Coming soon to an office near you: The CMO of the Future. You may not recognize him. He has ROI on the tip of his tongue, reams of customer analytics in hand and appointments with the engineering department keyed into his PDA.
CMO Partners--a venture launched in February by former Inforte consultants Peter McNally and Tom Klein and Wharton marketing professor David Reibstein--is on a quest to redefine the CMO's job description. Not only must CMOs continue to create value for customers, the group contends, they must also deliver on a new mandate: Capture value for the company. That requires new approaches to link marketing investments directly to financial outcomes.
The belief that outdated practices were keeping CMOs from thriving in a new era of accountability helped drive the trio's approach to the research and their formation of CMO Partners. "It appeared to us that traditional marketing practices weren't working," says McNally, who along with Klein and Reibstein are CMO Partners' managing directors. "At a very fundamental level, there was something wrong."
To test their theories, the team kicked off a research project sponsored by Inforte, Wharton and executive search firm Spencer Stuart, in which they interviewed more than 350 CEOs and CMOs. Their primary conclusion: The role of the CMO must expand.
"Our definition of marketing is everything you do to go to market," says McNally. "When you define it that way, that's a much broader lens and you start seeing opportunities across the organization. It doesn't mean that everything has to report to the CMO, but it does mean that you've got to be able to define your agenda and then work across the organization to achieve it."
CMO Partners envisions a chief marketer who knows how to develop intangible assets such as brand value and customer loyalty and--most important--link those assets to profitable growth.
To their surprise, the group's findings suggest that the biggest challenge may not be getting CEOs and CMOs to see eye to eye. One may speak the language of revenue while the other may prefer talking about customer satisfaction and brand awareness, but the research indicates that these groups are on the same page when it comes to identifying a company's most pressing marketing concerns.
"We did not find any major difference between the CEOs and CMOs on any major topic," says McNally.
That's not to say their joint outlook is all positive. Neither is fully satisfied with marketing's ability to tackle important marketing issues such as customer retention and product growth. Only 24 percent of CMOs and 21 percent of CEOs surveyed said their company has been effective in managing their most pressing marketing issue, which may explain the explosive level of CMO turnover.
"CEOs were getting more and more frustrated with marketing. Marketing had been given a very long leash and was running around in circles on that leash," says Reibstein.
The problem is one of accountability. Traditional metrics such as awareness or satisfaction don't connect to corporate performance metrics. Yet most respondents continue to look to these types of metrics in an attempt to justify their marketing budgets.
"People may say they have an objective of what they want their satisfaction levels to be," says Reibstein. "But they don't know what it costs to get that, and they don't know what it delivers for them once they get it."
In short, CMOs need to embrace new metrics that will help them draw a straight line between, say, brand value and financial results. It's a call to action that requires CMOs to recast their role as the voice of the customer across the enterprise.
"Marketing needs to take ownership of any experience with the brand and the company," says Klein. "They need to worry about all customer interactions: what goes on when someone calls in to the contact center, what happens when someone from the sales force visits a customer, what happens when someone drops something off at the loading dock."
Yahoo CMO Cammie Dunaway, who participated in the CMO Partners survey, agrees that marketing must align better with all facets of the corporation. "You want to be connecting in at the very senior levels of the organization," she says, "and you also want to be connecting in with the engineers and scientists who are doing a lot of the work on the front lines."
Dunaway, whose marketing team is a mix of mathematical, scientific and creative talent, compares the ideal CMO to an orchestra conductor. "You have to figure out how you pull all those instruments together in a way that's delivering great marketing accountability and engaging marketing programs," she says.
The maestro must also be able to embrace the latest technology and research methods.
"It's a much bigger toolbox than when I started as a marketing assistant at Frito-Lay back in 1990," says Dunaway. "Think about something like search-engine marketing, which just roared onto the scene in the past two years and has become critically important as part of a marketing mix."
Less than half of the respondents to the survey, however, listed technology investment as very important. That's a problem, McNally contends.
"The selective and appropriate use of technology to drive the value creation and value capture processes is critical," he says. "How do you connect marketing across the organization? How do you work with customer data? There's a technology element to those issues."
That could be prove to be a challenge for some veteran CMOs, says Jerry Noonan, a consultant with Spencer Stuart who helped develop a target list for the CMO of the Future research. "Marketers with cross-enterprise leadership skills came of age when technology was not really part of the marketing world," says Noonan. "If marketers are not able to adopt new technology, they are not going to be able to keep pace."
CMO Partners is still tweaking its future CMO prototype. The next step: putting its findings into practice, first by defining processes to help CMOs demonstrate the connection between marketing investments and financial outcomes.
"We're going to be working with customers to help them find out how to capture value and then see what generalizations we can make," says Reibstein. "How much does customer satisfaction really contribute to the valuation of a firm? What are the factors that lead to differences across firms?"
Adds McNally: "If we can build that discipline, we will change the practice of marketing. That's what we're really after."
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