The CMO’s transformation challenge – Part 1
Part one of the three-part series on the challenge to transform marketing for business growth
by Darren ‘Daz’ McColl, Marketing & Strategy Consultant – TARGAN CONSULTING
Understanding the CMO Landscape
According to Gartner, the average marketing budget is now equivalent to 12% of company revenue and 27% of that is allocated to marketing tech.[1] As a percentage, that’s about 5% more than the average allocation to media and just 1% less than what’s spent on marketing teams.
“Technology and data needs cannibalize media budgets. Marketers know that becoming more insights-driven will drive financial gain.. And more and more, media budgets fund investments in customer insights and the technologies to analyze and activate them. ”
At the same time, 31% of marketers say they have all the tools they need but don’t fully utilize what they have.[2] And, only half of CMOs regard themselves as effective at acquiring and managing tech.[3]
91% of CMOs are confident that Marketing will fundamentally change[4] and we can see the foundations of that today. As digital experience matures and customer engagement through digital commerce, social and digital channels becomes ubiquitous, consumers are returning their focus to product and brand value. And that focus is creating greater expectations for personal relevance and meaning in the way they are engaged, treated and how brands act within the wider world.
A couple of points to illustrate:
· Digital engagement in commerce is now ubiquitous (for example 83.2% of people in the US engaged in digital shopping, and 92% of them have done so with a mobile device)[5] – a sign that consumers are less likely to look at digital solutions in commerce as differentiating.
· Not only do consumers want businesses to be open and honest in their social posts, consumers actually hold businesses to a higher standard than they hold for themselves. In a new study from Sprout Social, consumers singled out brands as the group with the greatest responsibility to be “transparent” on social media, a broad term but one that the survey suggests includes honesty, openness, clarity and even authenticity.
As the consumer landscape shifts, CMO’s seek to build better emotional connection with consumers and better brand experiences that provide a form of utility meeting a particular need, at a particular time.
This requires a primary shift in methods and often a re-creation of the marketing ‘system’ that CMO’s operate. Which consequently makes life more complex for the CMO.
Successfully conquering this complexity lies in the CMO’s ability to lead a transformed marketing approach that is dynamic, performance driven and delivers customer engagement and communication that’s personalized and authentic, as well as solve their customers’ needs and problems responsively as things change. And of course, build emotional connection over time. All efficiently optimized for business growth through both customer acquisition and improved value.
That all leans to relationship building with individuals without getting ‘creepy’, that takes data, data management and creative application of stories and experiences throughout a customers’ individual journey of engagement. A hybrid approach that fuses motivational and behavioral data for fuller customer profiles is now essential. And that increases demand for insights that link customer data with business data which necessitates greater technical partnerships and investment.
And none of this is possible in a marketing team without a corresponding shift in mindsets, skills sets and processes. CMO’s need to make strategic changes around data and technology to support evolved brand and customer experiences, upskill their teams and relook at their processes to deliver more agile, creative and repeatable solutions.
Thus, it’s a clear and critical opportunity for CMO/CXO’s to create and implement transformation agendas for sustainable growth.
Establishing why a marketing transformation agenda is important
Marketing Transformation is fundamentally necessary for growth and profitability
Marketing today-- as it has been since invention—centers around consumer acquisition and retention to profitably grow a business. (Acquisition leaning to top line growth, retention leaning into lifetime customer value and profitability)
Marketing Transformation is likewise rooted in the concept of and focused on profitable growth. Quite simply in the marketing construct, if you want to just save money or cut costs, the easiest way is to simply do less and spend less. Thus, the ambition of marketing transformation is the evolution of: how you go to market, invest your budgets, operate your teams and systems, manage and leverage data, evolve products and experiences etc; all in service of growth and profitability from your efforts and spends.
“Every day, demanding customers, unforeseen competition, and disruptive new technologies hammer home that we have entered the age of the customer, where established business operations don’t work. Yet most marketing functions still rely on decades-old methods that undermine their ability to create post-digital brand experiences and help their firms become customer focused. CMOs: Because you behaviorally target ads or apply account-based marketing, you presume the customer is at the center of your marketing efforts. Au contraire!.“”
The industry and organizational challenge.
Many organizations’ marketing systems are built to produce and promote products or services. They are rooted in communication constructs and are often addicted to what has always worked, rather than a disruptive test and learn approach. They leverage systems and tools (like technology and media channels) to reach people, serve them with content, influence behavior or optimize investments. The primary construct of improvement is largely based on integration and performance efficiency (through better channel use or better asset use).
However, the power shift in marketing is the application of data and technology to both better inform and engage consumers at the speed of culture. Therefore, the modern marketing mandate must be to design and optimize the entire marketing system to acquire and retain consumers – by inspiring, rewarding, recognizing, and valuing them in ways that are personally meaningful and on their terms.
This can only be achieved when data is the fuel, enabled by the right technology, and the organizational design and incentive constructs of the past are changed to focus on and take advantage of these shifts.
It’s built on a belief that this will drive differentiation and desire, leading to growth and business value.
Time and speed are relative concepts business must deliver to.
Agility in technology could mean an enhancement release from sprint to live in 6 weeks…… a delay in delivery is leads to reduced business value. Agility in content marketing is moving from cultural occurrence to published in 6 hours…… a delay is the same as losing the entire consumer opportunity, as that live moment in a consumer’s world will have passed.
In Marketing today, there is no longer a “build and run” construct. Marketing is never “off”, it’s live and is constantly adjusting, adapting and evolving on the surface (consumer engagement and a brand’s content are both dynamic).
CMO’s need an approach designed to deliver on this reality – the speed of culture, and a responsiveness (or predictiveness) to the moment of consumer desire or need. The operational imperative to design and optimize marketing systems in this context also necessitates a transformed approach. Marketing Transformation in this dynamic universe requires more than integrated capabilities, it requires interdependence of diverse capabilities to be fluid and responsive. These capabilities must also be empowered to solve responsively and dynamically, using data and results as a strategic guide.
NEXT: Part 2
Delivering Marketing Transformation
[1] Forbes and Gartner
[2] Ascend2 - 2019 DIGITAL MARKETING STRATEGIES
[3] Gartner CMO Strategy Survey 2017
[4] Accenture
[5] eMarketer Oct2018