According to Forrester Research, 30% of CEOs indicated that they are going to fire their CMOs this year. The primary reason? Too many CMOs haven’t adjusted to the concept of the customer journey that fluidly moves across touch points.
According to Forrester’s Shar VanBoskirk, “Businesses are in a ‘post-digital era’ in which customers don’t think of digital experiences as separate from physical ones. Amid political and institutional uncertainty, customers value trustworthiness and positivity from the entities with which they interact.”
Marketing hasn’t kept up with your customers. Rather than seeing digital as a separate entity, they see digital tools as just another way to interact.
As a CXO, you’re in the perfect position to help CMOs catch up, improving outcomes for both your company AND your customers. There are three primary ways you can make an impact:
- Help your CMO picture the overall journey, including its true promise: an improved experience. Marketing gets the customer journey concept. In fact, a large share of journey mapping initiatives originates in marketing. Unfortunately, marketing frequently concentrates on path-to-purchase and similar initiatives that focus on promotional opportunities. This leads to a belief that digital and analog touch points are simply portfolios of customer contact points.
This may have been true five years ago, when customers tended to stratify along digital or analog lines. Today, customers are channel-agnostic. They select the channel that makes sense at that moment, whether that’s an app, a website, or a call.
Marketing traditionally focused on the sales funnel – a one-way process of narrowing down options until consumers select the product they’ll buy. Today’s journey is more fluid.
- Paint a picture of customers as relationships rather than transactions. It’s certainly true that customers like promotions in the abstract – everybody likes a deal. But promotions quickly get overwhelming.
An email offer creates short-term dollars. But each email promotion also has a significant cost if they lead customers to unsubscribe. At that point, not only can you no longer promote to them – you probably can’t educate, either. You’ve lost your most important tool for engaging customers as they want to be engaged.
With patience, marketing tools can to assist the long-term journey. Both the Temkin Group and Forrester agree that effective experience pays – but it’s a long-term payback. They even largely agree on what matters: impactful experiences accomplish your customer’s goals, are easy, and are emotionally satisfying. Marketing tools can ensure that you identify those customer needs, assist them in their journeys, and satisfy customers’ emotional needs. But not if there’s a big “Buy” button at each step along the journey.
- Change the metrics. CMOs traditionally focus on promotional metrics, such as number of new leads or sales from new customers. True growth doesn’t come from new customers – organic growth comes from an improved customer experience, leading your existing customers to buy more and recommend you to others. The best source of new sales isn’t Facebook or other social media sites, direct mail, or outbound calling. Your best source is from customers who buy your newest product and promote you to others.
The Temkin Group’s analysis shows how even a modest improvement in customer experience can increase revenue in many industries by over 25% over three years – stronger than any promotion. But if your CMO is measuring leads and sales from new customers, none of this will get noticed.
A better metric is Customer Lifetime Value (CLV). CLV measures the discounted value of all future profits from that customer. A simple example – if an average customer generates $100 in annual profit, and you retain 75% of customers a year, then this year’s customer is worth $100, next year’s is $75, followed by $56.25 ($75 * 75%), etc.
It’s a powerful metric in that it aligns the company to focus on what’s most important – keeping customers and giving them reasons to keep buying from you. And marketing can be a powerful driver of this experience – if it’s measured. I will have a future blog post going more in-depth on the CLV metric.
Help your CMO transition from a promotions focus to a focus on the customer’s journey. Doing so may cost you some short-term revenue from reduced promotions. But it’s the only way to get the 25%+ growth identified by Temkin.
And that will lead not only to your CMO keeping his or her job. It will also help you in yours, too.