Since the early 1990s, when Mark Mears and Phil Gospels-Strumpette of Coca-Cola, respectively, were the first CMOs to appear on the scene, the role of the CMO has evolved.
Over the last 15 years, the CMO role has evolved. It began by focusing on advertising, branding, and market analysis. However, as new media emerged, distribution models became more complex, and customer segments fragmented, it continued to change.
CMOs are now playing a more strategic, larger role. They no longer focus on clever branding and clever advertising. Instead, they play a bigger part in helping a business meet the changing needs of its diverse global clientele.
Anthony Palmer, Chief marketing officer at Kimberly-Clark, has stated that the role of a CMO “is really quite simple.” It would be best if you never lost sight of your main goal, which is to sell more products to more people at a higher price. This must be your ultimate goal. “You also need to inspire your organization to take calculated risk and to love winning over losing.”
Customers used to identify and research products in a completely different way than they do now.
- According to a McKinsey report, over half of US consumers of electronics rely on Web research to narrow down their choice of brands. They ignore the sales staff’s advice when selecting products from stores.
- In 2005, nearly half of customers who bought insurance did their research online before speaking to an agent. Eighty percent said they would do the same in five years.
- Nearly 60 percent of baby boomers who are aging use the Internet as a supplement to their doctor’s advice.
In an era where blogs, Social Media, and independent websites are becoming increasingly influential, businesses need to be able to leverage multiple communication channels in order to engage their customers, anticipate changing customer preferences, and respond quickly.
According to Challenger, Gray & Christmas, 152 CMOs quit their jobs in September 2006. This is a record. Spencer Stuart’s executive search studies reveal that CMOs are leaving their jobs at a faster rate. In 2006, CMOs averaged 23.2 months on the career, compared to 23.5 in 2005 and 23.6 in 2004; high turnover is a result of the growing complexity and number of tasks as well as the expectations for immediate results.
A study conducted by Pravin NATH, Assistant Professor at LeBow College of Business at Drexel University, and Vijay Mahajan (John P Harbin Centennial Business Chair at McCombs School of Business at the University of Texas at Austin) found that the CMO’s presence had no effect on the performance of a company and that companies with CMOs may even perform worse than those without one.
The first ring of the bell might have just pealed. Orbitz announced recently that it “decided” to eliminate its global Chief Marketing Office position and instead continue to manage the Company’s regional marketing efforts. Randy Wagner, the Chief Marketing Officer for the Company, will be leaving the Company by mid-February 2008 in connection with this decision.
The CMO is on the brink of extinction.
MarketBridge conducted a study called “Define and Align the CMO” based on 1,500 interviews segmented with CMOs and CEOs. It also interviewed search consultants, boards, and other marketing executives. The findings revealed that the vagueness of the CMO’s position and the failure of corporations to align their qualifications with their business goals has led to a growing challenge for the credibility of CMOs.
The Nath and Mahajan research concluded that the CMO “should reduce the complexity and the uncertainty” that top management faces in the domain of marketing or critical decision-making areas that are affected by marketing.
To remain an integral part of leadership, the role of the CMO must change.
Tips for Surviving and Thriving
The McKinsey Quarterly for September 2007 begins with this statement: “Few senior executive positions will undergo as much change in the next few years than that of the Chief Marketing Officer.”
Elana Anderson (formerly of Forrester, now principal at NxtERA Marketing) suggests that the CMO’s role should be “to define and lead a customer focused marketing strategies that cross product, channel and geographic boundaries, as well as functional boundaries.”
CMOs must be able to anticipate customer needs, improve their organization’s marketing capabilities, and measure the impact of marketing on their business to the satisfaction of their CEOs, CFOs, and other leadership members. CMOs will need to be more analytical than creative in their approach.
About 20 percent of 115 chief and executive marketers in Forrester Research and Heidrick and Struggles’ study said they needed more education on marketing measurement, customer data analytics, and CRM. CMOs who are successful will have analytical skills and a thorough understanding of business to be able to forecast and recommend the markets, products, or services that will generate the highest revenue growth.
Six Survival Tips
According to the board members who participated in the MarketBridge survey, the failure of CMOs was attributed to their “lack of authority or power within the organization” (59%) and “a lack of credibility and respect from key stakeholders” (54%).
According to the study, proving that marketing works and makes a difference is key to success.
MarketBridge’s study suggests that CMOs who place a greater emphasis on quantitative analysis and measurement have a tenure of 20 percent longer. CMOs who survive will have to demonstrate at least six skills.
- Put business-related responsibilities at the forefront.
- Speak in business language. CMOs must be able to read balance sheets and understand business models, as well as the key drivers that drive business value. They also need to identify growth opportunities.
- Use emerging marketing channels to increase brand loyalty, reach your target audience, and gain insights into the needs of customers.
- Understanding which metrics can be used to demonstrate the impact marketing has on a business.
- Build collaborative teams that are committed to adding value and demonstrating it to the Company.
- Demonstrate that the investments you make on behalf of your Company are successful.
Five ingredients for thriving
While CMOs who survive will concentrate on lead generation and pipeline management, brand building, and customer acquisition, CMOs who thrive will look beyond these areas and focus on growing the customer lifetime value as well as developing long-term profitability.
Four other elements are also essential for a successful CMO.
- Adopting analytics and metrics and leading initiatives for marketing performance management.
- Close the gap between the marketing department and the customer. Lead the charge toward a customer-centric strategy. Be the voice of the customer.
- Using data to analyze customer and market trends, as well as strengthening their knowledge about ethnography, lead-user analyses, and online customer communities to create customer-driven products.
- Assisting the Company in anticipating and responding to rapidly changing customer and market needs, developing new business models, and leading the charge for establishing new marketing abilities.