cmo to ceo

The New Requirements of the CMO

By Christopher Kenton

For the past four years, marketing has gone through a significant repositioning as consultants and gurus seek to recast marketing as an efficient revenue generating machine. It’s an idea whose time has come—after all, for how many more years could any CEO endure marketing’s de facto tagline: “I know half of my budget is wasted, I just don’t know which half.”

Marketers need to be accountable for every dollar invested in acquisition and retention programs, and they need to demonstrate an ability to drive both top-line revenue and bottom-line yield. But the transformation is far from complete, and along with the new requirements for financial accountability, marketers face a host of other challenges that CEOs need to understand in order to manage.

Companies serious about marketing have tremendous pressure for marketers to transform their operations. Marketers must assimilate new technologies, benchmark business processes and develop entirely new skills to leverage emerging channels and respond to global competition. They must integrate more effectively with sales, justify their programs to the CFO and develop closer working relationships with IT. And at the end of the day, they are expected to deliver precisely targeted customer acquisition and retention campaigns that strategically position the company while driving measurable revenue and market share gains. With all of these challenges to address, who has time for customers?

In fact, that may be the most significant question CEOs and CMOs face in navigating and negotiating the new requirements for marketing. Despite the resurging trend in brilliant theories and bestselling books about customer-centric organizations, the reality on the ground appears to be that many businesses are becoming increasingly disconnected from their customers. A relentless focus on internal customer data systems and new marketing processes may, at least in the short term, be making the problem worse as marketers grow distracted from more mundane customer concerns.

In this age of increasingly advanced CRM systems, the CMO Council decided to explore some of the attitudes, trends and day-to-day realities that are shaping customer-centric marketing operations. The study, Select and Connect: Strategies for Targeted Acquisition and Retention, compiled qualitative and quantitative surveys from more than 560 senior marketers in both b-to-b and b-to-c markets. The results are not encouraging.

Marketers report an overwhelming reliance on their CRM systems as a primary source of customer data, with very little insight gained through customer service, distribution channels, customer organizations or communities, or even online customer networks. The reliance on CRM might be acceptable if systems were robust, but on average 40% of all respondents rated their customer data systems as “weak” or “very weak” in critical areas, including the timeliness and depth of transactional data; the availability of useful data, reports and analytics and the relevance of available data to marketing strategies. Despite the fact that businesses have generated strong customer relationships for centuries before CRM existed, marketing executives have grown so focused on marketing technology that in the CMO Council study, they cited the complexity of data and system integration requirements as the most significant barrier to achieving optimal customer intimacy.

When businesses see data integration as a barrier to customer intimacy, you might assume that more fundamental marketing practices have been perfected. But the study reveals an astonishing lack of direct customer involvement among marketers, with heavy reliance on the sales force to initiate customer engagements.

Nearly 75% of marketers in the survey said they have no customer advisory group of any kind, whether a formal advisory board or even an informal Web community of users or buyers. This lack of direct contact with customers paints a disturbing picture of a customer-centric business defined more by processes than real engagement, and seems to support the common complaint among sales teams that marketers don’t really know their customers.

Before you start calling your marketing team to account, you may want to consider how marketing priorities are established. Nearly 50% of the CMO Council survey respondents say someone other than the marketing team influences or determines the most critical aspects of marketing strategy. Of those, 30% say the CEO or business unit manager determines strategy. And even though marketing executives were far more likely to state they were driving the strategic agenda, their managers were more likely to say the CEO is calling the shots.

When it’s time to reconsider your company’s marketing priorities, you may want to consider the brighter side of this report. We were able to identify a sub-group of marketers in our audience that consistently reported optimal levels of customer insight and intimacy in their marketing programs, and the traits that characterize their organization are instructive. They have more control over setting marketing strategy; they have strong relationships with sales and other business units; they drive engagements with customers directly, which they support with robust and reliable data systems; and they maintain a clear view into where, how and in what way customers are using their products.

As important as it is for businesses to build effective CRM systems, creating a technology infrastructure that serves, measures and responds to customers is not sufficient. Companies need to follow the lead of businesses that have succeeded by building a passionate customer following, and building a customer data system to support growing demand—businesses like Apple, Nike and Netflix. Marketers can’t afford to get lost in the weeds on internal systems and processes while losing their connection with customers. In fact, direct engagement with customers should be the source of inspiration driving programs and processes.

Christopher Kenton is senior vice president of the CMO Council (www.cmocouncil.org), and its corporate parent, GlobalFluency.