CMO Council: Marketers lack right customer metrics for digital transformation

Latest CMO Council and Adobe report on Asia-Pacific digital directions shows only less than one in five marketers use revenue per customer or lifetime value as core metrics

Australian marketers are still largely approaching digital in terms of campaigns and short-term acquisition and aren’t developing the right skills and business metrics required to drive true digital transformation.

The latest APAC Digital Directions Strategies, Mandates and Challenges report, produced by CMO Council in partnership with Adobe, set out to gauge the state of digital marketing transformation across the Asia-Pacific region and how budgets, skillsets and activities are reflecting its evolution.

One in three Australian marketers surveyed for the report rated their digital marketing proficiency as “pretty good or high”, even as many struggle to find the skillsets and longer-term metrics necessary for driving true business transformation.

For 68 per cent of Australian respondents, digital is enabling additional customer touchpoints, while 51 per cent saw it delivering more cost-effective customer acquisition. In addition, 41 per cent claimed digital improved customer loyalty and just over one in three said it lifted overall customer experience and responsiveness.

The top three digital priorities locally this year are strengthening digital content strategy (68 per cent), richer, deeper customer profiling and insights (51 per cent), and social media optimisation (50 per cent).

Yet while 78 per cent of respondents regionally reported increasing their digital budgets in the past 12 months, getting the right level of investment and skillset remained a significant challenge for those surveyed.

Fifty-five per cent of Australian respondents said the lack of appropriate talent and skills was hindering their ability to building in-house and virtual digital marketing teams, followed by budget limitations (42 per cent) and identifying the right technologies and tools required to take the next step (40 per cent).

The top three challenges with regards to digital campaign execution, meanwhile, are budget limitations (54 per cent), determining the best technology solutions and services to use (41 per cent), and making a case for digital marketing spend (36 per cent).

According to CMO Council senior VP of marketing, Liz Miller, one of the key inhibitors remains the campaign mentality marketers rely on to approach and then measure digital activities. In particular, she noted the lack of business contribution metrics and holistic customer conversations as a gaping hole in the path towards digital transformation.

For instance, Australian marketers were found to still largely rely on single vector or historical metrics to gauge success such as clickthrough rates (70 per cent), campaign ROI (49 per cent) and response rates (73 per cent). In contrast, very few measure in terms of business metrics such as revenue per customer (16 per cent, down from 36 per cent in 2013), customer lifetime value (15 per cent), and marketshare movements (16 per cent).

But as CMO Council’s Digital Dashboard findings have shown, those who are using these business metrics spend a higher proportion of their budget on digital, and are almost twice as likely to spend more than half their overall marketing budget on digital programs (19 per cent versus 10 per cent).

Overwhelmingly, most marketers in Asia-Pacific are relying on previous campaign results and KPIs of key digital campaigns to secure digital funding. Just half are basing their requests on a strategic assessment of potential business impact and contributions.

Not surprisingly, those who are on top of more business-oriented metrics have higher levels of confidence in digital (75 per cent versus 59 per cent), are having less difficulty securing digital investment, and claim to be growing a profitable business faster (45 per cent versus 33 per cent).

“Marketers are bringing on digital channels quickly as digital is evolving so fast – they see the newest digital channel and jump on it to push a new ad or app,” Miller said, noting the recent swathe of Apple Watch apps as the latest example of this trend.

“They’re missing the point. Advanced brands, such as Starbucks, see digital as part of the overall customer experience toolbox... they’re finding ways to create holistic experiences where customers need and expect them, and in a way that delights them using that combination of people, process and product fuelled by data.”

Miller agreed the figures also reflected the bias marketers still have towards acquisition over retention. For example, nearly three-quarters of respondents in Australia said their top digital investment was website content, development and performance (72 per cent), followed by search engine optimisation (69 per cent) and paid search (61 per cent).

“Many have not yet figured out that a repeat customer is not an acquisition, but retention,” Miller continued. “It’s also because people often think about loyalty in terms of sales, not the act of loyalty. Marketers often think about loyalty in terms of coupons, retention schemes and default to campaign mode. But loyalty is about demonstrating value. The great brands are showing their customers how much they value them by recognising all past customer experiences.

“It’s a very different mindset for marketers and the business to embrace. We’re still not looking at the totality of customer experience.”

Across the region, the report found the highest percentage of marketers (37 per cent) plan to spend between 10 and 24 per cent of their total marketing budget on digital in the next 12 months. Thirty per cent said it would be between 25 and 49 per cent.

The CMO Council/Adobe report was based on a survey of 648 marketers from across Asia-Pacific, 19 per cent of which were from Australia.

In light of the survey results, Miller said her top piece of advice for CMOs is to figure out the language of the business.

“Revenue is the only universal language – it’s the bridging language that connects us all. CMOs must translate the brand into business language,” she said. “A business is predicated on its customers, and if you don’t engage with that customer, you will have no revenue. As a CMO, that is what I have to focus on – reaching and engaging that customer.

“An amazing power has been dropped at our feet with digital, and we can engage with customers on devices they have deemed are important to them. But with that comes great responsibility and power.”

While CMOs aren’t going to be the ones controlling every aspect of that customer experience, they do need to help the entire organisation feel they own part of the whole customer story, Miller said.

“Right now, lots aren’t singing from the same song sheet. What CMOs need to be is literally the one who creates that songsheet, and they have to hold the baton.”

CMO Council’s tips for improving your digital journey

  • Optimise strategies for engagement and enablement by diving deeper into intelligence, insights and customer analytics. Best practice leaders across the region are demonstrating this by integrating tools that help streamline operations, and rolling out new strategies that leverage online and offline data to create smart experiences.

  • Boost team performance and skills. According to the CMO Council’s 2013 Digital Dashboard report, 37 per cent of Asia-Pacific marketers said their agency’s capabilities were holding them back. In 2015, this figure had risen to 47 per cent.

  • Allocate around a customer-centric business case. Marketers who leverage metrics tied to the bottom line, profitability and growth are having greater success persuading internal stakeholders to increase their investment in digital.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO Australia conversation on LinkedIn: CMO Australia, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu

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