In a study by the Fournaise Group, 80% of CEOs surveyed admitted being disappointed with their CMOs. In academic research conducted by Nath and Mahajan (2008), they found that the absence or presence of a CMO in the C-Suite didn’t matter (no impact on firm performance).
Recently, there has been a spate of negative press questioning the value and impact of CMOs. In collaboration with CMO.com, leading academics and CMOs (a special thanks to Steven Cook, former CMO and managing partner of www.FortuneCMO.co), I conducted research to better understand the role and impact of CMOs. The analysis is based on a survey conducted (814 surveys) throughout the summer and fall of 2013 and interviews conducted with experts on the CMO role (150 interviews). Of the survey respondents, 71% were CMOs (head of the firm’s marketing department) and 29% held other executive-level positions. The primary focus of the research was to compare the best (top 20%) marketing firms (in terms of marketing capability development) to the worst (bottom 20%) firms. We then analyzed the CMO role across the best vs. worst performing firms to see if there was a difference.
Marketing Matters
While some may question the import of marketing, this research indicates that a firm’s marketing capability (the ability to leverage marketing resources to drive firm performance) has a positive and significant relationship with overall firm performance. While we know that marketing matters, we don’t know how the CMO impacts a firm’s marketing capability (and therefore overall firm performance).
In my interviews, many CMOs have had discussions with other C-level individuals who do not always believe that marketing is firm enhancing activity rather than a resource draining one. As an example, while there are the enlightened CFOs who understand that differentiation and the superior ability to identify and deliver products and services that customers want is valuable, there are always a few who seem to think that marketing is a waste of money. In my interviews, the single biggest areas CMOs were looking for help on was demonstrating the value of marketing to others within the firm. To address this issue, we sought out to better understand when and how CMOs impact the development of marketing within the firm.
Marketers Managing Marketing Deliver Better Results
A fundamental decision CEOs must make is who to allocate marketing activities and responsibilities to. Should the CFO manage analytics? Should the merchant manage e-commerce? What should the CMO own? In this research, the better performing firms (top quintile) in terms of Marketing Capability have allocated greater depth of ownership across more marketing-related activities to the CMO than the bottom quintile. The CMOs whose firms outperformed their peers in marketing capability had, for example, 25% greater responsibility for corporate strategy, 32% greater responsibility for distribution, and 27% greater responsibility for sales. The biggest gap between the top and bottom performing firms was in the degree to which their CMOs had responsibility for distribution and corporate strategy. In other words, firms that have a stronger marketing capability have allocated more responsibility across a whole host of activities (e.g., research, analytics, new business development, corporate strategy, pricing, product development, distribution, etc.) than their poorer performing counterpart. When the CMO has a limited degree of responsibility around a narrow set of activities, it means that other C-level individuals in the company own them. And the research suggests that this is not good for the development of marketing capability within the firm.
Greater Marketing Importance is Associated with Stronger Firm-Level Marketing Capability
The top quintile of firms (in Marketing Capability) have CMOs who have achieved higher perceived status relative to their C-level counterparts, than have the bottom quintile CMOs. This suggests that greater scope/depth of responsibility, plus greater perceived importance, improves a firm’s Marketing Capability. Intuitively, this makes sense. What this suggests is that a CMO should be wary of a position in which the status (e.g., reporting to somebody other than the CEO) is lower than peers.
Without status and involvement at the C-level, it is unlikely that the CMO will have the same degree of impact. More important, the question for the CEO is to whom should s/he allocate these responsibilities? This research indicates that giving non-marketing leaders marketing-related responsibilities is simply not as effective if trying to enhance the company's marketing capability.
CMO Tenure And Experience Matter
Greater CMO tenure (number of years in a position) and greater overall experience as a CMO (aggregate number of years as a CMO) are associated with better firm-level marketing capability. Again, this intuitively makes sense, indicating that overall experience within the firm—and experience as a CMO—can aid in better performance. This also suggests that high CMO turnover can inhibit the firm’s marketing capability development and performance.
The age-old question is whether marketing – and marketers – matter? According to the CMO Impact Study, both do – under certain circumstances. This is just a highlight -- to see more results from the study, click here.
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