Recently, Harvard Business Review featured an article underlining the disconnect between the CEO and the CMO. This disconnect is problematic for business. Why? The article, based on a study conducted among CEOs and CMOs, indicates that a lack of investment in marketing can hurt growth. A lack of marketing investment can, in part, be attributed to the fact that marketing is usually not included in “critical” C-suite “planning discussions.” Furthermore, CEOs do not see marketing as a growth driver.
The study’s data are clear, however. The analysis indicated that companies where CEOs accepted marketing, communications and brand management as “growth levers” were “twice as likely to see annual revenue increases of more than 5%” relative to businesses where the CEOs did not see the benefits of marketing, advertising and brand management. The researchers wrote that the “probability of achieving this 5% growth was 67% for the group with pro-marketing CEO versus 33% for the second group with CEO marketing-rejectors. “High growth companies invested, on average, three times more in marketing than firms in the bottom two quartiles (of the study) did.”
Both the CEO and the CMO are to blame for this C-suite disconnect. There are lots of reasons why CEOs disdain marketing as activities with little or no return on investment. CEOs, according to Harvard Business Review, have little grounding in marketing. CEO backgrounds are in operations and finance. This is due to the lack of seriousness around marketing and brand management at business schools. It is difficult to find a business school that actually teaches brand and brand management.
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On the other side, there are lots of reasons that CMOs are not included in serious, strategic financial decision-making. CMOs fell in love with the increasing number of communication channel opportunities: social media, influencers, entertainment, digital, apps, events, online and so forth. Channel and communications management are not marketing management. Message management is not brand management. CMOs went through a period of adopting snappy, adolescent titles for their jobs that eroded C-suite belief that CMOs cared about profitability more than storytelling.
Here are two realities for the CEO who spurns marketing: 1) the bottom line of any plan to win is more customers who buy more frequently become more loyal generate more revenue and profit; and 2) there is no shareholder value without brand value. A non-buyer does not generate cash flow. Without cash flow, the shareholder’s value is low.
Profitability and shareholder value rely on loyal customers. Marketing is the generator of customer loyalty because marketing is all about profitably satisfying customer needs. Marketing is essential to enduring profitable growth.
Marketing is about managing the business and managing the business is bigger than managing messages and media. Peter Drucker, the most respected management expert ever, once said, “The purpose of business is to create a customer.” Effective marketing is not merely about message and media management; it is about business management. It is fundamentally about attracting and retaining customers. And, this is the role of the CMO.
The CMO must be the business leader responsible to generate, support and activate a customer-driven focus within the organization, whether B2B or B2C.
Businesses with their respective CEOs must no longer distinguish between the business plan and the brand plan. There is only one plan, it is the brand-business plan. The purpose of brand management is the enduring profitable growth of the business. The purpose of the business plan is the enduring profitable growth of the brand.
The three functional responsibilities for building enduring profitable growth are Marketing, Operations and Finance. The authors of the brand-business plan are the CMO, the COO and the CFO. The owner of the plan is the CEO.
The CMO brings a distinctive perspective to corporate management. The CMO is responsible for:
· Helping define the growth strategy
· Achieving organizational alignment behind a common brand- business purpose and direction
· Helping define the Brand-Business priorities
· Developing and implementing a Balanced Brand-Business Scorecard
· Leading customer-driven innovation through providing insights into customer needs and problems, defining the focus for the development of innovative insight-driven products and services.
· Developing the price-value strategy
· As well as taking responsibility for brand communications, internal and external
What needs to happen to change this unfortunate CEO-CMO dynamic?
First, The CEO must recognize the criticality of the CMO as the voice of the customer
The primary role of the CMO is to be the voice of the customer. The CMO embodies the customer informing the organization. Customer understanding and insight generation are the CMO’s highest priorities. Sure, the CMO has numerous other functions these days. But, being the voice of the customer must be the number one function.
CMOs must embed themselves in customers’ psyches and, then, create future scenarios and actions to keep the brand-business viable, especially during volatile, uncertain times. According to a book from two Deloitte (the global business-services group) principals, one of the main CMO roles is to translate customer needs into “… trendspotting that will then generate observational insights” that will hopefully “… shift” the brand-business strategies.
To do this well, CMOs cannot just rely on interpreting digital data. These data provide answers on what customers have done and what they are doing. Based on past and current behaviors, data can provide predictions. But, these predictions are behavior-based and do not allow for consumers changing their minds and their behaviors. Most data do not tell the CMO why customers are behaving in these ways. Knowing what is happening is interesting. Knowing why it is happening is imperative. Knowing what is information. Knowing why is insight. This means the CMO must not just focus on what the customer wants. It means focusing on problems and concerns for which the brand-business can create solutions.
In a world that is drowning in data, knowing what to ignore is as important as knowing what to consider. Marketers must return to using their expertise and their judgment and their creativity to make reasoned, informed, insightful decisions. CEOs and CMOs are in their positions because they are people who recognize, that at some point, they know what they know and must make a leap of informed faith.
The CMO is in the unique position of being responsible for the common thread that crosses all functions, all geographies, all organizational levels. The CMO is the keeper of the customer wants and needs. In a customer-focused business, the CMO is the voice of the customer.
Second, make insight meaningful again.
Here marketers are at fault, making insight a marketing cliché. Marketers have turned insight into a meaningless, useless term.
· Is it insight to discover that people’s incomes are under strain and stress?
· Is it insight to learn that… people want an easy-to-use clothes washing- machine?
· Is it insight to learn that people like food that tastes good?
· Is it insight to learn that people prefer a dog food the dog will eat?
· Is it insight to learn that a B2B customer wants a computer system that won’t go down?
These are not insights. These are observations of the obvious. Yet, in each case, these were reported as insights based on extensive research.
Meaningful insights are more than mere information, they need to meet two criteria:
· Surprise at what you learned…
· And, as a result, a change in behavior based on this learning.
Real, actionable insight will not come from superior data analysis.
Business schools are turning out MBAs who are analyzers rather than synthesizers. MBA has come to mean, “manage by analytics.” This may, in turn, lead to meaning “murderer of brand assets.”
Superior analysis provides understanding of where we are and how we got to where we are. It does not provide insight into what kind of future we can create. Over a decade ago, a professor at Harvard Business School observed that “true innovation and strategic value are going to be found more and more in the “synthesizers – the people who draw together stuff from multiple fields and use that to create an understanding of what the company should do.”
Third, CEOs must accept that measurement is a tool, not a justification
As business has become more challenging, CEOs have become more cautious. CEOs over-rely on metrics. In many cases, metrics stifle marketing. Of course, the CMO must be focused on producing business results. But, having to justify marketing’s value only through metrics results in an over-emphasis on metrics: numbing by numbers.
Do not use metrics to justify; use metrics to guide continuous improvement. If marketing needs to be justified in the organization, then marketing has a bigger problem than can be solved through measurement.
Measurement should be a learning tool, not a justification tool. Measurement of past experiences cannot tell us what will or might work in the future. We can never be certain about the future. We can be confident that what we propose is better than what we are doing.
There is a big difference between confidence and certainty. Confidence comes from a combination of research information, experience and judgment.
As reported by Deloitte, the CMO still has to prove that there is monetary value within brand-business marketing. While attending to all other important activities, the CMO must prove that brand-business marketing is an investment not a cost. Again, it makes sense to follow Peter Drucker’s lead. He said, innovation and marketing are the levers for growth.
Fourth, CEOs must stop forcing the fragmenting of marketing. If the CEO does not trust the CMO, make a change. CEOs have fallen in love with all of the wonders of a tech-inspired world. CEOs are forcing CMOs to be conductors not counselors.
The fragmentation of marketing is forcing the Chief Marketing Officer to be a coordinator of multi-media messages; a manager of mini moguls who have staked out their spheres of influence. This CMO role is to be the uber-manager of “…digital transformation, proving marketing’s value, diversity, equity, inclusion” efforts. CMO’s are supposed to “… oversee marketing analytics, manage customer data, create connected experiences (know-me-know-my history), manage customer-led privacy (give-me-control-of-my data), be agile and make sure the AI is empathetic….”
CEOs want CMO’s to promote the brand’s social, environmental credentials (purpose), be inclusive, hire people with analytical skills, figure out how to manage data collection without cookies, make sure all customer experiences are delivered in a personalized manner, make sure that these experiences cover both physical and digital channels while predicting customer behavior in order to deliver holistic experiences. The CMO is the digital transformation leader, the personalized customer experience leader, the leader of customer-focused data capture and usage, and the customer data privacy captain.
Based on detailed information from three Deloitte reports, the CMO should be one of the more valued individuals within the organization. The CMO should be the leading C-Suite influencer encompassing the entire customer experience.
Meeting the challenges of today’s brand-business environment is exciting. The CMO is now charged with some of the most topical functions for steering brand-businesses within the enterprise. However, at the same time, the CEO is asking the CMO to become a dumpster for an array of activities not focused on being the voice of the customer to the enterprise nor on creating a customer-focused brand-business aimed at profitably satisfying customer needs and problems.
Let’s be clear: all of these new tasks are important for driving the business. But, an enlightened CEO knows that the CMO must not relinquish the responsibility of leading the understanding, articulating and activating of great trustworthy, quality brand promises for enduring profitable growth. Nothing valuable can happen without knowing what the brand-business stands for in the eyes of the customer. Nothing valuable can happen without growing customer-perceived trustworthy brand-business value.
If a CEO is focused on enduring profitable growth, then the CEO needs to get a grip on the fundamentals of marketing. The CEO must know marketing’s essential role in growing a loyal customer base of frequent purchasers who generate high-quality revenue growth and profitability. The CMO must be more familiar with the financial aspects a CEO must deal with daily. The CEO must stop asking what this costs the business and start asking what is this worth for the business.
Contributed to Branding Strategy Insider by: Joan Kiddon, Author of The Paradox Planet: Creating Brand Experiences For The Age Of I
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