Archive

Archive for the ‘Strategy’ Category

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.

‘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.

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.

Good Customer Service: You Either Get It or You Don’t

November 21, 2011 Leave a comment

It seems the chasm between good and bad customer service is growing wider every day.  There are many reasons why this is happening.  First, social media has empowered the consumer to not only voice her opinion, but also to create a rapid shift in positive or negative sentiment towards companies. Second, the combination of increasing global competition and a stagnant economy is forcing companies to reduce expenses, and often they decide to cut costs by targeting front-line employees who have direct impact on the quality of service delivery.  Over the past year, I, like many of my colleagues, have personally experienced the extremes more often than not.

On the good side of service delivery, I can find no better example than American Express.  I recently discovered that over the past 18 months AmEx had not been accruing rewards points on my credit card.  I called customer service and was told they’d research it and get back to me in 24 hours.  Later that day, I retrieved my voicemail to hear a message the service team saying: “Hi Mr. Johnson, this is Janet with American Express and we have looked into your account history.  It appears we inadvertently did not accrue points for you since early 2010.  We have deposited the 23,010 points into your account, and I’ve added another 2,500 for the inconvenience this may have caused you.”  Well, I’ve been loyal to Amex for more than 20 years and the stellar way this was handled (i.e. exceeding expectations in response time and action) only increased my satisfaction level.

Another shining example of good customer service comes from USAA.  Tired of sifting through competing credit card offers online, a colleague called and bluntly asked a CSR, “Which USAA-branded credit card offers the best cash back option, and can you tell me what the right card is for me based on my spending habits?”  Minutes later, the CSR not only told him the cash rewards Platinum Visa was best for accumulating cash rewards, but was also able to tell him how much he spent last year on each of his USAA cards.  Then, she noted how much he would have earned, had he used the cash reward card (and tastefully noted the low interest rate).  He’s used that credit card for the vast majority of purchases ever since.

On the bad side of service delivery is American Airlines.  I booked award travel in January and decided to redeem extra reward miles so my family of five could travel first class (which would be a first for my three kids) on a cross-country trip.  A few weeks ago, I received an email alerting me to a time change for the flight, so I checked the itinerary online and discovered, much to my chagrin, that all the tickets had been changed to coach seats.  I’ve flown over 1,000,000 miles on American and have lifetime Gold status, so when I call the service desk to get an explanation, I’m thinking this is an easy fix.  Not so. They simply say first class is not available anymore.  I say “fine, then deposit 125,000 miles back into my AAdvantage account, since I used 50,000 per ticket, not 25,000, when making the reservation in January.”  “We can’t do that, Mr. Johnson, because the plan-ahead seats for coach are no longer available, so you have to use “anytime” miles, and it’s now 50,000 for coach.  “But you changed the flight time, causing me to lose not only the first-class seats, but the mileage difference.  It’s not a change I made. Why should I be penalized?  Of course plan-ahead seats are taken, it’s only two months until the flight, but I booked 10 months ago,” I respond.  “Sorry, there is nothing we can do,” is all they said.  I could go on, but clearly American is no longer concerned about keeping me a satisfied customer.

Another bad experience came when dealing with a home warranty from First American Home Warranty, which came attached with an existing home purchase.  Since it was not new construction, my colleague, like many other homeowners, wanted the policy to cover unforeseen and expensive repairs of a variety of household appliances, plumbing, etc.  Oddly, the company knew the contract was about to expire one year from the home purchase date, yet it waited until one month after it had expired to solicit my renewal.  An entry-level customer service rep called repeatedly, using borderline scare tactics and poorly scripted messages to pitch me.  Since it knew the contract expiration date from the start, the company could have made proactive contact one or two months prior to the end date, versus sending vanilla form letters saying only, “Your contract is about to expire.” And the renewal would have been routine.  Taking this reactive tact compelled my associate to refuse renewal, and tell this story about a bad service experience.

An informal survey of several colleagues drew quick responses of good customer service and bad; however the bad ones are more salient and tend to linger in our memories.  My advice for companies looking to retain and grow their customer franchise is to work on fixing the processes, systems and training (or lack thereof) that leads to bad customer service, so more of their customers experience good customer service, and then recommend that business to their friends, and so on.

Selective Hearing: The Voice of the Customer

November 8, 2011 Leave a comment

For many of us, the clarion call to become more customer centric is echoing throughout the halls; we all need to better acquire, serve, and retain customers.  While there are many avenues to customer centricity, one of the primary approaches to getting closer to customers starts with designing and implementing a Voice of the Customer program.

Wikipedia defines Voice of the Customer as “the in-depth process of capturing a customer’s expectations, preferences and aversions.”  Forrester defines the term as “a systematic approach for collecting customer insights and incorporating them into business decisions.”

Both definitions share the premise that the rigorous gathering of customer insight can improve a company’s ability to serve its customers more successfully.  The key of course is not just obtaining the insight, but acting on it.  Many companies start out the customer insight journey with good intentions, but have “selective hearing” with Voice of the Customer (VoC), and only hear what they want and change the easy things, rather than embarking on the difficult business policy changes required to meet customer expectations.  Lester Owens, Managing Director and Global Head of Treasury Services Operations at JP Morgan, said it perfectly during his keynote address at this year’s PegaWORLD: “It’s not about what we think we want, it’s about what the client wants.”

In the report “Voice Of The Customer Programs Don’t Deliver Enough Value,” Andrew McInnes of Forrester writes: “The vast majority of respondents (to the Forrester VoC survey) also admitted that their programs don’t systematically drive actions based on VoC insights or make those insights easy to access.”   So first, companies need to make sure they hear everything that the customer is saying.  Many companies are getting this part right.  Second, and more importantly, is the ability to drive change and take the necessary actions to improve the customer experience in ways that lead to higher levels of customer engagement, satisfaction and loyalty.

One of the things I’ve learned here at Pega, a leader in both the business process management and the customer relationship management markets, is that understanding the customer’s process, i.e. how they want to interact with your business, is as critical as anything else to orchestrating business processes and outcomes that meet customer requirements.  In the age of customer empowerment, no company can survive by making the customer conform to how the business thinks customer processes should work.  It’s now the other way around: businesses have to adapt their processes dynamically to customer needs and continue to change if they want to succeed in retaining and growing their customer base.  Only then will the Voice of the Customer research lead to better business insight and, ultimately, better business results.

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.