Lately, I’ve been doing a deep dive into the question of the effectiveness of CMOs (or marketing directors, as they were once called) and their relationships with other members of their boards, particularly CIOs (formerly called IT directors).
Research from many sources indicates that CMOS are having an exciting time, as channels and media proliferate, as the number of apps to help them achieve their customer engagement and sales objectives explodes and as customers take up with alacrity new digital ways of managing their relationships with companies. Their budgets are on the whole moving rapidly from conventional to digital media.
However, they are also having a challenging time. They are experiencing serious skills shortages, particularly in the digital area. They are facing competitors from new areas, often using digital technologies to cross industry boundaries (Amazon Cloud Services is one of the best examples of this). They are under pressure to move more quickly to deliver results while maintaining high levels of customer satisfaction, at a time when customers are using digital approaches to gather information to judge relative performance.
Worse, to achieve what they are being asked to achieve, they are having to use a proliferation of partners, in areas such as optimisation (search, channels, media), analytics (overall and for different areas, particular new channels), content and website management, as well as the classics like brand and creative strategy and customer data management. While some of their partners may help them by working well with other partners, many are so focused on delivering in their area of expertise that they won’t or can’t (because of lack of knowledge or skills) help by reaching out to and working with other partners.
All this means that many CMOs are having to reinvent how their marketing departments work, making them faster, leaner and more productive, while becoming expert at recruiting and deploying new internal and external resources. Some companies have overcome their first shock at the impact of digital media and channels on their business, and are bringing things back into order, to focus on selling profitable products to happy customers (putting it simplistically). However, many have not, and are still working out how to cope with the shift of power to customers triggered by the swinging of the balance of information and access to customers and redress the imbalance by using the information flowing from customers via new apps.
On top of this, many CMOs are also facing a requirement to show a better return on investment for marketing spend, including spend on marketing systems.
But, hang on! Marketing systems? Surely that’s the business of the CIO? Increasingly not, in many companies. Self-contained systems and apps are becoming the domain of CMOs and their teams. They may consult CIOs and their people, but are decreasingly influenced by them. Their priority is to deliver value, not to integrate or be consistent. The same is occurring in other functions, as increasing numbers of business relegate CIOs to managing the infrastructure, leaving business technology to functional heads.
However, on average, CMOs don’t seem to be succeeding, as many boards are less confident than previously about the returns to marketing. Is obsession with keeping up to date leading CMOs astray?
My answer to this question is that some are and some aren’t. Statements based on averages (in this case, board attitudes to marketing RoI) are highly misleading. The response to such statements must be to ask further questions, such as:
- Where are CMOs producing good returns and where not? In which sectors, in what types and sizes of companies? For example, is there a difference between businesses that operate in stable markets, with known parameters of responsiveness to marketing and sales investments, compared with businesses in rapidly changing markets, where CMOs must experiment before finding out which approaches give the best returns?
- Are good and bad returns associated with positive or negative returns in other functional areas, such as R&D, IT, HR and most importantly operations? I wouldn’t be surprised to find marketing investment being successful in companies where other functions were also producing good returns?
- Is the question asked subject to the framing effect, allowing a little blame to creep in? If you were a director of another function and a bit worried about your own performance, how would you answer a question about the effectiveness of your marketing colleague’s investments?
- Is there any relationship between the pressure CMOs face to produce good results, and the results themselves – some research suggests that tough love is the best approach!
- Is there a connection between the business or marketing model and the returns marketers generate? For example, do companies whose prime contact with customers is through contact centres (now armed with the latest in customer engagement software across all channels and the appropriate analytics to help them work out what to do) do better than those who work through, say, sales forces or retail outlets, or those who are (or claim to be) omni-channel?
I could continue, but I hope you have got the message. Once we get some way to an answer to these questions, after checking that the result was statistically valid, then we should b e asking why the result occurred. After all, the aim of these questions is not to apportion credit or blame, but to find ways to improve things.
Then, I would get back to that difficult question of the relationship between CMOs and CIOs and their respective empires. However, I would not expect any problems to be resolved quickly, or opportunities to be captured easily. I’d revert to the philosophy that I applied to the idea of the single customer view in my previous article on this site. In this digital age, most companies are on a journey of discovery and innovation, in which progress in one area may initially be faster if they don’t at first worry too much about coordination, consistency, integration, cross-company optimisation and the like. That comes later, when processes and systems may need to be industrialised to deliver secure (and in some cases compliant) achievements. There is no clear end to the journey – we are going from A to ? not A to B. This makes journey planning is much more difficult.
All this means that developing a process of mutual communication and experimentation that is shared between marketing and IT may be the most companies can do to produce the best result. It may also require a change in role definition, one in which the marketing function is seen as one of IT’s innovation arms, taking it forward rather than opposing it. I’m not sure about this, but certainly the way forward is not antagonism and blame, nor one in which marketers should fall into the arms of new partners or suppliers whose main aim is to woe them away from involving their IT people. That is something marketers should definitely resist. Unilateral declarations of independence are dangerous, as history has taught,. That is why surveys showing the importance of marketing departments in IT decision-making should be viewed with great circumspection.