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2012 cmo study comparative deck
- 1. Insights from the Global Chief Marketing Officer Study
- 2. IBM Institute for Business Value The 2011 Global CMO Study is part of our C-suite Study series encompassing interviews with more than 15,000 C-suite executives ’04-’05 ’06-’07 ’08-’09 ’10-’11 CEO CIO CFO CHRO CSCO CMO 2 © 2011 IBM Corporation
- 3. IBM Institute for Business Value In this largest sample of face-to-face CMO interviews, we spoke with more than 1,700 CMOs of organizations in 64 countries and 19 industries Sectors Regions 3% Public 17% 16% Communications North America 21% Industrial 44% Growth markets 36% Distribution 35% 24% Mexico/SSA Europe Financial Services Sectors 4% Japan 2% 9% Public Industrial 16% Communications 33% 64 interviews in our Financial Services region 41% Distribution Growth Markets include Latin America, non-EU Eastern Europe, Middle East and Africa and Asia Pacific (excluding Japan); n=1734 3 © 2011 IBM Corporation
- 4. IBM Institute for Business Value Through these in-depth discussions, we are better able to understand the evolving role and function of the CMO in the C-suite Scope Approach Analysis Sample consists of private sector Face-to-face one hour interviews Statistical analysis of 35 questions CMOs (97%) and public sector with 1,734 CMOs and the related 236 discrete factors leaders (3%) Facilitated using structured In-depth analysis based on self- Representative sample across 64 questionnaire reported performance nations and 19 industries characteristics for differences Wide coverage: from highly between “outperformers” and Private sector organizations profiled organizations (48 of the “underperformers” with revenue more than US$500 100 top Interbrand organizations) million in mature markets and more to lower profile local organizations Comprehensive review and than US$250 million in growth analysis of more than 10,000 markets; public sector organizations interview quotes with more than 1,000 employees Marketing in the Digital Era Deliver value to empowered customers Foster lasting connections Capture value, measure results Note: Outperformers and underperformers were identified by answers to questions about their organization’s competitive position. Those who selected “significantly outperform industry peers” were identified as outperformers; those who selected “somewhat or significantly underperform industry peers” were grouped as underperformers. 4 4 © 2011 IBM Corporation
- 5. IBM Institute for Business Value Agenda Introduction – Swimming, treading water or drowning? Deliver value to empowered customers – Move from market analysis to understanding individuals – Take charge of growing volume, velocity and variety of data Foster lasting connections – Focus on the relationship, not just the transaction – Invest in building your corporate character Capture value, measure results – Demonstrate accountability through ROI – Recognize shift towards new skills and capabilities The CMO Agenda – Get fit for the future “The perfect solution is to serve each consumer individually. The problem? There are 7 billion of them.” Consumer products CMO, Singapore 5 5 © 2011 IBM Corporation
- 6. IBM Institute for Business Value CMOs: swimming, treading water or drowning? In this digital era... CMOs have to... Globalization has brought the world to Do more than ever, inside and outside the everyone’s backyard organization Everyone is a broadcaster, publisher and a Be more accountable for return on investment critic: there is nowhere to hide (ROI) Transparency is the new price of entry Use tools and technologies that their children understand better than they do And... And... more data, more sources, CMOs have just three to four years less clarity to make their mark “Being able to collect the right information, making sure the right people have access to it, can analyze it, and make recommendations based on insights – this is where marketing needs to lead, invest, engage.” Engineering and machinery senior VP sales and marketing, France 6 6 © 2011 IBM Corporation
- 7. IBM Institute for Business Value CMOs feel unprepared for the amount of complexity they face Expected level of complexity and preparedness to handle Percent of CMOs responding 79% Expect high/very high level of complexity over 5 years 48% 31% complexity Feel prepared for gap expected complexity “In this coming age of complexity and uncertainty, there is a serious risk of ‘losing our north,’ of being intoxicated by data overload and suffering from corporate indigestion.” Industrial products senior managing director/marketing, Spain Source: Q4 How much complexity will your organization have to master over the next 3 to 5 years compared to today? n=1709; Q6 How prepared do you feel for the expected complexity ahead? n=1712 7 7 © 2011 IBM Corporation
- 8. IBM Institute for Business Value The vast majority of CMOs are underprepared to manage the impact of key changes in the marketing arena Global Underpreparedness LA Underpreparedness Percent of CMOs reporting underpreparedness 50% Data explosion 71% 67% Social media 68% 80% Growth of channel and device choices 65% 60% Shifting consumer demographics 63% 68% Financial constraints 59% 67% Decreasing brand loyalty 57% Emerging market opportunities 56% In our region, the lack of preparedness to ROI accountability 56% approach Social Media is greater than in Customer collaboration and influence 56% the rest of world Privacy considerations 55% Global outsourcing 54% Regulatory considerations 50% Corporate transparency 47% Source: Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years? n=149 to 1141 (n = number of respondents who selected the factor as important) 8 8 © 2011 IBM Corporation
- 9. IBM Institute for Business Value We wanted to understand which underprepared areas are the most critical for CMOs Global Marketing Priority Matrix 1 Data explosion Underpreparedness 2 Social media Percent of CMOs reporting underpreparedness 1 3 Growth of channel and device choices 70 2 4 Shifting consumer demographics 3 5 Financial constraints 4 6 Global outsourcing 60 5 Emerging market opportunities 7 7 9 6 8 ROI accountability 8 10 11 9 Decreasing brand loyalty 50 12 Customer collaboration and influence 10 13 11 Privacy considerations Factors impacting marketing 12 Regulatory considerations 40 Percent of CMOs selecting as ‘Top five factors’ 13 Corporate transparency 0 20 40 60 Mean Source: Q7 Which of the following market factors will have the most impact on your marketing organization over the next 3 to 5 years? n1=1733; Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years? 9 9 n2=149 to 1141 (n2 = number of respondents who selected the factor as important in Q7) © 2011 IBM Corporation
- 10. IBM Institute for Business Value To deal with the broad level of underpreparedness, CMOs signaled three key domains of improvement Deliver value to empowered Capture value, customers measure results Foster lasting connections “Marketing must become more adept at managing the magnitude of change now taking place. Otherwise, it will be like going into battle with a Swiss Army knife.” Financial services vice president, marketing, US 10 10 © 2011 IBM Corporation
- 11. IBM Institute for Business Value Agenda Introduction – Swimming, treading water or drowning? Deliver value to empowered customers – Move from market analysis to understanding individuals – Take charge of growing volume, velocity and variety of data Foster lasting connections – Focus on the relationship, not just the transaction – Invest in building your corporate character Capture value, measure results – Demonstrate accountability through ROI – Recognize shift towards new skills and capabilities The CMO Agenda – Get fit for the future “The biggest challenge isn’t the amount of data that’s available, but interpreting the data and making business decisions based on the insights it provides.” Telecommunications CMO, Poland 11 11 © 2011 IBM Corporation
- 12. IBM Institute for Business Value Most CMOs are still focusing on understanding markets versus understanding individuals to shape their strategy Global Our Sources used to influence strategy decisions Region Percent of CMOs selecting all sources that apply 50% Market research 82% 95% Corporate strategy 81% 84% Competitive benchmarking 80% Customer analytics 74% Marketing team analysis 69% Customer service feedback 68% 80% Financial metrics 68% Campaign analysis 68% 80% Brand performance analysis 65% Sales/sell-through numbers 61% 88% Test panels/focus groups 54% R&D insights 52% Consumer-generated reviews 48% In our region we are using Third-party reviews & rankings 42% most the traditional sources Retail and shopper analysis 41% Online communications 40% Professional journals 37% Blogs 26% Supply-chain performance 25% Key sources to Source: Q15 What sources of information influence your marketing strategy decisions? n=1733 understand individuals 12 12 © 2011 IBM Corporation
- 13. IBM Institute for Business Value CMOs are overwhelmingly underprepared for the data explosion and recognize need to invest in and integrate technology and analytics Global Underpreparedness Percent of CMOs selecting as “Top 5 Factors” Need for change to deal with data explosion Percent of CMOs indicating high/significant need Data explosion 71% Social media 68% Invest in 73% technology Channel & device choices 65% Integrate Shifting demographics 63% 69% insights Financial constraints 59% Understand 65% Decreasing brand loyalty 57% analytics Emerging markets 56% Rethink 64% skill mix ROI accountability 56% Collaborate Customer collaboration 56% 52% with peers Privacy considerations 55% Validate 49% Global outsourcing 54% ROI Regulatory considerations 50% Address 28% privacy Corporate transparency 47% Source: Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years? n=149 to 1141; Q20 To what extent will the opportunity to collect unprecedented amounts of data require you to change? n=1629 to 1673 13 13 © 2011 IBM Corporation
- 14. IBM Institute for Business Value CMOs in our region are more worried to understand that data explosion and make decisions accordingly Mexico SSA Underpreparedness Percent of CMOs selecting as “Top 5 Factors” Need for change to deal with data explosion Percent of CMOs indicating high/significant need Data explosion 67% Social media 80% Invest in 81% 60% technology Channel & device choices 68% Integrate 75% Shifting demographics insights Financial constraints 67% Understand analytics 89% Decreasing brand loyalty 41% Emerging markets 56% Rethink 72% skill mix ROI accountability 47% Collaborate Customer collaboration 59% with peers 58% Privacy considerations 0% Validate ROI 66% Global outsourcing 57% 54% Address Regulatory considerations 38% privacy Corporate transparency 21% Source: Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years? n=5 to 46; Q20 To what extent will the opportunity to collect unprecedented amounts of data require you to change? n=63 to 64 14 © 2011 IBM Corporation
- 15. IBM Institute for Business Value Majority of CMOs are eager to deploy tools and technologies to grapple with growing volume, velocity and variety of data Global Our Plans to increase the use of technology Region Percent of CMOs selecting technologies 50% Social media 82% 91% Customer analytics 81% 89% CRM 81% 86% Mobile applications 80% 89% Content management 73% Tablet applications 72% Single view of customer 70% According to Social Media and Collaboration tools 68% Analytics unpreparedness in our Predictive analytics 66% region, they want to increase the Reputation management 63% use of Technology in those two areas Search engine optimization 62% Campaign management 61% Score cards/dashboards 56% E-mail marketing 46% Source: Q22 Do you plan to decrease or increase the use of the following technologies over the next 3 to 5 years? n=1616 to 1671 15 15 © 2011 IBM Corporation
- 16. IBM Institute for Business Value What’s inhibiting them? Building the business case, IT-marketing alignment/integration issues and marketing technology skills Business case Global Our IT related Region Barriers to using technology in marketing Marketing related Top 5 selected by CMOs IT and marketing related Usability Cost 72% 75% Lack of ROI certainty 61% 61% Tool implementation issues 47% 56% Lack of skills of (potential) users 46% 56% Lack of marketing and IT alignment 45% As expected, in our region the Lack of IT integration with organization 43% main barriers are related to cost and how to show the ROI Ease of use 37% Lack of technological ownership in marketing 34% Lack of IT skills 25% Reliability 18% Source: Q23 What are the top 5 barriers to using technology? n=1733 16 16 © 2011 IBM Corporation
- 17. IBM Institute for Business Value Recommendations and tough questions – Deliver value to empowered customers Begin with the big business question. How are you gearing your marketing people, Focus on the opportunity to create value programs and processes to understand for customers as individuals. individuals not just markets? Open the aperture. Reprioritize your investments to mine digital channels, such as blogs, tweets, social networks, peer reviews and consumer- Which tools and processes are you investing in generated content, to access customers’ to better understand and respond to what honest, unmediated views, values and individual customers are saying and doing? expectations. Use advanced analytics to recognize preferences, trends and patterns across every touch point. Safeguard data. Work with IT to assess potential data and How do you safeguard your customers' data and infrastructure exposures, employ tools to secure privacy in a multi-channel, multi-device world? customer data and update privacy policies to address customers’ concerns. 17 17 © 2011 IBM Corporation
- 18. IBM Institute for Business Value Agenda Introduction – Swimming, treading water or drowning? Deliver value to empowered customers – Move from market analysis to understanding individuals – Take charge of growing volume, velocity and variety of data Foster lasting connections – Focus on the relationship, not just the transaction – Invest in building your corporate character Capture value, measure results – Demonstrate accountability through ROI – Recognize shift towards new skills and capabilities The CMO Agenda – Get fit for the future “Marketing performance tracking is driven by customer loyalty. End-to-end lifecycle management is key.” Telecommunications CMO, Belgium 18 18 © 2011 IBM Corporation
- 19. IBM Institute for Business Value Confronted with the shift toward emerging digital technologies, CMOs see enhancing customer loyalty as the top priority Global Our Priorities for managing the shift toward digital technologies Region Enhance customer loyalty/advocacy 67% 70% Design experiences for tablet/mobile apps 57% 66% Use social media as a key engagement channel 56% 70% Use integrated software suites to manage customers 56% Monitor the brand via social media 51% Measure ROI of digital technologies 47% In this subject, the results are the same in our region, Analyze online/offline transaction analysis 45% with the high value of using social media as a Develop social interaction governance/policies 37% key engagement channel Monetize social media 29% Gain comprehensive visibility of supply chain 24% Source: Q12 What are your priorities for managing the shift toward emerging digital technologies? (Select top five.) n=1733 19 19 © 2011 IBM Corporation
- 20. IBM Institute for Business Value Customers have clear expectations based on the corporate character, being even bolder in our region.. GLOBAL Is your corporate character understood in the marketplace? 22% 53% say no or limited say understood and (strong) understanding of contributor to brand success corporate character 5% 17% 25% 32% 21% Not understood Strong contributor to the brand’s success Mexico SSA Is your corporate character understood in the marketplace? 12% 76% say no or limited understanding of say understood and (strong) corporate contributor to brand success character 3% 9% 11% 34% 42% Not understood Strong contributor to the brand’s success Source: Q10 Is your corporate character understood in the marketplace? n=1702; Q11 How much work is needed to have employees embrace and live the corporate character? n=1703 20 20 © 2011 IBM Corporation
- 21. IBM Institute for Business Value … yet employees are not fully on board and the gap in our region is even bigger GLOBAL Is much more work needed to get employees on board? 20% 57% say no or very say significant or much work needed limited work needed 25% 32% 23% 15% 5% Significant work needed No work needed Mexico SSA Is much more work needed to get employees on board? 75% 8% say no or say significant or much work very limited needed work needed 27% 48% 17% 5% 3% Significant work needed No work needed Source: Q10 Is your corporate character understood in the marketplace? n=1702; Q11 How much work is needed to have employees embrace and live the corporate character? n=1703 21 21 © 2011 IBM Corporation
- 22. IBM Institute for Business Value To activate the corporate character in a transparent world, marketing needs to drive broad changes in the organization Global Our Top 5 initiatives driven by transparency Region Percent of CMOs selecting initiatives 50% Manage brand reputation within 79% and beyond the company 75% Enhance engagement with 75% customers and citizens 74% Expand data collection, analysis 75% and insights capabilities 67% Strengthen collaboration 64% 75% across the enterprise Orchestrate a single view of the brand 61% 72% “Traditionally, corporate culture and character have been managed by HR, but it can't remain there in a digital environment. The world of separate internal and external messages is gone, and internal actions, memos and decisions can impact your brand just as much as an advertising campaign.” Financial markets EVP, head of global marketing, US Source: Q9 To what extent does transparency create a need for you to: n=1645 to 1675 22 22 © 2011 IBM Corporation
- 23. IBM Institute for Business Value Recommendations and tough questions – Foster lasting connections Jumpstart relationships. Capitalize on new digital channels to stimulate How do your marketing tactics and investments conversations with existing and potential work in sync to create and customers, and create new types of grow a pervasive and innovative total customer relationships to reveal untapped relationship? opportunities. Use tangible incentives to attract followers. Connect continuously. Engage with your customers and citizens at What steps are you taking to connect customer insights with product and service development, every stage in the customer lifecycle, and build and stimulate your customers to become brand online and offline communities to strengthen or company advocates? your brand. Champion your organization’s corporate character. Help the enterprise define and activate the traits How are you collaborating with your that make it unique. Work with the entire C-suite C-level peers to activate your “corporate to meld the internal and external faces of the character” across all touch points and enterprise. experiences? 23 23 © 2011 IBM Corporation
- 24. IBM Institute for Business Value Agenda Introduction – Swimming, treading water or drowning? Deliver value to empowered customers – Move from market analysis to understanding individuals – Take charge of growing volume, velocity and variety of data Foster lasting connections – Focus on the relationship, not just the transaction – Invest in building your corporate character Capture value, measure results – Demonstrate accountability through ROI – Recognize shift towards new skills and capabilities The CMO Agenda – Get fit for the future “The success of my role is far more about analytics and technology than it is about hanging out with my ad agency, coming up with great creative campaigns. We must increase campaign ROI.” Airlines executive manager/marketing, Australia 24 24 © 2011 IBM Corporation
- 25. IBM Institute for Business Value CMOs in WW as well as in our region believe ROI on marketing spend will be the number one method for determining success by 2015 Global Our Seven most important measures to gauge marketing success Region Percent of CMOs selecting success measurements Marketing ROI 63% 78% Customer experience 58% 63% Conversion rate/new customers 48% 45% Overall sales 45% 39% Marketing-influenced sales 42% 48% Revenue per customer 42% 52% Social media metrics 38% 59% Source: Q19 What are the 5 most important measurements you (will) use to gauge marketing success by 2015? n=1733 25 25 © 2011 IBM Corporation
- 26. IBM Institute for Business Value To truly deliver marketing ROI, CMOs need to have significant influence across all four Ps, not just promotion Global Percent of CMOs citing significant influence Integrated advertising and promotion 84% Promotion Aligned internal and external communications 82% Innovative social and other emerging media 73% Deeply researching customer needs 67% Products Product service portfolio 53% Comprehensive research and development cycle 47% Customer experience involving multiple touch points 54% Place Channel selection and management 47% End-to-end supply chain process 31% Full competitive pricing assessment 48% Price Understanding of total ownership costs/benefits 46% Integrated, cross-company pricing process 37% Source: Q14 How much influence do you and your organization have over the “Four Ps” and their related sub-factors? n=1580 to 1703 26 26 © 2011 IBM Corporation
- 27. IBM Institute for Business Value In our region, Advertising and Promotion seem to be more influence than the rest Mexico/SSA Percent of CMOs citing significant influence Integrated advertising and promotion 91% Promotion Aligned internal and external communications 84% Innovative social and other emerging media 84% Deeply researching customer needs 75% Products Product service portfolio 59% Comprehensive research and development cycle 56% Customer experience involving multiple touch points 59% Place Channel selection and management 47% End-to-end supply chain process 28% Full competitive pricing assessment 59% Price Understanding of total ownership costs/benefits 51% Integrated, cross-company pricing process 45% Source: Q14 How much influence do you and your organization have over the “Four Ps” and their related sub-factors? n=60 to 64 27 © 2011 IBM Corporation
- 28. IBM Institute for Business Value To gain influence, CMOs need to introduce new skills into marketing's mix; many plan to tap external expertise Global CMOs’ use of external partnerships Sales contact/lead management 7% 100% Customer and data analytics 12% 92% Direct/relationship marketing 13% 77% IT skills 23% 61% Call and service center 22% 59% Tracking/measurement 13% 54% Event management 28% 50% Online community development 22% 50% New media strategy and design 24% 42% Online advertising and promotion 35% 26% Percent of CMOs using partners extensively today Traditional advertising and promotion 31% 19% Percent increase of Creative brand strategy 17% 18% partnerships in 3-5 years Source: Q16 What do you do within marketing and what resources will you tap into, to manage marketing today and going forward? (in 3 to 5 years) n (Today) = 1440 to 1668 n (in 3-5 years) = 1481 to 1636 28 28 © 2011 IBM Corporation
- 29. IBM Institute for Business Value According to the main worries ranked by the CMOs in our region, they plan t increase the use of external partnerships to obtain IT Skills, analytics and social media Mexico/SSA CMOs’ use of external partnerships Sales contact/lead management 14% 93% Customer and data analytics 9% 111% Direct/relationship marketing 14% 79% IT skills 17% 147% Call and service center 18% 50% Tracking/measurement 11% 45% Event management 30% 67% Online community development 19% 121% New media strategy and design 22% 82% Online advertising and promotion 26% 62% Percent of CMOs using partners extensively today Traditional advertising and promotion 25% 40% Percent increase of Creative brand strategy 20% -15% partnerships in 3-5 years Source: Q16 What do you do within marketing and what resources will you tap into, to manage marketing today and going forward? (in 3 to 5 years) n (Today) = 57 to 64 n (in 3-5 years) = 59 to 63 29 29 © 2011 IBM Corporation
- 30. IBM Institute for Business Value CMOs also can expand their personal influence by shifting to new capabilities that focus on technology, social media and ROI Global Our Capabilities for personal success over next 3-5 years Region Percent of CMOs selecting capabilities Leadership abilities 65% 72% Voice of the customer insights 63% 78% Creative thinking 60% 69% Cross-CxO collaboration 49% 56% Competitive trends insights 45% 38% Analytics aptitude 45% 52% Management capabilities 31% Understanding products/services value chain 30% Demand creation capabilities 30% Technology savviness 28% Social media expertise 25% Finance skills 16% Source: Q17 What capabilities do you need to be personally successful over the next 3 to 5 years? n=1733 30 30 © 2011 IBM Corporation
- 31. IBM Institute for Business Value Recommendations and tough questions – Capture value, measure results Capitalize on new tools to measure what How are you measuring and analyzing the matters. results of your initiatives and Use advanced analytics and compelling communicating them to advance your metrics to improve decision making and to marketing function’s credibility and demonstrate your accountability. accountability? Enhance business acumen. What are you doing to enrich the skills mix in Adjust your talent mix to increase technical the marketing function and build technical, and financial skills, and grow your digital financial and digital acumen? expertise by finding new partners to supplement your in-house resources. Lead by example. In what ways are you personally investing to Expand your horizons by enhancing your broaden your capabilities? personal financial, technical and digital savviness. 31 31 © 2011 IBM Corporation
- 32. IBM Institute for Business Value Agenda Introduction – Swimming, treading water or drowning? Deliver value to empowered customers – Move from market analysis to understanding individuals – Take charge of growing volume, velocity and variety of data Foster lasting connections – Focus on the relationship, not just the transaction – Invest in building your corporate character Capture value, measure results – Demonstrate accountability through ROI – Recognize shift towards new skills and capabilities The CMO Agenda – Get fit for the future “Marketing is a balanced combination of art and science. A good approach blends human creativity and logical thinking based on the data insights technology offers.” Consumer products marketing director, Vietnam 32 32 © 2011 IBM Corporation
- 33. IBM Institute for Business Value Moving from Stretched to Strengthened Deliver value to empowered Foster lasting Capture value, customers connections measure results Focus on creating value for Capitalize on new digital channels to Use advanced analytics and customers as individuals stimulate customer conversations compelling metrics to improve and new relationships; use tangible decision making and to Reprioritize investments to mine incentives to attract followers demonstrate accountability digital channels to access customers’ views and use Engage with customers throughout Adjust your talent mix to increase advanced analytics to recognize the customer lifecycle; build technical and financial skills, and preferences and trends across online/offline communities to grow digital expertise by finding every touch point strengthen new partners to supplement in- your brand house resources Work with IT to assess potential data and infrastructure exposures, Help the enterprise define and Expand your horizons by enhancing employ tools to secure customer activate traits that make it unique your personal financial, technical data and update privacy policies to and engage the C-suite to meld the and address customers’ concerns internal and external faces of the digital savviness enterprise 33 33 © 2011 IBM Corporation
- 34. IBM Institute for Business Value In addition to strategic actions, there are three initiatives CMOs can start today to become better prepared for the digital era Create small action teams 1 Establish a short-term task force for each imperative to develop recommendations for improvements Invite eager marketing futurists from your organization to participate Break challenges in chunks to address the big picture, details and dependencies Identify opportunities for small wins and boost support for more radical initiatives Schedule time with your C-suite peers 2 Be proactive with collaboration CIO: Discuss improvements for marketing technologies and tools CFO: Explore financial implications and accountability CHRO: Consider how to empower employees to better represent your corporate character Engage like a customer 3 Live your customers’ experience with your brand. What does it feel like to be a segment of “one”? Drop in on stores and sites Visit your call center, sit in with representatives, or remotely access randomly recorded calls Join the customer conversation via social media 34 34 © 2011 IBM Corporation
Hinweis der Redaktion
- This study includes some of the most exciting results we have uncovered throughout the CxO series. CMOs today are on the threshold of major changes and this study takes a closer look at those forces impacting the marketing function and CMOs’ responsibilities. We found that CMOs are keenly aware of the shifting marketplace they are in. But how well are they prepared to manage the flood of change coming their way?
- This report is IBM’s first study of CMOs – and the fifteenth in the ongoing series of C-suite studies developed by the IBM Institute for Business Value . The CMO Study follows the same tradition as the studies preceding it, with fact-based insights derived from in-depth conversations with executives around the globe.
- Between February and June 2011, we met face to face with 1,734 CMOs in 19 industries and 64 countries to better understand their goals and the challenges they confront. This sample size and approach makes our study statistically very strong. It also enables us to dive deeply into many of the segments, whether by industry, geographic region or even country. There are a number of other CMO studies in the marketplace, but they are either focused on a particular geography or industry, or rely on online surveys, which cannot capture the depth, nuance and candor that comes from an in-person dialog. This is what sets this study apart from the rest – it is large enough, and comprehensive enough to provide a true reflection of what CMOs around the world are thinking and feeling.
- Scope: We focused mainly on private sector organizations with revenue of more than US$500 million in mature markets, and $250 million in growth markets. We sought to interview a wide range of organizations, from high profile companies to lower profile, local organizations. In total – our questionnaire included 35 questions, which resulted in 236 factors, and we captured more than 10,000 interview quotes which we analyzed using sentiment analysis tools to determine common themes. We also sought to identify, and understand, any disparities between CMOs in outperforming organizations and those in underperforming organizations. To this end, we asked respondents to assess their organization’s position within the industry in which it operates, on a scale ranging from one to five. Organizations ranked as fours were classified as average performers, while those ranked one to three were classified as underperformers and fives were classified as top performers. (We took four as our midpoint to compensate for any cognitive bias respondents might have in favor of their own organizations.) We cross-validated responses by comparing them with two objective financial measures – compound annual growth in operating margins and profit before taxes between 2006 and 2010 – where the information was publicly available. Our analysis confirmed there was a very high correlation between self-assessed and actual performance, thereby eliminating the potential for distortion from a systemic “halo effect.” All references to outperforming and underperforming organizations in our study are based on how CMOs assessed their own enterprises. In the course of our conversations with CMOs worldwide, an overwhelming consensus emerged. The vast majority of CMOs believe there are three key areas for improvement, three key imperatives: Deliver value to empowered customers Foster lasting connections Capture value, measure results The findings and recommendations in this report have been organized to explore these imperatives – the things CMOs need to consider if they are to lead the marketing function in the digital era.
- In this next section we introduce some background and context on the marketing profession – swimming, treading water or drowning.
- The digital revolution is transforming the marketplace. Empowered customers can see – and say – more about the organizations that serve them than ever before. But this revolution has also left CMOs struggling to respond. Just as X-rays transformed medicine by letting doctors see through human tissue, so the new information and communication technologies are revolutionizing business by letting customers and citizens peer through corporate walls. As a result, the relationship between people and the institutions that serve them is changing dramatically. Consumers’ expectations are rising. They want better products and services, more choice and more value. And they expect organizations to act in a socially and environmentally responsible manner. Business customers are also buying more carefully, haggling harder over prices, demanding greater customization and looking for opportunities to pass risk back to their suppliers. Meanwhile, globalization has given customers everywhere many more options. Witness the fact that world export flows have soared from $7.9 trillion to $18.9 trillion in current U.S. dollars over the past 10 years. And, with social media, anyone can become a publisher, broadcaster and critic. Facebook now has more than 750 million active users, for example, and the average user posts 90 pieces of content a month. Twitter’s registered users send about 140 million tweets a day. And YouTube’s 490 million users upload more video content in a 60-day period than the three major U.S. television networks created in 60 years. In short, customers can see – and say – more about the organizations they deal with than at any time in history. If an organization stumbles, there’s nowhere left to hide. At the same time, the digital revolution is providing unprecedented opportunities to engage with customers. But any business that wants to realize the potential of new information and communication technologies faces a daunting task. It must, first, intercept and interpret vast quantities of data to find the meaningful parts. The volume and variety of data are increasing with ferocious velocity. We now create as much information every two days as we did from the dawn of civilization to 2003. CMOs, therefore, have to do more than ever before. They have to manage more data, understand and engage with more demanding customers, and ensure their employees consistently exemplify the organization’s values. They have to use tools and technologies their children often understand better than they do. And they have an average tenure of just three to four years in which to make their mark.
- CMOs are well aware of the challenges that confront them. They recognize, like CEOs, that the world in which they operate is much more volatile, uncertain and complex. Increasingly interconnected economies, enterprises, societies and governments have given rise to huge new opportunities. But greater connectivity has also created strong – and often unpredictable – interdependencies. And like CEOs, CMOs don’t feel completely ready to handle the situation. A full 79 percent of the CMOs we talked with believe the level of complexity will be high or very high over the next five years. But only 48 percent feel prepared to cope with it. These percentages mirror those from the 2010 CEO study, when we asked CEOs the same questions about future complexity.
- So, what are the main sources of concern? We probed more deeply to find out whether CMOs feel equipped to manage the impact of 13 key market factors. Alarmingly, more than 50 percent of respondents think they are underprepared to manage all but two: regulatory considerations and corporate transparency.
- We asked respondents to rank each factor in terms of its expected impact on the marketing function over the next three to five years. Then we looked at how this related to the level of confidence they feel about managing each factor. Some of the changes CMOs are least prepared to manage are those likely to cause the biggest upheavals. We found that the top items – 1 through 4, which CMOs felt least prepared to manage, were, in fact, the factors they thought would impact their business the most: 1) Data explosion – CMOs have been dealing with this for a while already, which probably explains why it wasn’t further to the right on the x axis, but it is still the factor that concerns CMOs the most. 2) Social media – CMOs feel somewhat more prepared to manage social media – though their level of anxiety is still high, and it is further along the X suggesting “more impact,” because it is relatively new and still evolving. CMOs are unclear how social media is going to change things specific to their organization – but they anticipate the change will be significant 3) Growth of channel and device choices – the onslaught of tablets and increased use of mobile, among other things, is very quickly becoming a priority for CMOs – and like social media – it is still not clear how all of this will manifest itself. Most CMOs said this would have the most impact on their marketing organizations, but they feel a bit more prepared to deal with it than the data explosion or social media 4) Shifting consumer demographics – like #1, “data explosion” – CMOs have been aware of these predictions for a while now, so they have already been anticipating the impact, but they still are feeling significantly underprepared to deal with the implications, in part because so many of the factors we just discussed are being driven by the demands of changing demographics that include new global markets and the influx of younger generations entering the marketplace who will drive a lot of the changes noted in 1 through 3. The other items – 5 through 13 are also important, but either CMOs feel they are better prepared to manage them, or don’t anticipate their impact to be as powerful as the top 4.
- To deal with this degree of change and complexity – CMOs’ responses indicated there were three key domains – three imperatives – where they feel the need to improve: Deliver value to empowered customers The digital revolution has forever changed the balance of power between the individual and the institution. If CMOs are to understand and provide value to empowered customers and citizens, they will have to concentrate on getting to know individuals as well as markets. They will also have to invest in new technologies and advanced analytics to get a better grasp of how individual customers behave. Foster lasting connections To effectively cultivate meaningful relationships with their customers, CMOs will have to connect with them in ways their customers perceive as valuable. This entails engaging with customers throughout the entire customer lifecycle, building online and offline communities of interest and collaborating with the rest of the C-suite to fuse the internal and external faces of the enterprise. Capture value, measure results Lastly, CMOs will have to quantify and analyze the financial results of their marketing initiatives and communicate them to the wider organization to enhance the marketing function’s credibility and effectiveness. They also will have to inject new skills into the marketing function by expanding the digital, analytical and financial capabilities of existing employees and by hiring staff or by partnering with specialists to fill the gaps. And since it’s important to lead by example, CMOs will need to invest in enhancing their own expertise in these areas as well.
- This next section is focused on delivering value to the empowered customers. The most effective CMOs focus on getting to know individuals, not just markets. They mine new digital information sources, and they use customer analytics to turn data into insights on which their organizations can act.
- One reason most organizations struggle to get the customer insights they need is that they still focus on understanding markets rather than individuals. At least 80 percent of CMOs rely on traditional sources of information such as market research and competitive benchmarking to make strategic decisions. Similarly, more than 60 percent rely on sales, campaign analysis and the like. Traditional sources of information are important, of course. However, most of them have one big drawback. They can only show customers in aggregate, offering little insight into what individual customers need or desire. Relatively few CMOs, by contrast, are exploiting the full power of the digital grapevine. Although nearly three-quarters use customer analytics to mine data, only 26 percent are tracking blogs, only 42 percent are tracking third-party reviews and only 48 percent are tracking consumer reviews. This is largely because the tools, processes and metrics they use are not designed to capture and evaluate the unstructured data produced by social platforms. Yet blogs, consumer reviews and third-party reviews disclose what discrete customers want. They provide a rich source of information about customer sentiment, with context, that can help companies more accurately predict demand patterns. Real-time conversations between informed individuals are also a valuable source of new ideas. And when an organization monitors these social sources for brand mentions, it can rapidly respond to threats of negative exposure before they spiral out of control. As one energy CMO in India pointed out, “What we think will take 24 hours to affect our brand may only take 2 hours. So our speed of reaction needs to increase tremendously.” In short, new digital data sources can provide crucial insights into how customers and influencers think and behave. But to scale this effectively, organizations need to consider building fundamentally different relationships. They need to enable employees to engage with customers and provide customers and other constituents the ability to help one another. Only a small number of CMOs are currently capitalizing on such opportunities to enhance their understanding of these dynamics.
- CMOs are also overwhelmingly underprepared to take charge of the growing volume, velocity and variety of data. The majority of respondents recognize this. More than two-thirds believe they will need to invest in new tools and technologies, and develop new strategies for managing big data. Two-thirds likewise believe they will need to change the mix of skills within the marketing function and enhance its analytics capabilities. More surprisingly, though, relatively few CMOs are thinking about the profound policy implications of big data – especially those relating to privacy and security. Only 28 percent consider it necessary to change their privacy policies, for example, despite the numerous ways in which customers’ privacy can now be compromised.
- Managing big data is certainly high on their list of “must-dos.” Not surprisingly, CMOs are most interested in increasing their use of those technologies that address some of their key concerns: customer analytics, CRM, social media and mobile apps. For these top 4 concerns – an astounding number – more than 80% - say they expect to increase their use of these technologies in the next 3 to 5 years, and with the exception of the last one, “email marketing” – all of the technologies listed rated quite high - over 50%.
- Despite the urgency to change, why haven’t more CMOs already adopted new tools and technologies? The two biggest barriers are cost and lack of certainty about ROI – both issues that are becoming increasingly important in the marketing domain. Most CMOs have not traditionally been expected to provide hard financial evidence of their ROI. But given the current economic volatility and pressure to be profitable, organizations can no longer afford to write a blank check for their marketing initiatives. CMOs recognize they now need to quantify the value they bring to the business, be it from investing in advertising, new technologies or any other activity. This increasing emphasis on ROI also reflects the scrutiny the marketing function is currently attracting, itself a reflection of the function’s growing prominence. Today’s CMOs are in much the same position as chief financial officers (CFOs) were a decade ago, when their role was evolving from guardian of the purse strings to strategic business adviser.
- For this first imperative, we offer these three recommendations and questions that address how CMOs can bring about the changes needed to deliver value to empowered customers.
- This next section is focused on fostering relationships through continuous interactions. Proactive CMOs forge customer relationships that continue after the sale. And they fortify these bonds by creating a corporate character that manifests itself in everything their employees do and say.
- When asked what their priorities are as they try to manage the shift toward digital technologies, 67% of CMOs say it is about enhancing customer loyalty. It’s not enough just to understand customers or citizens, of course. An organization also has to act on what it learns – and do so faster than its competitors. Nowadays, it’s easy for disaffected customers to go elsewhere, as CMOs are intensely aware. Hence, their top priority is to enhance customer loyalty and encourage satisfied customers to advocate their brands.
- Today, with increased corporate transparency, companies are recognizing that brand perception is influenced not just by the products and services the company sells, but also by what the company does, its corporate values, who it partners with, how it conducts business, and how openly it communicates. We refer to the sum of these considerations as “corporate character.” More than half of the CMOs we talked with think their organization’s corporate character is well understood in the marketplace and contributes strongly to the success of their brands. However, further questioning revealed that many respondents are much less confident than their preliminary responses might suggest. Fifty-seven percent of CMOs admit there’s still a lot of work to be done to get employees fully on board. Only 20 percent believe they have already succeeded. Moreover, many CMOs recognize they have a major role to play in helping to ensure the workforce embraces and exemplifies their organization’s corporate character.
- Today, with increased corporate transparency, companies are recognizing that brand perception is influenced not just by the products and services the company sells, but also by what the company does, its corporate values, who it partners with, how it conducts business, and how openly it communicates. We refer to the sum of these considerations as “corporate character.” More than half of the CMOs we talked with think their organization’s corporate character is well understood in the marketplace and contributes strongly to the success of their brands. However, further questioning revealed that many respondents are much less confident than their preliminary responses might suggest. Fifty-seven percent of CMOs admit there’s still a lot of work to be done to get employees fully on board. Only 20 percent believe they have already succeeded. Moreover, many CMOs recognize they have a major role to play in helping to ensure the workforce embraces and exemplifies their organization’s corporate character.
- In fact, the majority of CMOs believe the transparency the digital revolution has engendered requires the marketing function to make at least five key changes. These changes reflect the way in which the CMO’s role is evolving. For many decades, the CMO’s job was to market an organization’s products and services. Today, it begins with the marketing of the organization itself. CMOs view the marketing function as a key player in the shaping and execution of corporate character, and they recognize the need to champion changes within the organization to improve it, which means not only playing the traditional role as owner of external engagement with customers (or citizens) but also being responsible for managing brand reputation within the company. This means they need to have stronger collaboration across the C-Suite. Also – CMOs understand that the fuel for this engine needs to be better data capabilities and the ability to share insights.
- For this second imperative, we offer these three recommendations and questions that address how CMOs can bring about the changes needed to foster lasting connnections.
- The pressure is rising. CMOs have to show a real return on their marketing expenditure. They also have to hire people with technical, digital and financial skills, and become savvier in such areas themselves. This last section is focused on capturing value and measuring results.
- The CMO’s last challenge is to measure the success of the marketing function’s efforts. At one stage, it was enough to point to advertising recall, brand perception or website traffic. But CMOs are under increasing pressure to provide quantifiable evidence of how their marketing expenditure is helping the organization achieve its goals. If they are to use their budgets as wisely as possible, CMOs also need to know which initiatives deliver the best returns. In other words, they need to know what to stop investing in, as well as what to ramp up. CMOs are well aware they will have to be much more financially accountable in the future. In fact, 63 percent of respondents believe marketing ROI will become the most important measure of success over the next three to five years.
- One reason CMOs are concerned is their apparent lack of influence over those areas that effect marketing ROI. If CMOs are to be held responsible for the marketing returns they deliver, they must also have significant influence over all four Ps: promotion, products, place and price. Surprisingly, this is often not the case. CMOs told us they exert a strong influence over promotional activities such as advertising, external communications and social media initiatives. But, in general, they play a smaller role in shaping the other three Ps. Less than half of all respondents have much sway over key parts of the pricing process, for example. Similarly, less than half have much impact on new product development or cross-company pricing. As all CMOs know, price, product and place significantly influence customer preference. At the same time, actions taken by marketing impact the organization. A special promotion, for example, may drive up demand, with implications for the supply chain. The CMO is uniquely positioned to capture and disseminate such customer insights throughout the organization.
- CMOs can grow the capabilities they need by hiring internally, which many plan to do, but they are also looking at external partnerships to help them improve more rapidly. At present, most CMOs use partnerships primarily to augment their promotional activities, such as advertising and event management. But when we asked respondents where they intend to tap external resources more heavily over the next three to five years, there was a marked shift in emphasis. The increase in the percentage of CMOs planning to use outside agencies for lead management, customer and data analytics, and direct or relationship marketing was especially pronounced. The percentage of CMOs planning to get help with IT, call or service center management, and tracking and measurement also rose by more than half. “We have to get scientific about the customer experience,” a travel and tourism CMO in China explained. To achieve this, a company must be able to track what its customers say and do, extrapolate from the data and manage touch points systematically. This change of focus suggests that CMOs are eager to move beyond traditional marketing. Since that’s uncharted territory for many organizations and the talent they require isn’t readily available, they are looking for new partners to help them.
- But it’s also important that CMOs lead the way by boosting their own digital, technological and financial proficiency – and many CMOs seem surprisingly reticent in this respect. When we asked respondents which attributes they thought they would need to be personally successful in the future, technological competence, social media expertise and financial acumen came last on the list. They placed much more emphasis on traditional leadership traits.
- For this third imperative, we offer these three recommendations and questions that address how CMOs can bring about the changes needed to capture value and measure results.
- The practice of marketing is going through a period of unparalleled change, putting CMOs everywhere to the test. So how should the CMO respond? We learned from more than 1,700 CMOs how they are addressing new opportunities and challenges and strengthening themselves to succeed.
- CMOs can carry on as before – and continue to feel stretched. Or they can seize the opportunity to transform their marketing function by responding to these new realities: • The empowered customer is now in control of the business relationship • Delivering customer value is paramount – and an organization’s behavior is as much a part of the value equation as the products and services it provides • The pressure to be accountable to the business is not just a symptom of hard times; it is a permanent shift that requires new approaches, tools and skills.
- Where should CMOs begin? 1. Create a small action team comprised of eager marketing futurists – individuals within the organization who have the potential to be CMOs themselves someday. Give these people a short timeframe to review the issues and develop recommendations for resolving them. Breaking the challenges into smaller chunks will enable CMOs to address the big picture as well as the details and dependencies. It can also help them identify opportunities for small wins and boost support for more radical initiatives. 2. Schedule time to talk with C-suite peers. Consult the CIO about how to improve marketing tools and technologies. Confer with the CHRO about how to empower employees to better represent the organization’s corporate character. Enlist the CFO as a partner in developing the appropriate marketing metrics. 3. Lastly, look at the organization through the customers’ eyes, as they progress through the full relationship lifecycle. While CMOs may believe they already capture this information, all the data in the world cannot replace the personal experience of walking in the customers’ shoes. What are customers learning about an organization and its offerings from blogs, reviews and other customers? Where do the products and services rank in price comparison lists? How easily can customers interact with an organization – before, during and after the sale? What is the CMO doing to create communities of interest and build longterm bonds? Think, too, about how the employees interact with customers. Do they exhibit the qualities that exemplify the unique corporate character that customers value? Do the sum of the on- and offline touch points provide an accurate impression of the organization’s corporate character? Armed with this personal understanding of the customers’ experience, the insights of C-suite colleagues and the findings from the action teams, CMOs will be able to start building a marketing function with the sinews to succeed in the digital era.