Data-Driven Leadership: Advice Forward-Looking CMOs Can Use To Navigate Economic Uncertainty

There is no denying that we are now navigating challenging economic times, posing a crucial test for marketing leaders, especially Chief Marketing Officers (CMOs) or similar roles within any organization tasked with aligning brand-building initiatives, creative execution, developing data-driven strategies, and increasingly being responsible for putting the technology in place to make it all possible.

All while needing to be a good steward of increasingly constrained budgets.

If you are in that role, your future can branch out in two directions: either your sales and marketing efforts are performing exceptionally well, but you are uncertain about how long that will be the case, or you're grappling with cooling consumer demands or escalating costs of acquiring the customers who are still spending. In either scenario, I’m sure you are contemplating how to achieve your revenue goals each quarter.

If you are in the retail industry, you have a unique set of challenges, as a significant level of uncertainty is hanging over the remainder of the year. This uncertainty is being caused by the unpredictable economy and the continued shifts in Federal Reserve policies.

One critical thing that should be on the mind of every leadership team is the growing commercial real estate bubble, which could send shockwaves across the entire economy.

How marketing leaders navigate this moment will most likely define the role of marketing in organizations for generations to come—no pressure.

The good news is that these challenging times also present unique opportunities for organizational alignment, fiscal discipline, innovation, and creativity. This is especially important as it becomes increasingly necessary for brands to stand out from their competitors and demonstrate customer value.

Regardless of whether you hit or miss your revenue goals this quarter, here are three pieces of advice that you, as a CMO or marketing leader, can use to put a plan in place to weather the storm we see on the horizon.

Integrating First-Party Customer Data Across Your Organization

Your first-party customer data should guide your decisions throughout the organization. Traditionally, marketers often focus primarily on metrics such as traffic, and customer acquisition cost. However, these numbers are not always aligned with the cash flow realities of the business. To operate effectively, marketing needs to collaborate closely with the finance function. By understanding the implications of marketing spend on other areas of your business, you can make more intentional and surgical decisions with your spending, enhancing the efficiency and effectiveness of your investments.

Leveraging First-Party Data Effectively

We all know that a unified view of your data can enable everyone to align better and speak the same language. By aligning marketing and finance around specific outcomes, such as customer lifetime value and channel effectiveness, you can make better investment decisions, extend customer lifetime value, and improve your future marketing strategies. There are many platforms and tools available today that allow us to capture comprehensive information about our customers. However, you might be paying for subscriptions with duplicate functionality, putting unnecessary pressure on your bottom line. To make matters worse, this data is often siloed, with marketing, finance, and in-store operations viewing it from different perspectives. This can easily be addressed by defining the questions about your business and customers that the leadership team needs to answer and asking your partners to tell you how their software solution can help you answer them.

Promoting Alignment and Decision Making Through Key Focus Areas

The third piece of advice is about fostering alignment among your internal team, external vendors, agency partners, and other leadership team members. To achieve this, focus your decisions through these five lenses:

1. Customer Retention: Make efforts to retain customers you have already invested resources to acquire.
2. Customer Reactivation: Reactivate lapsed customers. They may be interested in your new products or might have evolving needs that your products can fulfill.
3. Customer Acquisition: Understanding your customer acquisition dynamics can help you invest more intentionally. Use data to determine the best channels for acquiring the right customers.
4. Lifetime Value Analysis: Understand the long-term worth of each customer to your business. This understanding will allow you to define clear investment constraints and potentially justify more substantial investments for acquiring high-value customers.
5. Causal Understanding: Leverage data to understand cause-effect relationships in your customers' behavior and your marketing activities. This understanding will enable you to implement effective marketing strategies, learn from these implementations, and build trust across your organization.

All that being said, it's important to remember that you're not alone. While the volatile economic environment poses challenges to your organization, your peers and competitors are navigating the same challenges and are most likely planning to pull back investments in marketing. This provides an opportunity to continue to invest with intention. By leveraging your first-party customer data effectively, collaborating closely with your finance team, and aligning decisions around key areas of focus, you can navigate through these turbulent times and position your organization for success both in the short and long term.

Recommended Next Steps:

To implement these pieces of advice, I recommend investing in consolidating the tools and leveraging services that enable you to collect, cleanse, organize, and leverage your first-party data effectively. This investment will lay the foundation for all the benefits discussed above and allow you to make informed decisions based on both easily accessible and reliable data.