The failure to create a clear and meaningful CMO role hurts not only the CMO (who have the shortest average tenure among all C-suite roles), but the organization as a whole. Companies in which the CMO has a hand in the strategy of the organization net shareholders significantly higher returns. This trend is even more pronounced in companies with higher advertising and R&D spend.
I read a research article this week in the Deloitte Review called Redefining the CMO. Its authors—the CMO of Deloitte, a director of its CMO program, and a researcher with Deloitte’s Center for Integrated Research—argue that Chief Marketing Officers are often set up for failure. Marketing activities are crucial to the financial success of organizations, yet for a number of reasons outside of their control, CMOs often struggle to explain the connection between marketing activities and financial performance. Deloitte’s research shows that despite their place in the C-suite, CMOs lack the strategic empowerment their position demands—empowerment that can allow them to expand their influence beyond the marketing organization. Deloitte proposes three key ways (all three of which Custora can help with) in which CMOs can redefine their role and earn a strategic seat at the executive table.
The CMO Paradox
Deloitte’s research showed that CMOs are expected to play an enterprise-wide role in the organization, but that they’re often not given the authority and responsibility to do so.
We all know that marketing has changed dramatically over the past few decades. New technologies have given the consumer more power than ever before. Social media and digital marketing channels have opened new avenues for communicating with customers. It’s the “age of the customer” as dubbed by Forrester! Who better to lead the customer-centric charge than the CMO?
A successful CMO will be “center-brained”—someone who can cultivate a data-driven mindset without losing that creative spark.
So what’s actually happening in the market? Companies are asking CMOs to focus less on brand and tactical campaign management and be more of a revenue-driver who understands the needs of their customers. Organizations seem to recognize the strategic importance of the CMO, but if you ask CMOs … their voices still aren’t being heard. Deloitte conducted over 40 interviews with C-suite executives, both CMOs and otherwise. Half of their interviewees said having an enterprise-wide mindset was one of the most important factors in a CMOs success, yet the focal areas for CMOs aren’t enterprise-wide:
- Only 6 percent of the CMOs they interviewed said they were actively working on growing revenue across all global business initiatives
- More than 40 percent of CMOs said they were still spending most of their time on tactical brand-shaping and campaign execution activities
With an ever expanding suite of execution tools and marketing channels being added to marketers’ plates (e.g. social media, digital marketing, direct marketing, advertising, public relations), CMOs often become a “jack of all trades, master of none.”
Three ways to empower the CMO
Executives want CMOs to adopt an enterprise-wide mindset, but how? In Deloitte’s research, three areas stand out.
1. CMOs must position themselves as customer experts.
CMOs have to position themselves as the customer expert in the organization—the person who understands the needs and wants of the company’s customers better than anyone else. It’s not enough to use data insights to map out the customer journey—marketing needs to take these insights and apply them on a grander scale. To read more about the executive level customer-centric metrics that matter, check out this post.
The CMO Council and Deloitte survey shows that while more marketers are being armed with greater customer insights, they are not broadening their applications. Instead, they are doubling down on brand and campaign-centric efforts. For example, while 34 percent of CMOs said they are applying these capabilities toward campaign management platforms, only 10 percent said they are using them to improve lifecycle management or customer experience management platforms.
At Custora, we encourage marketing leaders to use the customer insights uncovered with our platform to solve enterprise-wide challenges, not simply marketing initiatives. For example, product or category affinity insights can be used to balance marketing campaigns and demand planning. Customer lifetime value insights can aid the Finance team with forecasting.
A great example of a company that has put customer insights at the forefront of the organization is fast-fashion retailer Eloquii. VP of Marketing Kelly Goldston explained how Eloquii embeds customer insights throughout the organization at Custora’s CARMA conference last year.
2. CMOs must translate marketing insights into the language of their C-suite peers.
Marketing leaders need to be able to translate marketing concepts into terms that other members of the C-suite understand. For example, when speaking to a CFO, marketers need to clearly articulate why doing X will result in sustainable profit. When speaking to a product or merchandising team, marketers need to explain why doing X will result in customers buying more of their products.
When speaking to a CFO, marketers need to clearly articulate why doing X will result in sustainable profit.
This is often easier said than done, and some companies are creating “marketing finance” teams to bridge the gap between Marketing and Finance. Marketing finance teams are tasked with tying the marketing team’s goals and efforts to financial results.
At Custora, we recommend that marketing leaders introduce the concept of customer equity. Customer equity is the total value of all of the new customer relationships created in a given period. It’s equal to the number of new customers acquired in a given period, multiplied by the CLV of those customers. Customer Equity provides a broad view of how much customer value your company is creating— and whether you are striking the optimal balance between quantity and quality of new customers acquired.
3. CMOs must understand the art and the science of marketing
Marketing has traditionally been thought of as a creative discipline. Yet the rise of data and analytics have demanded that marketing leaders also be analytically inclined. A successful CMO will be “center-brained”—someone who can cultivate a data-driven mindset without losing that creative spark.
It is not realistic to expect that every team member be both creatively inclined and highly analytical. A good CMO will take inventory of the skills represented on his or her team. This is the first step in identifying gaps and addressing them, whether through new hires, development, or partnerships with other departments.
One Kings Lane VP of Marketing Michael Krueger spoke to this melding of storytelling and data insights in a conversation with Custora’s Head of Product at our CARMA conference.
The CMO role has been a paradox—while CMOs are expected to play a strategic, enterprise-wide minded role in the organization, they haven’t been empowered with the authority and tools to do so. Additionally, the tactical asks of their role are often at odds with the strategic role they are expected to play.
The good news is that this is changing. By using customer analytics and forging strategic partnerships with the rest of the organization, by learning the language of other C-suite members, and by combining the art and science of marketing, CMOs can become the customer experts they were meant to be, and can have a meaningful role in the C-suite. In the “age of the customer,” it’s time to truly empower the marketing leaders.
To read more about Deloitte’s research, head over to Deloitte Insights.