture.  Hence the brilliant, experience-enhancing idea. In 2014, Ikea launched an app giving the customer the ability to place virtual furniture in their own home with the help of augmented reality.

Last year’s global launch of the Ikea Catalogue App resulted in 8.5 million downloads!

THE FUTURE OF MARKETING

If you are ready for the future of marketing, here are three steps you want to think about:

1. SETTING THE RIGHT MINDSET & OBJECTIVES

Digital isn’t merely a thing—it’s a new way of doing things. If you want to accelerate digital transformation regarding consumer experience, service-based innovation, customer service and technology platforms, you should:

• Start from the top | Getting the strategy right requires the CMO to work closely with the CEO, the chief information officer (CIO), business-unit leaders, and the CFOr, being an active participant in and shaper of the strategy.
• Be bold | Many companies are focused on developing a digital strategy when they should instead focus on integrating digital into all aspects of the business, from channels and processes and data to the operating model, incentives, and culture.
• Move fast and be prepared to make mistakes | Be patient for possible mistakes and hiccups as it takes time for the team to get used to the new technology. Keep motivating the marketing team that changes are necessary, and it takes determination during the transformation period. Anithing between 1%-5% of your marketing budget should be allocated to trying something new, without hard KPIs associated.

Did they get the memo? Make a strong stand about the future of marketing in the company and make it crystal clear that the future is here to stay. You cannot afford to hesitate, there is a point of non return and it is critical that this is clearly communicated and evangelised throughout the business. Also, be prepared to encounter internal resistance and challenges.

Finally, just telling people about change might not be enough. The right governance framework needs to be in place, ensuring the right set of rewards are there to align everybody involved. This is why you should establish a rigorous performance-based framework of KPIs, focussing on embracing innovation and securing hard revenue growth. 100% visibility of ROI is the new house rule.

2. SECURING NEW SKILLS & CAPABILITIES

Are the experts working for you or your competitors? Undoubtedly, people will continue to play the most important role of all in the future marketing organisation. The new marketer has a broad set of skills, Many of these skills, such as expertise in the business use of social networking, in digital marketing, or technology, require a degree of specialisation that complements the generalist capabilities of traditional marketing managers.

As a result, BCG has rightly pointed out that many companies will be forced to restructure their marketing and sales organisations by creating centres of excellence for key marketing capabilities and, perhaps, by outsourcing marketing activities requiring specialised skills, just as some CIOs rely on external IT-development resources.

Many best-in-class marketing organisations act more like technology companies, using agile techniques borrowed from the software development world to speed up the development of initiatives and timelines.

No wonder then, if you will need to think and act more like a Google or a Facebook going forward. And these companies alway face three option when looking to develop: build, buy or partner?

• BUILD | Training is by all means important, but you will need to think about training in a more innovative way. Creating innovation capabilities will be critical and this is why best-in-class organizations are launching innovation labs to stay on top of trends and experiment with new approaches. To “find the next Facebook,” they are getting as close as possible to those at the forefront of innovation. Organizations such as The Home Depot, Anheuser-Busch Companies, and Unilever are setting up shop in technology hubs like Silicon Valley, California, and Austin, Texas, launching venture capital funds and start-up labs to learn better ways to develop products and reach customers. Others have, within their marketing organization, dedicated teams that typically conduct pilots and measure their results before approving channels and platforms for wider marketing use and developing best practices for how to use them.
• BUY | New people will join your team - of the kind that specialises in agile development, big data for consumer understanding and programmatic buying. If you are thinking of securing these new skills and capabilities, you need to have in place a robust recruitment and reterntion plan: this new breed of marketers is in short supply and is, therefore, rather expensive. You will probably be competing in the talent market with the likes of Google, Facebook or Alibaba.
• PARTNER | Not all brands have enough experience in marketing technology. In some other cases, you might lack the scale to justify any building or buying capabilities. If you wish to hit the digital ground running, it might be better to rely on external partners to start with. This also means that, to manage such a large portfolio of agencies in a scalable way, you will have to develop marketing operations roles, located in marketing, not in procurement. These roles often oversee planning and budgets, measure performance, and deal with contracting, negotiations, and reviews. Staff members can find agency-related cost savings by improving the efficiency with which marketers use agencies and vendors, such as by reducing multipliers, harmonising rates, and optimising non-billable hours. Sometimes marketing-operations people manage media buying as well. According to the Boston Consulting Group, best in class marketers have found savings of anywhere from 5 to 10 percent by putting these roles in place.

Agencies: are they a friend or foe? Most of your marketing $$$ go to agencies. Review your current relationships and explore new ones - transparency, independence and accountability are must-haves.

3. INVESTING IN THE ENABLING TECHNOLOGY & WORKFLOW

Think about this. Enterprise technology has lagged consumer technology for over a decade now. Consumer behaviour changes faster than behaviour within the company. It is therefore imperative for marketers to align the technology and the skillsets needed to make the best of IT.

And, when it comes to the techie stuff, many CMOs feel unprepared or even intimidated. Data explosion, social media and the growing number of channels and devices from which customers can choose, top the list of things CMOs feel most anxious about. Integrating new technology with existing tools—essential for getting data in is a challenge for many companies.

If you haven’t already, there are five sorts of marketing technologies that should be on your radar right now:

1. Software for measuring campaign effectiveness
2. Tools for automating media buys programmatically, even for offline properties
3. Platforms for distributing “authentic” content
4. Software for reaching “infinite segments of one”
5. Predictive sales and lead generation technologies

Investing in technology is only part of the deal. The key is to make sure it gets used. In a recent Experian study, more than 80% of respondents said they use data-driven personalisation in marketing communications; but more than one third of marketers still feel they lack the internal resources, personalisation technology, and accurate data to implement a fully effective personalisation strategy. This requires change management and training. Most of all, it requires a process change, to ensure people do not have the option ot revert back to the old ways.

CLOSING REMARKS

To conclude, technology is at hand to turn marketing into a real-time, always-on affair. This is not old-school CRM. We are talking about the technology allowing you to:

1. GAIN FULL CONTROL OVER MARKETING SPENDING AND PERFORMANCE | to know exactly where and how well your budget is being spent, where the your brand is displayed, who sees it, at the exact time. This is also provides the obvious answer to the need for Hyper-Targetting
2. HAVE AT HAND REAL-TIME DATA FOR REAL CUSTOMER INTIMACY | to be able to engage your customers where they are, with what they are interested in, when they are most likely to take actions. This wealth of knowledge will be the basis for developing a Hyper-Personalised offering.
3. SET-UP AND ACTIVATE MARKETING STRATEGIES IN A MATTER OF HOURS, NOT YEARS | to be able to look at data and to know exactly what is working and what is not, constantly optimising the performance of your strategy, staying ahead of the market.

Everything happens in real-time, with measurable ROI!

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Note: this article collects, in a rather post-modern fashion much of the literature I've read on the subject in recent months. Whilst great effort was taken to put the right quotations and references in place, we apologise in advance to anybody we have unintentionally missed.