Transformation: The Co-op's CMO Greg Smith
- 17 March, 2013 13:58
As the first CMO in The Co-op’s 55-year history, Greg Smith is breaking new ground in every conceivable way. Appointed to develop the retail co-operative’s first comprehensive marketing and digital strategy, and unite its university shopfronts with its ecommerce offering, Smith faced a momentous challenge which he freely admits left him feeling like a “kangaroo in headlights”.
But with superior multi-tasking, strategic team development, community champions and a healthy dose of digital and technology know-how, Smith is spearheading the transformation of The Co-op into a modern retailer with customer experience at the forefront of its strategy.
Smith’s path to CMO is an intriguing one, beginning not in marketing but with a double degree in economics and accounting and an analyst’s role at the Sydney Stock Exchange. While scrutinising share market performance, Smith developed a lively curiosity for how the stock exchange was positioning and selling company information to the likes of stock brokers, fund managers and private investors.
“I had a good mentor back then in the MD of our analyst division, who suggested I become the marketing guy,” Smith told CMO. Smith was sent on several training courses to learn the fundamentals, then did an MBA in marketing.
He was swiftly promoted to head of marketing at the Australian Stock Exchange and given the task of rebranding after Australia’s six independent stock exchanges came together in 1987. As a result of his efforts Smith won the Young Marketer of the Year award and spent three months in the US learning from the best marketers of the day. It was an experience that changed his life.
“I was living alongside the CMOs and marketing heads companies like IBM, the New York Stock Exchange, Standard and Poor, Coca-Cola – every major marketing company you could dream of,” he recalled.
Following a stint in the banking sector, Smith jumped into advertising, then worked on ecommerce strategy at ANZ before setting up his own venture, Money Café, in 2001. “The premise was the conversion of people, technology and retail, and was the world’s first coffee shop cum financial centre,” Smith explained.
With a penchant for start-ups, Money Café was followed by a financial planning and mortgage broking practice, which Smith sold in 2009, then a stint with telecom start-up Amasyn as it entered Australia.
“All the way through, the commonality is the customer,” Smith claimed. “A true marketer is someone who can adapt to whatever industry they’re in and accumulate knowledge on the way through. The other aspect is you have to have great teams. That comes down to leadership.”
Leading The Co-op
It is this combination of start-up mentality and knack for building marketing roadmaps and teams that led Smith to become The Co-op’s first CMO just over a year ago. His appointment coincided with the recruitment of the group’s first COO and push to become a true omni-channel retailer.
What will surprise many is that The Co-op has never had any marketing formally in its 55-year history, despite being a greater than $100m business and boasting of 1.7 million members nationwide.
“When I joined, we had frilly stuff on windows and walls and that was pretty much the extent of marketing activity,” Smith said. “We were basically a logistics operation business. Students come in at certain times in the year, line up, grab their textbooks and disappear. We wouldn’t communicate with them, we’d just expect them to come back again next time around.
“Inevitably however there’s going to be competition and you’re left standing on a burning platform. The books industry is a burning platform right now.”
As well as the absence of a formalised marketing budget and team, the group lacked appropriate systems and structures to measure and track customer activity, adequate digital ecommerce functionality and a fully integrated, behaviourally-triggered CRM solution.
So how on earth did Smith work out what to tackle first?
“I was like a kangaroo in headlights,” he admitted. “On day four, I shot off to a bunch of stores to get a feel for the business. I was wowed because there’s so much opportunity here and scope. But all of this was with limited resources, so I had to put my entrepreneurial, small business cap on and maintain a strict budgeting policy.
“As a CMO, I literally rolled my sleeves up. I realised I needed to get out there and meet and greet the staff, understand the people, find out what motivates them and what doesn’t, identify what the pain points are and the systems we can use to improve those quickly, and deal with the low hanging fruit.”
Smith was also immediately tasked with creating the group’s digital strategy, and was given just weeks to prepare before meeting with the board. “We have had amazing growth and been brilliant at what we’ve done on the online side, it just wasn’t ‘ecommerced’. It was there, it was operating beautifully, but it needed that extra fire to direct it.”
Smith took “a big deep breath” and adopted a strategic planning model using a three-horizon approach. From there, he broke down the core marketing area opportunities for The Co-op. These are local-area marketing for its 51 stores; CRM optimisation and improving the membership lifecycle and customer engagement model; and digital development, including The Co-op’s digital presence as well as its ecommerce platform.
“My question was ‘What are my systems, people, processes and strategy inside each of my three-horizon approach and three core strategy areas?’,” he explained.
As these areas were defined, Smith wrote a board paper for each strategic approach, penning a fourth paper eventually on rebranding.
“I worked with the company secretary to organise one-on-ones with each board member, walking them through the strategy and how each of these things demonstrably effect what we do. More importantly, I showed them measurements, structures and practices in place to measure our ROI,” he said.
“Everything is ROI modelled. Any marketer today will tell you it’s not all about brand. ROI is the bottom line and marketers have this core top-line and bottom-line KPI we need to look after.”
Marketing as a profession has become more focused, measurable, and accountable, Smith said. “No longer can you run an ad campaign on a Sunday night, then expect flocks of customers to run to your door the next morning. We now have to utilise multiple channels, multiple opportunities and recognise the customer has moved on as well. We need to become much more intelligent.”
Metrics and milestones
One of Smith’s first steps was tackling The Co-op’s limited SEO and SEM. The aim was to build a social media stature that reflected the individual ecosystem across the university campuses it operates in. Given Facebook is an ingrained part of student life, this saw the group move from one Facebook page to 40, each underpinned by content engagement rules.
To ensure the social media policy could be enacted, Smith brought on a social media manager, and steadily worked to achieve a marketing-focused culture across The Co-Op’s headquarters and stores. This included training a social media champion at each store who could be its eyes and ears onsite.
The Co-op has seen a 300 per cent increase in revenue generated through Facebook as a result. “Not only did we leap up in terms of engagement, we can now track and measure our sales through Facebook,” Smith said. “This week in fact was a record again, and we saw sales go up 80 per cent in two days.”
CRM was the next critical area of focus, and to ensure The Co-op could produce ROI metrics on every single campaign sent out, Smith brought on third-party agency, Digital Alchemy, to manage its data strategy. The agency built a bespoke system offering detailed measurement at a product level, as well as data and email automation.
“I know at any moment where my ROI is going to be and I can start predicting that using the CRM,” Smith said. “Our whole CRM area is transactional, behavioural and social and we track all of that on an ongoing basis. From there, we learn about the behaviour of our customers.
“On the digital side, we measure SEO and SEM with Google Analytics and everything is linked to ROI. I know for example that my ROMI [return on marketing investment] started at 10, and is now up to 42. So if I put down $1, I get $35-$42 back in top-line sales, which is a great result for us.”
The Co-op’s next task is optimising natural search across the four million titles on its website. “Our SEO and organic capabilities are growing rapidly and every day we’re seeing differences,” Smith claimed.
“The bane of every CMO is ‘where does that allocation of all my resources give me the best return for my money?’. We have invested in great systems, structures and measurement tools to know that.” In local-area marketing, Smith implemented KPIs for PR based not just on column inches, but by how many dollars are attributable to that sale.
“We have everything from digital to social, CRM, local, branding inside the stores and the net promoter score,” he continued. “These help determine if we’re successful or not. And if something isn’t working that well, we look at why not, and how to refine it.”
Having heavily relied on third-party agencies, Smith plans to increasingly manage these functions in-house. The first appointment was a head of digital followed by a CRM chief. The Co-op is looking to bring on a local-area marketing manager next.
“I have built up a good leadership team over the past year that can take more and more responsibilities, which will allow me to move on and grow the business,” Smith said. “Without great people, great ideas go nowhere.”
At the same time as the strategy and leadership changes, Smith questioned how to make The Co-Op’s transformation visible. The answer was to rebrand. This process started with a one-day board workshop which led to a rewrite of its value proposition to ‘enterprising spirit’.
Any marketer today will tell you it’s not all about brand. ROI is the bottom line and marketers have this core top-line and bottom-line KPI we need to look after
Smith also nominated internal brand champions to communicate the new branding company-wide. “When you change a brand, there is always going to be that difficulty of two worlds colliding. People hold onto heritage, and it’s a 55-year old brand we’re talking about here,” he said.
The Co-op engaged branding agency, Uber Brand, presented back to the board and commenced on a series of qualitative research followed by a quantitative study of 30,000 members through partner, Insight Room.
“At the same time, we put the brand research back out to our teams, handed to them by the brand champions. Not one person had a negative word to say about the logo when it came out. It represents the new frontier and how we’re moving this company forward.”
Evolving as a CMO
Throughout all of this technology played a crucial role, and Smith insists every modern CMO needs a good dose of digital and technology knowledge if they’re to survive. “The best part about being a CMO these days is that you are expected to evolve and take digital under your wing,” he said.
“At the end of the day, digital is another channel. We are dealing with web developers and constantly talking about the different drivers we use, backup systems, applications – all of that is CIO speak, but as CMO I’m speaking the same language.”
As well as convergence between IT and marketing, Smith predicted the rise of the chief digital officer (CDO). “It’s a matter of time before these roles converge in some form – perhaps the CIO will disappear or become a CDO as everything goes digital.”
Meanwhile, The Co-op’s marketing team continues to allocate more of its budget to technology, with a mobile app and mobile version of the group’s website being recent areas of investment.
Yet with such a wide demographic to service (18-70 year olds), The Co-op’s ongoing success ultimately comes back to direct marketing 101 and segmentation principles, Smith said – even as technology changes how we view and act on this information. “It’s about understanding trends and techniques in each of those areas, and getting the data modelling right,” he said.
This year, The Co-op is confident of getting at least 100,000 new members signed up, but Smith is also cognisant of leveraging legacy member data to reconnect with past members and has implemented a ‘reactivation strategy’.
“Part of our modelling process with the new CRM system is breaking this down, sliver by sliver, to find the different pathways into these segments,” Smith said. “We are using LinkedIn, the industry groups, and working with the universities to be part of their campus programs so that when they connect with alumni groups, we connect as well.”
As well as utilising technology in the back-end, The Co-op is working with technology partners to up the level of interactivity in its stores. “We have 51 stores each with a very definable demographic. We’re now working on several initiatives that will enable us to do some pretty cool things in-store,” Smith said.
Having instituted such dramatic changes at The Co-op, Smith is well-aware of the importance of the board in the process of marketing.
“A lot of people think marketing is just about advertising, or PR, but it is a holistic activity and it all adds to the bottom line. It’s our job to help the board understand that,” he said. “How can I get a logical, ongoing relationship with the customer that gets greater recency/frequency/monetary value? That’s what we’re here to do.”
Futurising is another must both as a CMO and marketer, and Smith encourages his team to spend time observing and devising ways to move the business forward. In addition, The Co-op is experimenting with campus ambassadors to spot new trends and ways of engagement with its customer base.
Long-term success will come down to building more into what The Co-op offers. “When I presented to the marketing team recently, I entitled my presentation ‘even more’, which is about those incremental sales,” Smith said. “It’s about more activity, more technology, more focus, more initiative and more awareness.”
And how about dealing with that burning platform known as the book industry? “It’s not a matter of time or ‘if’, it’s a matter of when we’ll see change in the delivery platforms for books,” Smith said. “It’s unknown territory for publishers.
“We are doing bits and pieces and using joint ventures to get us there, but there’s a long way to go. We will get to a time and place when books will be delivered via a glass-covered shiny surface, or perhaps not even a Kindle – it may be a holograph. Who knows?”
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