There’s no question that thanks to technology and globalisation, customers expect more from businesses than ever before.
The organisations that survive and thrive will be the ones which recognise this, harness every aspect of customer data they can gather, use it to understand exactly what their customers want, and reorient every step of their operations to align behind a refreshed customer centric strategy.
Our digital future and the externally looking CMO
While Chief Marketing Officers (CMOs) have not traditionally been ‘first in line’ for a Chief Executive Officer (CEO) position, the new demands placed on businesses by customers mean CMO insights have become more valuable for a major strategic leadership role. CMOs are well positioned to navigate companies through the staggering amount of digital disruption that’s occurring, and make the correct links between what customer data tells them, and where they should steer the organisation.
CMOs are in a predominantly ‘external facing’ role, which differs from others in the C-Suite (such as the COO, CFO, CIO, and CHRO). These execs are often more focused on operations within the company. This means the CMO is well positioned to understand the vast changes occurring in the digital economy, and help the business deliver on customer expectations. As boards look at their company talent pool for CEO successors, they are increasingly recognising this.
Think about the landscape: today, customers do still partially interact with a company brand, product or service via traditional offline platforms like bricks and mortar stores, call centres, and on-the-road sales representatives. However, they are now more often interacting with the brand online via websites, social media, and e-commerce platforms. The next wave of interaction via artificial intelligence (AI) enabled voice and robotics, has already begun, and this is only set to grow. Given that growth is paramount to boards, the CEO should be focused on growth via these digital channels – and it’s CMOs that can bring the deepest knowledge of market trends to the top role.
Brand is key for strong returns
InterBrand Best Global Brands tracks the brand value of the world’s top 100 global brands. There is a link between brand value and shareholder value, something CMOs know natively, but many boards underestimate the impact of a powerful brand. Because CMOs are brand custodians they have an important role to play in driving shareholder value by improving brand value. Several studies have shown this positive correlation to exist:
- The Stockholm School of Economics showed that high brand value companies derived +12.7% higher annual shareholder return than mid to low brand value companies over a seven-year study from 2005 to 2012 (analysing European brands in the InterBrand Top 100).
- Kantar Millward Brown also showed this correlation exists with their analysis of Top 100 BrandZ. They noted the top 100 ‘Most Valuable BrandZ’ outperformed the S&P 500 index by 39% over a 10-year period.
Brand and customer experience
A good book I read recently by Alex Allwood suggests directly that ‘Customer Experience is the Brand’. Alex posits that marketers and leaders must turn their attention to focus on bettering the overall customer experience by focusing on improving the customer journey, by using data and technology more effectively, and by utilising advocacy to grow a brand and be successful in today’s experience economy.
If customer experience (CX) is the new marketing agenda, all CMOs should be focused on improving the overall experience that customers have when interacting with a company’s physical and digital touch points. This includes:
- Mobile apps
- Pre-sales information gathering
- Post sales support and interactions
CX and NPS
Today, more than ever before, executive and employee compensation is being tied to CX scores such as the NPS (Net Promoter Score), which has led CEOs and their organisations to focus more on improving the overall customer experience. For example, within Lenovo our entire employee base has 10% of bonus compensation linked to CX and NPS. This is comprised of five major elements which we found drive improved CX, including:
- Brand consideration
- Time to quote
- Delivery timeliness
- Product customer satisfaction, and
- First time issue resolution
In order for CMOs to lift the brand with greater impact, they simply must become more involved in many functional areas of the corporation beyond the traditional CMO remit of advertising and marketing communications. We need to see CMOs take a bigger step into customer engagement in the sphere of sales, customer service and post sales support.
So why aren’t more CMOs becoming CEOs?
HBR July-Aug 2017 has an interesting article on this entitled “The trouble with CMOs” by Professor Kimberley White from the University of Virginia, Darden School of Business. Her summary is that the top marketing job in the company is a minefield where many executives fail. Why is it so risky? She maintains there is often a mismatch between CEO expectations and CMO authority. We need to address this and eliminate the shortfall. What happens is often the CMO role is considered important in helping to lead the company’s efforts for growing revenue and profit, but the overall scope is limited to ‘traditional marketing’ areas like events, communications, advertising, and social media. When the CMO is not in control of product launches, pricing, store openings, channel strategy and website e-commerce – they are disempowered and not as effective as they could be.
The short tenure of CMOs
Research by Korn Ferry shows CMOs are one of the shortest held roles in the C-Suite. A CMO’s average tenure is 4.1 years, compared to CEOs (8 years), CFOs (5.1 years) CHROs (5 years), and the CIO (4.5 years).
Interestingly, the HBR data from Professor White reinforces this, as she cites that 57% of CMOs will spend three years in the role, and 40% will spend just two years or less. There seems like a missed opportunity for businesses here. This lack of tenure will severely limit the opportunity for CMOs to be considered for the CEO position when boards look to promote from within an executive team.
CEO skills required – and – CMO changes required
In my view, the leap to the CEO position highlights a wider skills gap which marketer’s face beyond traditional marketing. It also illustrates the missing skills needed by CEOs.
The modern CEO needs to:
- Understand customer experience
- Have “carried a bag” (managed a sales target or run a sizeable PnL)
- Have strong financial knowledge and experience
- Have a deep understanding of business operations and strategy
- Understand product development and supply chain
On the flipside, for more CMOs to be considered for the top post of CEO, there are some changes required from both the CMO and company boards:
- CMOs need to broaden their skills outside of marketing into sales, operations, product, and strategy. ‘Pure marketing’ experienced CMOs need to move beyond marketing to be considered as a potential CEO.
- Corporate boards need to ensure that CEOs have strong digital skills and be able to navigate new online opportunities. This is especially important as AI, voice recognition and automation impacts the customer interaction and sales experience.
- To bring a growth mindset to life, boards should look to CMOs as being most capable to navigate digital disruption and capture growth through new online business models. This means hiring progressive CEOs, not traditionally styled CEOs. Traditional business models no longer ensure success.
- Marketing needs to change its image from the ‘MADMEN’ stereotype of marketing as a discrete function, into a broad capability empowered to widely act and create impact across the entire business, responsible for all customer touch-points in the customer journey online and offline.
With these changes, marketers can become more hands-on and more deeply involved in traditionally ‘non-marketing’ aspects of the business. CMOs will interact with other functions and leaders, playing a more important role in the overall strategy of the organisation. CMOs should broaden their experience for a greater impact on sales, CX, pre and post sales, strategy and business operations. This will help raise the profile and skillset for the next generation of CEO candidates.
Please share your personal and professional views on this viewpoint by commenting below!