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The Evolving Role of the CMO – Part II

This post can also be seen on 1to1 Media.

Part two of an ongoing series in which Pegasystems CMO Grant Johnson sits down with other CMOs and Industry experts to talk about burning issues that are top of mind for B2B and B2C marketers.

In the first part of this series published on February 8 I covered three of six key elements that define the new CMO. In this second part, I delve into the other three: achieving alignment, becoming a business partner, and being customer driven. As before, I include insights from three CMO thought leaders on what it takes to succeed in an increasingly digital world: David Cooperstein, vice president, CMO Practice Director, Forrester Research; John Ellett, CEO of nFusion and author of The CMO Manifesto; and John Neeson, managing director and co-founder, Sirius Decisions.

 

Achieving Alignment

Alignment used to mean that the CMO needed to inform sales on what new products or services were about to be announced, and what new marketing campaigns would be running in the quarter. We could approach alignment in a siloed fashion, seeking it where needed, such as for budget approval for major expenses, and avoiding it where unnecessary, such as testing messaging to increase response rates. It’s a lot different nowadays. Today, as John Ellett states, alignment means, “getting the rest of the C-suite unified around a central strategy. It’s about aligning sales, customer service, operations, and support around delivering a superior customer experience across every touch point.”

As CMOs, we are expected to contribute to the shape and trajectory of the business and bring ideas, energy, and inspiration about how to grow more profitably and compete more effectively. It takes a lot more effort and cycles to drive companywide alignment than functional alignment, especially when any significant change is contemplated. It also takes someone with more business savvy (i.e. typically an MBA or advanced degree is required) than marketing may have been expected to possess in the past. It also takes a lot more gravitas today, both in and outside of the boardroom. As David Cooperstein says, today’s CMOs have to “earn the right to the C&O (chief and officer), and not just the ‘M’ part of our titles.”

It’s about achieving alignment as well as sustaining it. With increasingly dynamic markets and competitive pressures, it’s easy for an agreed-upon strategy to be compromised, so refining and re-aligning are required more frequently. Plus, CMOs must continually demonstrate not only well-conceived strategies, but also deliver consistent, predictable results. In a 2012 Sirius Decisions marketing survey, John Neeson found, not surprisingly, “that the top challenge was demonstrating marketing ROI.” CMOs are more accountable than ever and also better equipped, with proper executive alignment, to demonstrate the value that marketing delivers.

 

Business Partner

In order to fully achieve alignment, a CMO must be adept and proficient at becoming a full-fledged business partner. While the opportunity to impact business results has increased for CMOs, the expectations have also risen commensurately. As Cooperstein says, the CEO now expects the CMO “to tell them about the things that are coming down the pike and bring new ideas forward,” so they can better navigate fast-changing global markets and seize opportunities more rapidly, and to have “a constant pulse on the customer to gauge how they are reacting or changing, and what that means for the business.”

The CMO is uniquely qualified to optimize the customer experience, but to do so successfully requires substantive insight into customers to fully understand their preferences, predict their behaviors, and drive measurable outcomes to marketing initiatives.

In the past, marketing could sometimes speak in a slightly different language, just as engineering might have. Today, however, as Ellett believes, “the biggest thing that a CMO can do is to talk to what they do in the language of business results. They need to connect marketing language and programs to key corporate objectives and priorities.” They also need to spend more time in crafting, articulating, and refining strategy to be the business partner that others in the C-suite now expect. Neeson believes that the tide has shifted and more CMOs are coming to the table with “very good business skills and a more pragmatic view,” which is a lot different than when their role and scope was narrower.

He believes that the “CMO comes to this role because it’s the one place where you can touch every part of the business. You can change market perception, your business, and have an incredibly positive impact on the longevity of the business and really move the needle more than in any other place.”

CMOs also have to have complete command of the metrics that drive success for both the marketing organization and the business. They have to have facts and figures at the ready on every aspect of what they do, from cost per lead and relative program success to customer engagement levels and website effectiveness—all to instill confidence and demonstrate marketing ROI.

 

Customer Driven

As I’ve alluded to earlier, being connected to the customer is more critical than ever for today’s CMOs. As Cooperstein says, “the roles of marketing have been revised, and CMOs are much more customer focused than before. How customers consume messages is being considered more significantly now. It makes the role a lot more fun if you are customer driven, but not so much fun if you aren’t.” In mostly all companies, the CMO does not have direct control over the entire customer experience, but he or she must somehow understand every contact the customer and company have with each other and drive, or at least influence, how to shape and orchestrate the right experience at every moment.

Marketing has traditionally led cross-functional strategies and tactics around the customer lifecycle, from contact to acquisition and from cross-sell to retention. But leading an organizational shift to become truly customer driven is a much bigger undertaking, and one that requires both fortitude and stamina. But there’s no going back. In the Web 2.0 world, customer experience and loyalty have become the key differentiators between leaders and laggards. While the importance of delivering great experiences for customers is generally understood by most companies, executing well (and consistently) across all customer touchpoints remains a challenge and thus an opportunity for CMOs to make a major difference.

In today’s so-called customer-driven era, many companies are approaching this shift to a more empowered customer by driving greater integration in customer management across functions and systems. The CMO is naturally one of the primary executives that companies are asking to orchestrate a cross-functional, strategic initiative to enhance customer lifetime value and operational efficiencies across many functional areas, including sales, marketing, service, and support. Without appropriate department, process, and systems linkage, however, the impact will be diminished, so taking on this critical leadership role is no small task for CMOs. But that’s precisely why we are all evolving; figuring out how to increase our contribution to the business, what to do differently, what to discard, and what to amplify is what makes this role intellectually challenging and rewarding, both on a daily basis and over the long term.

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The Evolving Role of the CMO

February 4, 2013 1 comment

Part one of a multi-part blog series in which Pegasystems CMO Grant Johnson sits down with other CMOs and Industry experts to talk about burning issues that are top of mind for B2B and B2C marketers.

The CMO role is rapidly transforming, in large part due to the rapid pace that social, mobile, cloud and big data mega trends are becoming pervasive and changing the very nature of business. In this first installment, I spoke with three CMO thought leaders to better understand the most significant aspects of the new CMO role and what it takes to succeed in an increasingly digital world:  David Cooperstein, VP, CMO Practice Director, Forrester Research; John Ellett, CEO of nFusion and author of The CMO Manifesto; and John Neeson, Managing Director and Co-Founder, Sirius Decisions.

It became clear during the course of several dynamic conversations I’ve had recently that six key elements define the essence of the modern CMO, and how well they are put into practice can largely determine whether he or she will succeed in shaping company success or be relegated to the historical role of merely owning branding and communications.  I share many of the same views that my counterparts and I discussed, and there are many take-aways from each interview.

In the first part of this article, I will cover these first three key elements:  Old vs. New; Marketing Science; and Marketing Technologist.   In the second part, I’ll delve into the other three: Achieving Alignment; Business Partner; and Customer Driven.

 

Old vs. New

The old CMO was focused primarily on corporate marketing and strategic communications, without full operational responsibility or a regular seat at the table in the C-suite.   The new CMO is, according to Neeson, a “more cross-functional role that touches every part of the business.” CMOs now must be “constantly looking at things and evaluating from a strategy standpoint to determine what they can do better.”   To succeed in the new world requires not only a firm grip on navigating the complexity of the business environment, but also, according to Ellett, the ability to influence C-suite peers and “share insights across the organization that help shape both corporate strategy and operational excellence.”  It’s a balancing act to maintain an operational focus the keeps the engine running smoothly, while regularly looking over the horizon to what’s coming next, what to pay attention to and what to ignore, but the new CMO is figuring out how to do enough of both to increase impact on organizational growth and success.  It’s not for everyone, and becoming increasingly more digital and influential in business operations and outcomes is invigorating for many of us who are renewed in this process of evolving.

 

Marketing Science

In the old days, marketers could assert that “half of my marketing spend works, but I just don’t know which half.”   The rise of digital media, combined with the ability to measure the effectiveness of the increasing amount of digital marketing spend, means that marketers are now being held far more accountable for the results of marketing expenditures.  But it goes beyond just measuring marketing ROI.  Modern marketers need to become experts at understanding digital customer behaviors and in data mining so they can architect a customer strategy that maximizes the efficiency of how their company targets, acquires and grows customers and increases market share.  We are in the customer-driven era and the age of customer empowerment. According to Ellett, “this dramatic shift in power to the voice of the customer” means that marketing needs to become more science, and marketing needs to lead the company to “build out the capability organization-wide to be more responsive to customer voice and experience.”  He continues, “Marketers have traditionally been quite strong at persuasive communications and ideation.  The best ones have also excelled at understanding the customer mindset and leveraging agency partners to drive demand and increase influence.  The new CMO must now become as adept at analytics and data-based decision making as they have been at the more subjective art of branding and communications.” As Cooperstein states: “today, more than ever before, CMOs are being held fully accountable for the results of marketing activities.  This means we have to be more metrics oriented.  A lot more is required.  We’re seeing that working together is much better than working apart.”

Neeson, too, agrees, noting CMOs must not just “measure results, but also effectively communicate marketing’s value.”   Becoming more “scientific” can be daunting, however, having the evidence to objectively demonstrate marketing’s contribution to the business can also be very empowering.

 

Marketing Technologist

From a career path perspective, marketers traditionally have educational backgrounds rooted mostly in liberal arts, fine arts and communications, rather than science.   Some have progressed or transitioned into marketing careers from a more technical underpinning, such as computer science or engineering, especially in technology markets.   With the rapidly increasing role that technology plays in helping companies optimize their operations, engage with and convert customers, and build lifetime customer value, technology adroitness is now a mandate that all marketers can’t ignore.  According to analyst firm Gartner, by 2017, CMOs will spend more on technology than CIOs.  Regardless of whether this prediction comes true, marketers have no choice but to become well-versed in technology.  They need to not only understand the broad range of technologies that can help the company compete more effectively (e.g. predictive analytics, social media monitoring, marketing automation), but also how to create a technology adoption roadmap.  Except for CMOs starting out at new companies, most of us have a technology infrastructure that is a collection of capabilities and not fully capable or integrated to serve current business mandates.  So it’s now required to closely partner with CIO peers to articulate a cogent roadmap to acquiring, improving and integrating marketing technologies that help the company meet its strategic objectives.  As Ellett states,  “technology has changed the way customers interact with information and how they choose to interact with companies,” so CMOs must now drive how technology is utilized, just as they drive marketing strategy and tactics, to ensure their company can successfully engage with the more empowered, digital, and social customer.

Because of these reasons and more, there’s been no better time to be a CMO.  Sure, current-day challenges are formidable.   But as all three interviewees note, the stakes are much higher in this era of digital marketing, and marketing has an increased ability to demonstrate intrinsic value to the entire organization.  I’ll hit on this and more in the second installment, focusing especially on how this new approach is driving several things, including tighter alignment of marketing, and the expanding role that customers are playing in marketing strategies, tactics and more.

Categories: CMO, Marketing

‘Tis The Season

December 11, 2012 1 comment

As we move closer to the holidays, many things are once again cropping up, just like clockwork.  Some – including the airing of The Christmas Story and It’s a Wonderful Life – are always welcome.  Others, like frenzied mall traffic and egg nog, you want to forget.  And then there’s the blitz of year-end predictions – just like holiday songs, they can be a mixed bag.

I promise I won’t declare 2013 “The Year of fill in the blank”.  But as we look forward to the New Year, there are some trends that CMO.com highlighted earlier this year that are worth revisiting. In fact, it’s my view that three are going to be increasingly important for B2B CMOs to pay attention to as we look toward 2013:

1.      Show Me the Money – I mean it.

With the economy teetering on the edge of what many are calling a “Fiscal Cliff,” I can’t stress enough how important marketing ROI has become in our field.  As I noted previously, what matters most is what has the most measurable impact on sales and customer retention.  Did sales increase, did sales velocity increase, did average customer value increase? What about marketing to sales qualified lead conversion ratios and customer retention rates, and what was marketing’s measurable impact on any and all these numbers?  There are many ways to objectively demonstrate relative contribution by marketing.  Getting agreement on what to measure and what success looks like is key to showing the true value that marketing contributes.

2.      The Silos are Broken

Marketing is no longer viewed as a stand-alone function. It is now expected to strategically drive more of the customer experience to help support customer acquisition, expansion, loyalty and retention goals.  As one CMO recently told me, “I need to prescribe the ideal customer experience at every touch point – Web, call center, retail store, etc. – regardless of reporting structure.  I’m providing guidance on how to drive a better customer experience so our company can optimize every interaction and drive positive word-of-mouth momentum.”  This new dictate applies equally well to B2B and B2C marketers.

3.      Word of Mouth Spreads

As CMO.com notes, social has proven to have vast benefits for all companies that become adept at it.  While that’s a big “if” in some cases, the role of social media is relentlessly increasing as it becomes more prevalent.  Companies that once turned a blind eye to certain channels like mobile or Twitter or LinkedIn are now being forced to embrace them all – simultaneously. Or else they risk losing impatient customers who can go elsewhere for better customer experiences.

There’s little doubt that B2C organizations – especially those with millions of customers that come into daily contact with consumers – have more opportunities to show they’ve embraced this. At Pega, while our target-account approach differs from many other B2B organizations, social has become an integral and formidable medium for us to leverage throughout our marketing and communications. We’re active on Twitter, Facebook, and LinkedIn to ensure we’re engaging with our customers appropriately, but also so we can continue building our brand awareness. As we move into 2013, we’ll continue to increase participation in these areas, with the objective that we’ll be drawing more attention to our increasingly known brand.

For all organizations, the key to getting ahead in this area will not only be proactive listening.  Companies mastering social will be continually participating in opportunistic ways to drive customer engagement and improve business outcomes.  That ultimately impacts the way enterprises respond, what solutions they sell, how they sell them and their relative market success.

Sure, this is no easy task. But then again, neither is enduring those long lines and packed parking lots.

Marketing Metrics That Matter

Every CMO and senior marketer I talk to these days is striving to improve marketing ROI (MROI).  Most have become proficient in measuring and reporting on marketing effectiveness.  But few believe they have succeeded in proving the value of marketing to their CEO and peers, especially the CFO and head of sales.  Why is this so?   There are a lot of reasons, including not having a complete or robust data set, not constructing marketing dashboards in a manner that is as easy to understand as a standard P&L report, or simply not having delivered sufficiently compelling data to support MROI assertions.   From my experience, however, the primary gap results from not being aligned with the CEO and your marketing peers on what metrics really matter.

To illustrate this point, there’s an entire category of metrics that don’t matter much to anyone besides marketing:  activity levels.  In other works, the quantity and frequency of marketing activities, such as the issuance of press releases, emails sent, campaigns designed and executed, collateral created and delivered, Web site visitors, even the number of Facebook fans and Twitter retweets.   While all of us set objectives calling for increased activity levels in nearly every facet of marketing (other than efforts to stem the tide of negative press or poor social sentiment), the intrinsic value of activities is virtually zero in the eyes of the CEO and C-level peers.   It’s not the amount of activities that matters, it’s the results.

I don’t even think effort matters for much.  What matters most is what has the most measurable impact on sales.  Did sales increases, did win rates increase, did average deal size increase, did retention rates increase, and what was marketing’s measurable impact on any and all increases?  It may sound too simplistic, but determining what the most meaningful metrics that influence sales success is actually very difficult for most marketers.   In B2B firms with simple products or services and short sales cycles (e.g. 30 days or less), these measures may not be that difficult to demonstrate.  But in complex enterprise sales characterized by multi-stage approvals, group decision making and longer sales cycles (e.g. one year or longer), proving marketing’s contribution is very difficult.   With so many influencers and inputs into the equation, proving attribution to marketing (i.e., something happened entirely due to marketing) is next to impossible.  Because of this, I’ve removed the word “attribution” from our marketing vocabulary and instead concentrate on demonstrating “contribution” to sales.

There are many ways to objectively demonstrate relative contribution by marketing, such as percentage of leads generated, percentage of pipeline generated, and for some organizations, pipeline acceleration – i.e. shortening the sales cycle, if truly measurable – as a result of nurturing campaigns and other marketing tactics.  If you can attain agreement on the acceptable numbers and percentages for these and related measures, you are well on the way to showing the value marketing contributes.

Sirius Decisions, as one of the leading firms helping B2B companies improve sales and marketing effectiveness, has developed best-practice guidelines around some of the more meaningful metrics.  To aid marketers in creating useful dashboards, they organize measurements around three elements: metrics, KPIs, and financial.  For metrics, Sirius suggests tracking inbound inquires (the best of which is the “contact me” request) and influencer advocacy (i.e. supporting and recommending your company).  For KPIs, they suggest tracking customer satisfaction and demand or sales waterfall conversion rates.  For financial, they suggest showing reduced cost per lead and where possible, cost per sale.   Any of these measures can help advance the case for marketing and build confidence in not just what marketing does, but how it impacts the top and bottom lines.

So if you’re still struggling with what to measure, how to measure it, and how to report marketing returns to a range of stakeholders, the most important part of this journey is getting agreement from the CEO and your peers on what metrics matter to them and what returns are expected.   Once you have achieved this, you can work on presenting the information in a readily digestible format that conveys facts and figures in a compelling fashion.   The first rule of effectiveness in communications applies equally well here: it’s not what’s said, it’s what understood.  When you achieve their understanding, you are well on your way to proving not just the effectiveness of marketing, but also its worth.

Now on to the next challenge:  how to ask for an increase in the marketing budget.  Let’s save that for another day, because this conversation typically goes as well as it did when, as a kid, you asked your parents to increase your allowance because of good behavior.

Categories: CMO, Marketing

How to Successfully Brand or Rebrand a Company

June 11, 2012 1 comment

Q/A with Pega CMO Grant Johnson, appearing on Rieches Baird’s “Branding Business” Radio Show

 

Ray Baird: Obviously you’ve built many successful brands and re-branded many companies over the years. What’s your secret and what can our listeners learn from your experience:

Grant  Johnson: Having done re-branding successfully for nearly two decades, the first key principle is to tightly define the drivers and key objectives.  Are we looking for a brand refresh or brand transformation?  When I arrived at a company named Big Fish, I needed to drive a transformation which included a new company name, logo, positioning, messaging and brand identity.  At FileNet, it was a refresh to build on earlier brand progress and help drive brand differentiation vs. the big guys we were competing against, including IBM, EMC and Oracle.   At Pega, it encompassed creating an entire brand system and architecture.   The company had grown to more than $200 million in sales when I arrived with almost no systematic approach to brand identity, architecture, or brand management.   Pega had a working logo, the symbol for Pegasus the flying horse, so I left that alone. Everything else, including color palette, graphic style,  naming conventions and brand personality, needed to be either created or changed.  We came up with a simple way to help our 2,000 employees relate to our brand personality.   Our four brand key personality attributes leverage our shorted name, PEGA and stand for: Passionate, Engaging, Genuine and Adaptive.  I created a video entitled, “How PEGA are you?” in which employees from different regions discuss how they embody those four brand personality traits, and this helped them become true brand ambassadors.  Together with online brand education and training, this really helped get our employees behind the new brand. When you get brand advocacy to become synonymous with company advocacy, you can really harness the power of your people to build brand momentum.

Ray Baird: What are the biggest challenges companies face when re-branding?

Grant Johnson:  Once you’ve got the first question I mentioned resolved, (the purpose for rebranding), you need to get agreement on how to approach it.  What is the scope?  Over what time and at what cost?  Who will make decisions besides the CMO?  I’ve found that having a simple three-phase process is something my executive peers can easily understand and support, so in my rebranding approach for Pega, I defined Phase 1 as Brand Assessment, Phase 2 as Brand Development and Phase 3 as Brand Execution.   Under each phase I defined what we would do, who would be involved – i.e. customer, partners, board members – how we would report on findings, and a process to make the important decisions. .

A second major challenge is developing consensus on what to change.  This can be somewhat controversial because after the brand assessment, obvious inconsistencies and variance in brand quality and standards will emerge, and sometimes you have to throw out what others have already created.  It’s like saying “your baby is ugly,” so it’s never easy to deliver a change message because after all, most of these decisions are subjective.

The biggest challenge, however, is getting agreement on specific changes.  In past practice, a lot of options that I’ve created around brand identity, personality, and promise were well received.  The hard part was getting agreement on which of the various desirable alternatives to choose.  At Pega, we came up with three alternatives for our brand promise:  “we help you drive continuous business improvement”; “we help you become more customer centric; “we transform the way your business works.” Our customer research and most of my team favored the transformative expression, also the most aspirational. However, many stakeholders thought such a brand promise would over-reach our ability to deliver.  So we landed on helping organizations become more customer centric.  This is working quite well for us, especially since we keep enhancing our product line to better deliver on this promise.

Ray Baird:  How do you manage the areas you don’t control on the brand, e.g. the touch points?

Grant Johnson: That’s a great question and something I’ve dialogued about with many of my CMO peers.  At most companies, B2B or B2C, the CMO doesn’t control all the touch points, such as Web, Storefront, Call Center, Services, Partner or others, which can lead to an inconsistent brand experience at best, and brand dilution at worse.   What works is for marketing, as the chief brand architect, to define what the brand and customer experience should be at each touch point.  That’s not enough, however.  Marketing needs to get feedback, reports and measures in either a systematic or ad hoc manner to determine if the brand vision is being delivered or if refinements or major changes are needed.   In today’s customer-driven world, none of us owns the brand. Our customers do.  The best we can do is shape it.  We can do a better job of shaping if we monitor all touch points, whether 1:1 interaction, via social media, or the Web, so we can continually reinforce what’s working and abandon what’s not.

Ray Baird: Technology companies bring a complexity to branding and create a plethora of products names, which can be overwhelming to prospective customers.  What’s the best way for B2B companies to have the right philosophy and brand architecture, especially in regards to brand naming?

Grant Johnson:The best way to deal with this is to create a coherent brand architecture that provides structure and consistency to the branding process   A company must first decide if they will adopt and perpetuate a master brand strategy (Lexus), a house of brands (P&G), or an endorsed approach (Microsoft).  Next, brand architecture is a useful metaphor because successful brand building requires some level of hierarchy to define the relationship between the company brand and all the product lines or sub-brands.  One key structural consideration is to not create too many levels in brand architecture.  Most people have difficulty keeping more than two levels in their heads, so it’s best to manage to a more streamlined brand structure.   After all, today’s consumer is more inundated than ever with information and thus their attention level to any piece of information is brief, so you want to make it easier for a customer to identify with and understand your brand.

A second and related issue is product naming.  If you’re P&G and you can afford to spend $100 million to launch a new product or brand, go ahead and create a proprietary name.  If you’re like most companies I’ve worked with, such an investment is inconceivable, so I recommend having either descriptive product names or perhaps suggestive ones.  This also supports brand or product extension goals because customers can more easily relate to an existing frame of reference than a new one.  Simplicity and customer understanding should be the driving force in naming decisions.

Ray Baird: If you had one critical piece of advice for companies going through the rebranding process, what would it be?

Grant Johnson: You should hire an outside branding firm to help.  I’ve done this five times and while I personally have the expertise to figure it all out myself, having senior level, independent and objective branding experts to help you shape, propose and close on brand changes helps enormously.  The way I see it, I can have someone like Ray Baird tell my detracting? peers, “you have to go this way if you really want to stand out from the competition,” or “your ideas won’t work and here’s why.”  If I say that same thing, I might put them on the defensive or disenfranchise them during the critical change process.   To riff on one of my favorite past taglines from American Express, the #1 service brand in the world, don’t go on this journey alone.

Q/A on Social Media with CMO Grant Johnson

This Q/A with Grant Johnson, conducted recently by Drew Neisser, CEO of Renegade, a NYC-based social media and marketing consultancy, also ran here on The Drew Blog.

B2B companies for the most part have been playing catch up to their B2C counterparts in the social media arena. One company that is coming on strong in this area is Pega, a company that helps other companies be more focused on their customers via BPM and CRM software solutions. I was delighted to able to catch up with Grant Johnson, Pega’s CMO as part of the soon to be released Social Media Fitness Study. (BTW, CMO’s can catch up with Grant at The CMO Club Thought Leadership Summit starting April 26th in NYC.)

DN: Large B2C companies significantly outscored large B2B companies in this study. Why do you think this is the case?
While social has proven to have vast benefits for all companies that become adept at it, there’s little doubt that B2C organizations – especially those with millions of customers that come into daily contact with consumers – have more opportunities to show they’ve embraced this. At Pega our target-account approach differs from many other B2C organizations. That’s not to say we’re not embracing social media, because we are, but we’re leveraging it in a far more targeted way than most B2C organizations do based on the size of our audience.

DN: Can you speak to the role social media plays in Pega’s overall marketing mix?
Social has become an integral and formidable medium for us to leverage throughout marketing as we at Pega view it as part of our overall customer-centric market approach. We’re active on Twitter, Facebook, LinkedIn to ensure we’re engaging with our customers appropriately but also so we can continue building our brand awareness. We’ve added another dedicated full time resource to further our social media efforts and we’re confident that this role will continue to increase.

DN: You mentioned that social wasn’t gaining as much traction as you’d like. What are doing to address this?
I’m actually dedicating much more resource as traction is building faster this year.

DN: Is there a hope that if more employees are active in social that this could benefit the whole company?
We are encouraging more people to be involved in our overall social media efforts and we want to make sure the right people are engaged with customers and prospects across the whole client management lifecycle, whether it’s account executives, industry solutions, public relations, as well as ensure they know what’s appropriate and what’s not in this medium.

DN: Lots of companies especially B2B struggle to develop engaging content. Do you think this is category wide problem?
Yes. Many companies have reams of content, but it’s too centered on company promotion vs. customer and prospect engagement, when taking into consideration what stage of the buying cycle they are in (e.g. someone just surfing your Web site for the first time is not ready for a “how to pick a supplier” checklist). Also, we want to make sure we present content in the most digestible way possible. While they’ve no doubt proven useful at many things, 140 characters or 300-word blogs aren’t always the most appropriate way to do this.

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.