Getting to Know the CMO

CMO Thanks to digital transformation, an explosion of marketing automation technology and breakthroughs in the tracking of customer behavior, there’s suddenly soaring demand for marketing-based  consulting services. A March 2016 Wall Street Journal headline contained a stern warning for traditional advertising agencies: “Consultants Targeting Madison Avenue’s Turf.” The article listed the latest round of creative agencies snapped up by Deloitte, PwC, IBM and others. Consulting firms, according to the article, “increasingly are targeting the Chief Marketing Officer as the marketing segment of the C-suite is becoming more responsible for the overall customer experience. The consultants are sharpening and building out their creative credentials.” True enough, but there’s more to the story. The bigger news is that a growing number of marketing functions across all industries also have a growing appetite for traditional consulting services and insights as the CMOs and their marketing functions transform. “Most requests boil down to helping companies connect with their target audiences and delight them in order to improve conversion and increase loyalty,” reports Anatoly Roytman, managing director for Accenture Interactive Europe, Africa, Middle East, Latin America. “We help our clients get there in many ways, many of which go beyond what traditional agencies can deliver.”Soaring demand for marketing help also has spurred new forms of consulting services. IBM Interactive Experience (iX) bills itself as a “next-generation services company” that “thinks bigger than an agency and more creatively than a consultancy” while providing services ranging “from strategy, creative and design to scalable digital, commerce, mobile and wearable platforms.”  IBM iX Global Leader, Strategy & Design, Robert Schwartz says his team is “very focused on what we feel is a unique moment in time.” This sentiment is shared by other consulting leaders. Thanks to far-reaching digital transformation, an explosion in marketing automation technology, and major breakthroughs in the tracking of customer behavior, CMOs and their marketing functions are assuming more influence. “The CMO has taken on a much more expansive role in the C-suite,” points out Capgemini Consulting Vice President Johanna Assous. “The CMO is directing more and more strategic activity.” While data-access and technology advancements have driven the expansion of the CMO’s role, the creative aspects of marketing have not disappeared. “The CMO of the future—or, in some cases, the CMO of the present—is equally adept from an analytical standpoint and a creative standpoint,” says The Boston Consulting Group Senior Partner Rohan Sajdeh, who leads the firm’s North American Marketing, Sales & Pricing practice. “That’s quite a shift.” Many dual-athlete marketing chiefs appear eager to enlist consulting partners to help them make the most of their quickly evolving roles and growing authority. This shift is evident in the volume and range of marketing-related service requests consulting firms are fielding. Fulfilling these requests with delightful solutions requires consultants to understand the nature of the current marketing evolution as well as the primary challenges CMOs confront. The Art and Science of Elevated Marketing The evolving CMO role today calls to mind other recent C-title transformations: the strategic post-Sarbanes CFO; the CIO role as digital transformation took root; the chief security officer (CSO) following the initial string of massive cyber-security breaches; or, to a lesser extent, the chief risk officer’s growing influence in some industries at the birth of enterprise risk management (ERM). What feels unique about the CMO’s current moment is that it extends to the entire marketing function. It also seems likely to sustain well beyond a moment, given the way technology has fundamentally changed traditional customer relationships across nearly all industries. “What’s different now is we’ve got a more sophisticated way of understanding how consumers choose,” says Sajdeh. “In the old days we used phone and paper surveys, which took months and months to accumulate useful information. Now, with online surveys, we’re getting 5,000 responses within two weeks.” He explains that each response represents a learning moment that a company can act upon immediately, via a more personalized email offer to a segment of customers, for example. The response to that email test generates additional layers of knowledge that are used to sharpen subsequent marketing endeavors. The sheer volume of customer insights combined with the speed with which this actionable knowledge can be acquired and acted upon has made marketing and the CMO extremely valuable. “With this shift comes the need to support expanded capabilities and financial accountability for marketing ROI,” Assous notes. “The new guard of CMOs must show strength in ‘all things digital,’ insights and analytics, and all aspects that affect the end-to-end customer experience.” More CMOs now lead the overall customer experience changes that are needed across the organization, which requires serious leadership and collaboration chops – not to mention a grasp of marketing art and science. “As marketing moved from an art to a science, the DNA of the CMO changed,” says Kate Gundry, founder of Pluck, a consulting and communications firm with numerous marketing-technology clients. “They’re learning what technologies serve them best, which ones can be discounted, how to run cross-functional teams, what vendors and agencies they still need with the advent of so much new technology, and more… Today CMOs know that the choices they make from a technology and human capital investment standpoint can not only transform their bottom line, but also turn the perception of them in their market from stodgy to innovative in a matter of months.” What distinguishes the modern CMO from past incarnations is their ownership of customer experience. “CMOs are slowly succeeding in convincing their organizations that the most important element of the brand is in fact the overall customer experience,” says Howard Tiersky, CEO of FROM, the digital transformation agency, “that central oversight is needed and that, even though it cuts across many areas of the organization, it is most logically owned by marketing.” Five Modern Marketing Challenges As marketing functions become more central to organizational value, they are taking on more responsibility for new product creation, strategy, sales, service, customer care and more, notes Schwartz. This is tricky because these functions typically reside in various parts of the organization; the management of the customer experience cuts across numerous traditional organizational silos and requires levels of internal coordination and cooperation relatively few companies have come close to mastering. That gives CMOs an opportunity, albeit an extremely challenging one. “Marketing needs to take this central role in the organization as an integration point because it represents and expresses the heart of the customer or prospect,” Schwartz asserts. “No other function can occupy this space as well – but there is still a lot of work to do in most organizations for this to happen.” A large part of this work involves addressing the following issues: Technology The universe of marketing technology has greatly expanded in recent years. These applications can monitor brand reputations over social media, distinguish between low-value and high-value prospects, identify and target customer segments with jaw-dropping precision, fatten sales pipelines while greatly reducing sales costs and much more. “If you take a look at the marketing technology landscape, it has exploded in the last five years,” says Gundry. She compares a well-known 2011 ChiefMarTec slide listing vendors in the marketing technology landscape with the 2016 version of the same slide. The former listed a few hundred vendors; the current version lists well over 3,500 vendors. “This is the largest common challenge facing CMOs that makes them seek out external expertise,” Gundry notes.” After making sense of the vendor landscape, CMOs need to deploy this new technology – and the data-driven insights it generates — to sharpen their marketing efforts. That means creating meaningful customer conversations by easily and quickly leveraging data, according to Laura Beaudin, global lead for Bain & Company’s Marketing Excellence practice. EY Americas Advisory Digital Leader Woody Driggs points that data management represents a major marketing-technology challenge. He also asserts that marketing functions are challenged to ensure the privacy and security of the data that they use.  “The CMO must work with the CIO and other security professionals within the organization to ensure that data remains private,” Driggs notes. “At the same time, CMOs face regulatory guidelines which are becoming blurrier as new marketing channels such as social media bend the boundaries of compliance procedures.” Organizational and Operating Models As the role of the CMO transforms, these leaders need help rethinking how they organize and operate their functions. This need exists because marketing-function structures have not kept pace with marketing-technology or customer-interaction advancements. “In the past decade, what marketers do to engage customers has changed almost beyond recognition,” write co-authors Marc de Swaan Arons, Frank van den Driest and Keith Weed in their Harvard Business Review article The Ultimate Marketing Machine. “Tools and strategies that were cutting-edge just a few years ago are fast becoming obsolete, and new approaches are appearing every day. Yet in most companies the organizational structure of the marketing function hasn’t changed since the practice of brand management emerged, more than 40 years ago. Hidebound hierarchies from another era are still commonplace.” Addressing this challenge, Assous notes, requires strategic planning, mapping the desired customer experience, developing a roadmap for digital transformation, identifying the function’s framework of capabilities and assembling the talent needed to support the new operating model. Once that vision is nailed down, marketing functions need to set up new organizational structures, governance models, processes and supporting technologies. “Organizational change management is imperative to ensure success with these new ways of working,” Assous adds. Culture  Besides rethinking their structures and operating models, CMOs also need to reflect and adjust some of the more psychological facets of their functions. “In our experience, many marketing organizations have ‘fire-fighting’ cultures that too often prioritize the urgent over the important, while at the same time operating with consensus-driven decision-making, which can often lead to no, or slow, decision-making,” Beaudin explains. She describes a need for marketing cultures that foster clear decision-making, identify transparent performance criteria, and focus on important issues (as opposed to urgent issues). “Never has it been more important for CMOs to maintain a concerted focus on what matters most—which customers, which experiences, what messages—and to move as quickly as possible to meet their needs,” Beaudin adds. ROI Although the challenge of demonstrating a return on marketing investments has existed for decades, new tracking technology and related data analytics advancements has made this hurdle less difficult (but not easy) to clear. “CMOs are increasingly being required to communicate the returns of marketing spend,” says Beaudin. “While delightfully simple in concept but terrifically complicated in practice, calculating true ROI of all marketing dollars that influence a customer’s path to purchase requires a long list of assumptions, and access to offline and online data that most CMOs don’t have at their fingertips.” Driggs agrees, noting that “CMOs must demonstrate the value of marketing and advertising efforts, which can be difficult, particularly when direct sales provide such an immediate return.” He points to the large percentage of bot-generated Web traffic as a specific measurement challenge. “It’s becoming even more important than ever,” Driggs adds, “to differentiate between noise and information that is actually reaching a human audience. Customer Experience Impediments This challenge consists of addressing the obstacles that prevent organizations from delivering the desired customer experience across all channels in a consistent manner. Traditional organizational silos feature most prominently among these impediments. “How do you create a seamless experience for the customer that is supported within the organization?” Driggs asks. “It’s the CMO’s role to integrate experience across service lines— to bring these traditionally silo-ed areas together to create an optimal experience.” Tiersky describes this form of organizational change as one of the largest challenges CMOs confront. “In order to drive the level of innovation around the customer experience,” he says, “[CMOs] they need to rally the organizational silos, which traditionally enjoy their autonomy.” Roytman agrees, pointing out that businesses have entered the age of customer experience. “Today it’s your customer who’s setting the bar, not your competitor,” he says, noting that this dynamic “requires CMOs to break down siloes and work across other functions, including [those of the] CIO, CFO and CSO.” Multivariate, and Extremely Varied Engagements This brew of strategic, structural, technological, cultural and tactical challenges is giving rise to a rich variety of marketing-related consulting engagements. Asked to describe the types of requests Bain fields from CMOs, Beaudin rattles off a list that includes customer segmentation, decision-driven marketing, multivariate testing and experimental design, media mix optimization, direct marketing optimization, marketing mix alignment, digital marketing strategy and pilots and customer experience redesign. Roytman reports that Accenture has taken on the management of the entire marketing function for some clients. Assous notes that Capgemini Consulting’s recent marketing work includes setting up an in-house agency for a global bank, developing marketing digitization strategies and roadmaps, customer experience design and social media assessments. Schwartz says one of his favorite current client initiatives involves IBM iX developing an educational program for marketers around new and emerging digital skills. “This program,” he explains, “aims to transform how the company goes to market, utilizes data to make marketing decisions, and—of course—how they create stories and content that truly affect customers and prospects.” As more marketing functions take greater ownership of those stories, the strategic trajectory of their own narratives are likely to continue to progress, which means that the consulting profession’s marketing-services turf will continue to expand.   Sidebar: Q&A with Accenture’s Anatoly Roytman Blurring Boundaries: How Accenture Interactive Blends Agency and Consulting Work In recent years, Anatoly Roytman, managing director of Accenture Interactive Europe, Africa, Middle East, Latin America, has seen the CMO role evolve rapidly. As marketing chiefs take on greater responsibility for the customer experience, they need to blend their function’s traditional creative expertise with newfound analytical rigor. Consulting firms are conducting their own blending act, combining advertising expertise with traditional consulting expertise, to meet the rapidly expanding needs of CMO clients. Here, Roytman discusses marketing’s current transformation and the challenges and consulting opportunities generated by this change. Consulting: How have you seen the marketing function and the CMO role evolve in the past two-three years? Roytman: The past three years have accelerated the evolution of marketing – beyond delivering advertising and creative campaigns to being responsible for the end-to-end customer experience and the associated digital transformation of the enterprise. CMOs today are expected to be much more accountable than they were in the past and deliver return on marketing spend, whether by achieving more with the same or less, increasing the number of new customers, or increasing wallet share and engagement. They also need to be a lot more tech-savvy as marketing technology and advertising technology now play a pivotal part in reaching the right customer with the right offer at the right time and providing delightful and engaging experiences. Consulting: What are some common challenges confronting CMOs? Roytman: A huge challenge is keeping up with the lightning pace at which customer expectations shift and evolve. In a recent study, we found that just seven percent of companies in the U.S. and Europe actually exceed their customers’ expectations. These expectations are changing faster than ever and what people learn to love in one industry increasingly defines what they expect in other areas as well. We call this development ‘liquid expectations.’ Consulting: What types of assistance are CMOs and marketing functions requesting from their consulting partners? Roytman: Most requests boil down to helping companies connect with their target audiences and delight them in order to improve conversion and increase loyalty. We help our clients get there in many ways, many of which go beyond what traditional agencies can deliver. For example, linking and aligning the advertising experiences to all the other customer touch points. Overall, clients are looking to help them with experience design, digital and traditional marketing strategy and execution, personalization, content and digital commerce capabilities, because all of these are necessary to provide superior customer experiences. Consulting: Can you share an example of a recent marketing engagement? Roytman:  We have worked with a top automotive company, managing their entire marketing function, from brand awareness to conversion and loyalty. It’s a project where the boundaries between agencies and consultancies are blurred and it’s really a template for how marketing will be done in the future. Clients require true innovation partners who can bring together creativity, technology and business acumen as well as share risks with them. Consulting: How has your practice evolved to better address the needs of marketing services clients? Roytman:  We have combined the creative and entrepreneurial spirit often associated with agencies with the scale of Accenture’s industry expertise and industrialized technology capabilities. We have expanded our services with a number of strategic acquisitions, such as Fjord, which is one of the best service design agencies, and we continue to hire top agency talent. As a result, we are now the largest digital agency, according to the Ad Age 2016 Agency Ranking, and also the fastest growing. Consulting: What are some ways you expect marketing functions and your services to evolve over the next two-three years? Roytman:  Just look at the top automotive company I previously mentioned where we manage the entire marketing function, or at a large international hotel chain where we are responsible for the end-to-end customer journey. This is the future of marketing—clients are looking beyond campaigns or projects. They want a partner who takes responsibility for outcomes. Our services will further evolve to support and be accountable for end-to-end customer experiences.       —E.K.   Sidebar: Magic + Math=Marketing Success  Leading marketing experts have trumpeted the need for marketing functions to update their “Mad Men” heritage by integrating a “Moneyball” mindset into their approaches. Research from Bain & Company indicates that striking the right balance between data analytics and more creative activities can help marketing departments boost revenues and grab more market share. “Today’s marketing leaders have evolved to harness the benefits of digital marketing, data and analytics—marketing ‘math’—but [they] have not forgotten their creative roots,” notes Laura Beaudin, Global Lead for Bain’s Marketing Excellence practice. “Leaders have become more scientific, but also maintain the ‘magic’—an emotional bond and loyalty with customers, built off deep consumer insights, moments that matter, and creativity.” Bain’s survey of more than 400 marketers identifies several key actions that distinguish how marketing functions that increase sales and share (i.e., leaders) operate from the approach in marketing functions whose companies suffer declining sales and share (i.e., laggards). Marketing leaders:  •Spend twice as much on digital marketing and half as much on television marketing investment compared to laggards; • Allocate spend flexibly to the most “scalable and impactful” campaigns three times more frequently than laggards; • Are three times more likely to use data to inform decision-making (while making decisions more than twice as quickly); and • Are twice as likely to own creative activities that steer their brand.  

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