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Are You a CMO 2.0?

October 5, 2012 1 comment

Over the past few years, I’ve connected with  dozens of CMOs via peer groups, such as The CMO CouncilThe CMO Club and Forrester’s CMO Group, and everyone I talk to is striving to become more “2.0.”   So what does it really mean to be CMO 2.0?

Conventional wisdom says that you have to embrace the mega trends, including big data, cloud, mobile, and social.  You need to immerse yourself into the new ways of pervasive computing and continuous communications that Generation C – or the connected generation – view as a way of life.  You need to be on Facebook, LinkedIn, Twitter, YouTube, etc.   You need to meld traditional competencies in communications and creative ideation with quantitative analysis and insight-producing analytics. But, while all this is true, it overlooks the change in operational approach and style that is equally important for a CMO 2.0.

Just because a CMO is in the “C-Suite” doesn’t mean he or she will be more successful at influencing peers than VPs of Marketing who are not part of the most senior executive group.   Success requires a commitment to building and maintaining strong ties to other C-Suite members, so you can count on their support for strategic initiatives.   As John Ellett, CEO of nFusion and Forbes blogger, said in a recent blog: “I found that effective marketing change agents take time early in their tenure to forge strong relationships with their C-suite peers. They don’t wait until they unveil their strategy and hope to build alliances at that time; they seek out their peers and develop the trust needed before it’s time to align on a plan for change.”  Leading change is a key success factor for CMOs, so this advice is critical to maximize the probability of success of any key initiative.

Another key dimension of being a CMO 2.0 is the ability to not only learn about and embrace mega trends, but also to determine how these trends are affecting your business, and how to use them as a catalyst to drive growth and revenue. Best-selling author and technology guru Geoffrey Moore definitely gets CMO 2.0.  In his talks about the future of IT, he articulates how systems of engagement are replacing systems of record, so that we are moving from an era of: command and control to collaboration; from transaction-oriented to interaction-oriented; from data-centric to user-experience centric; and from user learns system to system learns user.

To be CMO 2.0, you have to not only drive marketing, but also drive change in the systems the company uses to connect with and engage customers, and continually revise the policies and processes that govern all customer interactions, whether or not you have authority over these functions (e.g. sales, service, support) that touch customers.

Many observers have said that the CMO 2.0 is ideally suited to take on additional responsibility and have an increased impact on organizational success.  But this won’t happen by simply synthesizing the mega trends – it requires a deeper insight into what to do about them and the formulation of a transformative plan to drive organizational change.  In his recent book “Everywhere”, Larry Weber, Chairman of W2 Group and Pega board member, explains that you can’t just say your company is going to embrace social media, you actually have to change the company at the core:  “To develop a social enterprise, management has to be intentional about creating a culture that values openness, transparency, collaboration and innovation. Although many social forces are making this directional move inevitable, it often goes against the grain of how companies have traditionally been run.”  To be CMO 2.0, you therefore have to be just as involved in culture building and culture change as the head of HR and the CEO are.

So it’s clear that while embracing Web 2.0 technologies and understanding mega trends and their implications is important, it’s what you can do about this unrelenting wave of change to reshape your company and its operational parameters that will ultimately determine whether you are truly a CMO 2.0.

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The Customer is Truly King – A Look at Why Customer Obsession Needs to be Your Organization’s New Business Imperative

March 2, 2012 1 comment

In their classic book, “The Discipline of Market Leaders,” authors Michael Treacy and Fred Wiersema described three basic “value disciplines” that can create customer value and provide a competitive advantage: operational excellence, product leadership, and customer intimacy.  For a long time since the book’s publication in 1983, many companies successfully adopted a customer intimacy strategy by “continually shaping products and services tailored to specific customer needs.”

But in this Web/mobile/social-driven era of customer empowerment, a customer-focused approach alone is no longer adequate.   Those who don’t agree will find it increasingly harder to survive, never mind thrive.

In their February 1  article in the Financial Times, Kyle McNabb and Suresh Vittal observe that technology-fueled disruption has undermined prior approaches to customer focus:  “Old models of channel and product specific ‘command and control’ just don’t cut it. These anachronistic approaches, in which channel owners can’t see beyond the channel de jour and product owners build from the inside out, don’t set the organisation up for success in a customer-driven world. Customer obsessed marketers (must) rethink business structures, reward methods and organisational design.”

Due to this fundamental change in the balance of power which has shifted irretrievably to the customer, the authors propose that marketing should lead the company shift to becoming customer obsessed.   Marketing has traditionally led cross-functional strategies and tactics around the customer lifecycle, from contact to acquisition to cross-sell and retention.  But leading an organizational shift to customer obsession is a much bigger consideration than who leads the charge; it’s the new business imperative defining what all functions in a company should do about it, both from a philosophical and operational perspective.

Some companies understand the difference between these two perspectives and some don’t.  In his recent book “The Ultimate Question 2.0,” Fred Reichheld provides a wealth of examples of companies which confuse their profit obsession with customer obsession and don’t value the difference, and thus, become obsessed with profits, i.e., adopting “customer unfriendly” business practices to maximize profits (and produce what he calls “bad profits”) that over time can undermine customer loyalty.   By embracing both the philosophical approach (i.e. following the Golden Rule and treating customers how you’d like to be treated), and the operational perspective (i.e. continually adapting  business processes and practices to create and increase net promoters), companies such as American Express, Charles Schwab, Verizon and Farmers Insurance  have become truly customer obsessed and distanced themselves from the competition.  This chasm will only become larger over the next several years.

At the Forrester Customer Experience Forum last June, Jim Bush, EVP of World Service at American Express, delivered a keynote titled “A Relationship-driven Approach to Service” where he talked about how when he took over World Service he drove the company’s transformation of customer service into a customer-obsessed organization delivering extraordinary customer service, from a traditional call center previously focused on reducing average handling time and cutting costs.   To accomplish this goal, American Express adopted a holistic approach of “serving relationships, not transactions”.  There was both a philosophical shift to regarding customer service as a source of competitive advantage rather than being a cost center: “each moment of truth” or customer interaction became an opportunity to compete and improve service delivery.  Mr. Bush also flipped the traditional approach of 70% of a reps’ training on technical content to 70% dedicated to customer handling training, and the results have been extraordinary. Between 2006 and 2011, his group more than doubled their net promoter score, delivered a 20-25% increase in card member spend, lowered attrition by six-fold, and, despite not focusing on reducing expenses, decreased service costs by 10%.  Those achievements are even more impressive when you consider the size and scale of American Express – which boasted $25.6 Billion in revenue for FY 2010.

In his October 3, 2011 research note, “CMOs Must Lead The Customer-Obsessed Revolution,” Forrester analyst Chris Stutzman writes that in “the age of the customer, empowered customers are disrupting traditional sources of competitive advantage.”  In order to thrive in this new era, companies must abandon the outdated customer approach where “workgroups focus solely on their view of the customer to develop silo-based strategies” and replace with a customer obsessed approach where “the customer’s needs permeate the company’s culture and operations facilitating the sharing of customer insights across the enterprise to develop cross-discipline strategy.”  It’s clear that the most successful companies today, and in the future, will fully embrace the philosophy and practice of customer obsession. They are not satisfied by merely focusing on the customer, but relentlessly adapting their customer engagement strategies, investment priorities, business processes and policies to ensure that they create more net promoters and engender fewer detractors.   Before Web 2.0 and the power of social media and mobile channel proliferation, traditional customer focus approaches may have worked.  But today, any company that fails to adapt their business process to serve the customer specifically how they demand to be served will likely suffer the consequences.  The smart companies have figured this out and are busy creating competitive distance.

Meanwhile, those in denial of this new customer reality are falling behind faster than they can run the numbers. By the time they realize just how bad things are, their customers will have already defected in droves.

It’s Time to Make Marketing Dollars Work Smarter

January 18, 2012 1 comment

As we embark on another year with an uncertain and fragile economy looming, one thing is certain: most marketers are wasting money.  In the Web 2.0 world, and given the measurability of all things digital, at least it’s not as bad as the old lament:  “I know half of my money is wasted; I just don’t know which half.”  Nevertheless, many heads of marketing, especially at companies with broad product portfolios, are suffering from being far too egalitarian in how they allocate budgets by treating all budget centers and customer or prospect opportunities more or less equally.

But all customers are not created equal. Your best customers buy more of your products, are more loyal, less price sensitive and willing to recommend you more often to others.  So why are we not dramatically tipping the balance to the “20” in the “80/20” rule that can not only generate more revenue per invested dollar, but also more profit?

The main reason is the curse of entitlements and how established businesses generally approach the budgeting process by assuming that the prior year’s budget is the baseline – wherein each department or budget manager is entitled to some increase over the previous year.   This old-fashioned type of thinking typically leads to incremental vs. extraordinary improvement, and reinforces a “business as usual” vs. a “break from the pack” mentality, not only in terms of how budgets are allocated, but also regarding what market share gains are actually possible.   Geoffrey Moore addresses this level of stasis in his new book, “Escape Velocity: Free Your Company’s Future from the Pull of the Past”.  He says: “When organizations begin their strategic planning effort by circulating last year’s operating plan, they reinforce the inertial properties of the resources as currently allocated.”  To break away from the pack, Moore argues, companies need to be laser-focused on what they invest in and concentrate the maximum resources on strategies and investments that can create separation from the competition.

If one accepts the notion that all investments will not have the same impact and return, it’s not a big leap to realize that all customers and prospects should not receive equal shares of a budget.  The target segments and existing customers that have the highest revenue and profit potential should receive a disproportionately larger share of the marketing budget. One of the more important contributions to this type of non-traditional thinking is V. Kumar’s book, “Managing Customers for Profit”.  The quote from David Aaker on the back cover sums up Kumar’s approach best: “This book shows how a focus on Customer Lifetime Value (CLV) can change management toward long-term results by providing a fresh perspective on customer targeting, retention, and loyalty…it shows you the way toward strategic customer thinking.”

One of the key concepts that Kumar brings to light is how to transition from a product centric to a customer centric approach to marketing.  Rather than “peanut butter” the marketing budget across products equally, Kumar demonstrates how to target customers with higher profit potential and how to manage and reward existing customers based on profitability.   Kumar’s approach is also more holistic than many traditional methods that merely focus on lead generation and customer acquisition, in that he views customer value across a continuum, or lifecycle, prescribing a range of tactics for marketing resource allocation to optimize acquisition, growth and retention of a company’s most valued customers.

So, what’s this mean to you? If you haven’t already established your 2012 marketing budget and parsed out the allocations in a traditional fashion, where everyone gets their fair share approach, then consider a more radical or zero-based budgeting approach that can foster greater marketing efficiency and increased revenues and profitability.  If you are already locked in to the old way of doing things, who says it’s too late to shake thing up a little?  Marketers need to be agents of change, and there’s no better time to drive change than in the New Year.

Customer Centricity Begins Where a 360-Degree View Ends

While it’s one of the enduring tenets in the CRM market, a 360-degree view of the customer is fundamentally flawed.  Why is that?  Having all the information at your fingertips about any given customer is of little value if you can’t do anything with it to better serve the customer at the point of interaction, across all contact channels and organization silos.

The first wave of CRM software solutions concentrated on delivering a data-centric view of the customer.   That is, pulling all of the information about the customer into a consolidated database to make it available to a customer support rep (CSR).   For today’s customer —whether B2B or B2C— it is not enough to know what products or services they have purchased in the past.  They want you to meet their particular need ‘at the moment of interaction,’ i.e. when they contact you.  Today’s consumers want you to recognize them regardless of channel (e.g., email, phone, web, branch, etc.).  Today’s customers need companies to not only address their problems, but also resolve them.  Now, not later.  

To do this successfully requires rethinking organizational structures and business processes so that the client-facing, front-office systems and the back-office systems become one. This makes it possible to create a case around a given customer inquiry or request, and then automatically fulfill it – without a phone transfer, a trouble ticket routing, or other hand-off that stops short of immediately satisfying the customer’s need.

Customer centricity has been around as a concept for a while.  According to Wikipedia:

 “Customer centricity refers to the orientation of a company to the needs and behaviors of its customers.  Through this approach the customer becomes the central platform from which the organization operates and any decisions taken are viewed from the customer’s point of view.” 

Peter Drucker, one of the foremost management consultants, had a more succinct expression about serving customers that implies customer centricity:  “The purpose of business is to create and keep a customer.”   Only now, enabled by advanced BPM software solutions, can business achieve true customer centricity and finally move beyond the limitations of data-centric software solutions.

Some of the world’s leading companies are already realizing significant returns by adopting a more customer-centric and holistic approach to their business.  For example, Standard Life achieved marketing response rates 35 percent ahead of target.  Farmers Insurance reduced its new small commercial business cycle time from 14 Days down to 14 Minutes.  BB&T created a world-class, multi-channel account opening solution — in just 90 daysOrange UK improved retention, increased profitability, and is transforming the customer experience with centralized decisioning technology.

The Web 2.0 world has prompted a relentless move from command and control organizational structures to more fluid, collaborative and connected organizations that can better serve today’s customer demands.  The evolution from creating a 360-degree view of the customer to building a customer-centric organization is a trend well underway, and likely to accelerate as more companies discover that customer-centric software is enabling a better way to do business.   Organizations such as those noted above who are already adopting this technology have moved several steps ahead of the pack.

Customer Acquisition and Expansion in the Resurgent Economy

A recent CMO Club Summit in New York City gave me and a colleague a great opportunity to talk about a topic that’s top of mind for both of us and no doubt many others in the resurgent economy: customer acquisition, retention and expansion.

That’s why at each of our respective organizations, we’ve moved up the bar by creating and expanding key activities that support all aspects of sales, from lead qualification through close. At both Pega and Kofax, our marketing teams work closely with sales teams at several stages of the buying cycle. Investments, program priorities and nurturing and pipeline acceleration tactics are key aspects of this overall revenue generation team alignment.

At Pega, we’re constantly engaging in targeted campaigns that get the ball rolling – driving prospects, existing customers, etc., to our web site and communities to share meaningful content. Client success spawns increased public awareness. We’ve seen this happen firsthand with our clients such as Farmers and Medco, among others. Due primarily to our target account sales model aimed at predominantly large, internationally-known companies considered to be among the best in their respective industries, we do not attempt to drive transactional demand generation activities for our high-value products. Rather, we look to engage and activate prospects to ensure they are engaged throughout the buying cycle in a thought-provoking way.   We call this process the customer journey. Sales and marketing co-own how we facilitate this, which includes getting customers predisposed to our offerings and ultimately choosing us over other alternatives.

One event that has consistently enabled Pega to have such great success with customers and other areas is our annual user conference, which also doubles as a major customer training event and gathering of thought leaders. This year, we’re looking forward to PegaWORLD – and are confident it will increase customer interest in additional products and services, as it has in the past.

The #1 Success Factor for CMOs: Leading Change

October 7, 2009 2 comments

This past spring, the CMO Council issued a press release about the “DNA of a CMO, “stating: “among the most essential qualities, a CMO must be: a visionary & thought leader; a strong business driver; able to secure executive support & foster cross functional relationships; customer centric; competitive strategy guru; and a brand advocate & champion.”

These attributes make sense, but the ability to “secure executive support” doesn’t quite capture the hardest, and most essential, quality and success factor I’ve seen for CMOs (at least in technology companies where’s I’ve spent the past two decades). That quality is the ability to lead successful change initiatives, especially on a global basis. I’ve seen others fail when, upon achieving executive support for a change initiative, the CMO thought that hard work was done.

Having led global brand building change initiatives at AST Computer in the 1990’s and FileNet earlier this decade, I’m certain neither brand development initiative would have been nearly as successful had my team and I not secured cross-functional, cross-divisional and cross-regional (i.e. EMEA and APAC) buy in and participation. The easy way could have been to dictate the key change, given both companies were led by strong-minded CEO’s, but simply stating strategic intent is not the same as implementation and ensuring consistency of execution.

Russell Reynold’s published a white paper a couple of years ago on “The Successful CMO” which listed personal competencies that a CMO must possess to succeed: “leadership skills; strategic perspective; adaptability; and flexibility and backbone.” I found these last two attributes, flexibility and backbone, crucial to driving successful change. Having the courage of one’s convictions is key, along with fact-based evidence (e.g. customer input) as supporting rationale. However, as I’ve learned, flexibility is just as important. Trying to drive change down a straight track (“do it because I’m in charge”) can be the fastest way to derailment of key change initiatives. Flexibility to accommodate different organizational, personal, regional and cultural perspectives is key to successful and lasting change.

Recently, John Ellett, co-founder and CEO of nFusion Group , blogged on key trends to consider in 2010 planning: “Change will be imperative: Whether it is competitive position or media mix, the status quo won’t be acceptable. Successful CMOs will be the change agents for their companies. So trend #1 will be an increase in structured change initiatives led by marketers. (blog: http://marketing-has-changed.com/five-trends-that-will-shape-marketing-plans-in-2010/)

The key corollary to successful marketing change initiatives at technology companies is the art of leading change in organizations dominated by left-brained engineers — but that’s a story for another blog.