According to a recent study by the IBM Institute for Business value, over the next 5 years, 79% of Chief Marketing Officers (CMOs) expect a growing high degree of complexity, but 48%, less than half, feel prepared for it. There’s a 31% gap here that quantifies just how much change this executive role is facing. What’s causing this impression and what can they do about this?
First, let me start by pointing out that the Number One concern of CMOs according to this study of over 1700 executives in 64 countries and across 19 industries is not social media. That sits at number two. What 71% of CMOs say is that they feel, first and foremost, unprepared about the explosion of data among the industry, customers, brands, and products. Next in order, comes social media (68%), the growth of Channel and Device choices (65%) and shifting consumer demographics (63%). In terms of factors most impacting marketing, however, the study points to customer collaboration and influence, device choices and social media.
However, compare these priorities to what CMOs currently do invest in primarily: market research, corporate strategy, competitive benchmarking, and customer analytics (see Figure 1). Far fewer are investing in consumer reviews, third-party rankings, online communications or blogs. What this says is that CMOs currently still invest in understanding markets to shape their strategy, not in understanding individuals.
The frustration of unpreparedness often stems from not knowing or being comfortable enough in a particular area, especially in an increasingly important one. From these findings this may be because they are simply not investing in the area, even though they consider it a priority.
Let’s look at the number one issue in particular: what does one do about the explosion of data? The easy answer would be to invest in data analysis technology and skills. However, what is more difficult to see is how, with this new volume and variety of data, does the CMO create value?
One thing to recognize is that some, or even much, of this data explosion comes out of the activity, and content in customer environments. These likewise have exploded because customers have a wider range of options to discuss companies and products like never before; and these environments are social.
Thus rather than understanding markets, what CMOs face, are the need to understand the data that comes out in social environments out of many, many individuals. Rather than processes geared towards analyzing markets, they need ones geared towards understanding individuals.
Another aspect straight out of social media is that the data is not inside the organization, but ‘out there across the Web.’ Companies still have information about their customers, but this is only partial insight compared to the volumes those same customers, and other potential customers share on the public Web. What organizations do not have are the tools that can help them process this. Rather than internal customer databases by product, territory, market or other types, now organizations need new tools that need to investigate, and draw accurate information from the network.
Focusing data on individuals really means something different. Unlike focusing on how many items were bought, the goal now becomes to create actual profiles of customers and maintain their identity and history over time. For large business transactions and B2B markets that isn’t as unusual because each ‘customer’ tends to be a large organization. However, even here you are focusing on the individuals at points of contact and purchase.
Another point would be to look beyond these individuals are mere transactions. The CMO study also points this out (see Figure 2) in terms of where in the customer lifecycle they focus: 61% on customer segmentation and targeting, and 54% on the actual buy action. A fewer 46% focus on customer education, 41% on product or service use, and only 40% on building a bond and encouraging customer advocacy.
The long-term prospect is that marketing should be looking to build actual relationships with specific, distinct individuals, learning to understand them and work with their needs across the customer lifecycle from initial awareness to service and support. These elements like education and advocacy are very much focused on relationships, rather than the dealing purely on a transactional level.
How does this address CMOs priorities?
If you look at Figure 3, CMOs say that Customer collaboration ranks in 9th place, but also the furthermost to the right: the factor that most impacts marketing. However, CMOs indicate that they do not feel as unprepared in this area as per social media. What strikes me here is that they may not realize these two issues are really converging into one and the same. Yes, you can do more than collaborate with customers in social media, but this should not fall separately from a social media strategy for marketing. They should be one and the same.
In that line of thinking, how people interact in social networks is:
1) becoming the basis of how they communicate, make purchase decisions and advocate products
2) how they collaborate with companies (either directly or through advocacy), and how they present brand loyalty
3) what may be creating a new explosion of data about preferences, markets, and brands.
Interestingly enough, by focusing and reaching deeply into customer use of social networks, we address (per Figure 1), issues #1 (data explosion), #2 (social media), #6 (decreasing brand loyalty), #9 (customer collaboration and influence), and perhaps even #7 (growth market opportunities), #10 (privacy considerations) and #13 (corporate transparency).
That is hitting multiple notes at the same time. Many of the actions for CMOs now lie under this one banner. What they need to do now is figure out how to transform their programs, processes, skills and metrics that continue to support the traditional Markets-and-Transactions-based approach into ones that focus on Individuals-and-Relationships.
