CMOs: Redefining the rulebook

A new report from marketing consultancy CMG Partners outlines how art and science are allowing CMOs to redefine their roles

The CMO has finally arrived, according to a new report from CMG Partners. It might have taken five years to get there and involved a radical transformation of marketing as a practical function and principle, but the CMO has officially become a cornerstone of the executive team and a leader of corporate strategy.

According to the marketing consultancy firm’s <i>Fifth Annual CMO’s Agenda</i> report, the global economic crash of 2007-2008 saw marketers facing increased pressure to justify budget and prove their worth through a combination of art and science, providing a major catalyst for the CMO’s evolution. The rise in digital marketing channels, along with cheaper, deeper marketing technology and wider adoption of metrics and dashboards, also played a significant role.

“All the while, the very nature of customer engagement itself has been changing to be online, real time, direct and measurable,” the report stated. “The result has been a radical transformation in many marketing organisations – where lead marketers have increased their ability to measure, drive change and tie it all with top- and bottom-line performance.”

These evolving rules of engagement are making the CMO’s role complex and critical. So where should you be focusing your energies for the best return? To find out, CMO World delved into the five areas of performance CMG and its survey respondents urge CMOs to concentrate on.

Art versus science

At the top of any CMO’s list is merging art with science. As Four Seasons Hotels and Resorts executive vice-president of marketing, Susan Helstab, put it: “The data won’t create the vision for the business; it can inform the business”.

CMG outlined two types of businesses: those that are science-led, and those who focus on art. Science-oriented companies generally have a lower-risk profile where a steady state return is required, have high transaction businesses and are rich in customer data, are usually more mature companies, and maintain established brands but want to disrupt their industry by taking a unique approach.

In contrast, art-led companies are led by intuition and implicit knowledge and have a higher-risk profile, are lifestyle brands where emotional links with the customer are crucial, are early growth companies or in fast-growing categories, and who benefit from brand-building and customer engagement activities. Yet they too could also be established brands looking to upset the status quo by taking a unique approach.

While the science is a must for today’s marketer, the key is not to forsake art for the numbers, CMOs told CMG. Yes, you need to make sense of the influx of data, metrics, analytics, dashboards and bring data scientists into the marketing mix, but creative and bold thinking still have their place.

As an example, The North Face’s CMO Aaron Carpenter uses science to see what is going on in the market, then employs instinct to tap into what is coming next. Unlike many in the clothing sector, the company brings science capabilities into play through a landscape assessment and global segmentation study to understand opportunities across its core outdoor, performance and action sports categories.

“Our gut instinct for our sports is just as important as the science. Once we look into a concept, then we start to go into more of the data-driven approach to how viable is this,” Carpenter said. The North Face claims its blend of art and science directly contributed to raising annual revenue from US$1.4bn to $2bn in four years.

Tooling up

The second area of accountability for CMOs involves investment in new tools and technologies to cope with the rapid rise in recording and interpreting data. Adobe CMO Ann Lewnes recommended informal service-level agreements with other business units that clearly articulate marketing’s role and what each party can expect.

CMOs also need to build their marketing analytics capabilities by determining and getting alignment on the decisions that data will enhance such as customer segmentation, the media mix and pricing. One way most of the larger organisations surveyed by CMG are achieving this is through centralised analytics teams. The report found several of these are wholly-owned by marketing, while others are shared with the finance team or even an entire organisation.

Why you should bother collaborating with your CIO.

In Electronic Art’s case for instance, three groups oversee the analytics function: a marketing science/analytics group focused on the media mix, optimisation and ROI; an advanced analytics group focused on CRM and customer database marketing; and a traditional market research group primarily focused on marketing.

To help CMOs come to grips with it all, CMG identified six steps needed to taking a scientific approach to decision-making:

  1. Clearly identify the decision you need to make
  2. Define what you want to prove or disprove with data Agree upon the metrics you will use to inform you decisions
  3. Identify gaps in your existing data
  4. Source and clean the data
  5. Evaluate the findings.

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Strategic thinking

Given marketing owns customer insights and analytics, CMG also saw CMOs increasingly setting strategy and fuelling growth. Data is again key to driving decision-making results and long-term strategy, demand generation, revenue management, marketing effectiveness and innovation.

CMG reported imaging company Kodak now collects opt-in data from recording devices on inkjet printers to capture location, volume and usage information, which drives its demand generation strategy. This information is overlaid with profile information like customer demographics, psychographics and purchasing behaviour to better target messaging and marketing promotions.

“A lot of people would get these first order results, and they would stop there and go execute their marketing programs,” Kodak vice-president of corporate and consumer marketing, Vince Ferraro, said. “But the devil is in the details, and if you peel more layers of the onion away, you will get deeper customer insights that may allow you to reach your target customer in a better way than the competition and drive more of the behaviour you are looking for.”

Despite the validity of data, however, CMG advised marketers to use it wisely. Data feeds can’t replace engaging with your customers face-to-face either.

A good result

The rise in tangible evidence illustrating marketing’s importance has also lifted expectations of what information CMOs deliver to the wider chief executive team. CMG advised CMOs to make sure marketing is recognised for sales and revenue conversation, not as a cost centre. To do this, the report outlined five areas to focus on: defining the problem, discovering the data, determining the platform, creating a process, then training and testing.

“It’s all about ROMI [Return on Marketing Investment] and being realistic about what is happening in marketing,” Alcatel-Lucent Americas CMO Allison Cerra said. “Make sure what you are reporting is relevant. Speak to ‘how much profitability did I generate’ and identify the growth indicators – how fast are we growing share? Where can we expand? And how [do we] plan to do that?”

It almost goes without saying that marketers who can be agile, adapt quicker, and make faster and better decisions using this culminated knowledge have the best chance of staying ahead of the game.

“Balancing art and science and developing the right analytical infrastructure provides the foundation for becoming more agile,” the CMG report stated. “As we know, it can drive better, quicker decision-making, which positively impacts strategy, growth and results, but it also sets the framework for continually improving, for launching, learning, adjusting and repeating again.

“Consumer input and market reaction are very real indicators for marketers.”

Change is the only constant, as the saying goes, and CMOs are today’s change agents.

You can access the full <i>Fifth Annual CMO’s Agenda</i> report from CMG Partners website here.

Other reports on the state of the CMO to check out:

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