The old days when businesses took marketing spending on faith are over. But marketing doesn’t have to give up its finer side for the sake of accountability, argues Naras Eechambadi, author of the new book, High Performance Marketing: Bringing Method to the Madness of Marketing. CRMGuru.com founder Bob Thompson interviewed Eechambadi on Oct. 20, 2005, on the best ways to improve marketing performance. The following transcript was edited for clarity.
Bob Thompson
I’d like to welcome Naras Eechambadi, the CEO of Quaero Corp., to our Inside Scoop interview about his new book. It’s called High Performance Marketing. And the subtitle is quite interesting, Bringing Method to the Madness of Marketing. We’re going to chat with Naras about his book and some of his thoughts about marketing and how it relates to CRM. Naras, welcome.
Naras Eechambadi
Thank you, Bob.
Bob Thompson
Tell us a little bit about your background and what you’re doing at Quaero. What is the focus of your business?
Naras Eechambadi
Quaero’s been in existence for six years. I’ve been running it since I founded it in ’99. Prior to that, I was the senior vice president for knowledge-based marketing at First Union, which was a precursor company to what is today called Wachovia. And prior to that, I was with McKinsey and with BBDO New York. Essentially, I have been in the marketing business all of my professional life, which now spans almost 25 years.
With Quaero, itself, our mission is to help marketing departments and marketing organizations excel at what they do. Improving marketing performance is our mission, and we do that in a variety of ways but primarily by bringing information-based approaches to our clients and helping them not only think about how they can improve marketing but actually doing it for them.
Bob Thompson
That’s terrific. And by the way, thanks for all of your support on the guru panel for the last several years. I believe you were in the original group we started CRMGuru with back in January of 2000.
Naras Eechambadi
That’s right. It was soon after we started Quaero, and it’s been a pleasure. It’s been great being part of the panel, and I’ve learned a great deal from you and the rest of our colleagues there.
Bob Thompson
Let’s focus on your book, High Performance Marketing. Why did you write the book and who did you write it for?
Naras Eechambadi
Over the course of the last 25 years—but specifically, over the last three or four years—we have seen that marketing organizations are going through a very significant transformation from being organizations that are focused on outbound communications to being much more interactive with customers. But they’re also feeling a lot of pressure from inside their own organizations to be more accountable. People took marketing spending on faith. A lot of people spend money on marketing, out of either faith or fear. And that’s not sufficient, anymore.
Bob Thompson
It’s been almost like a black box, right? You put the money in and you hope something comes out, but you don’t know, exactly, what that was.
Naras Eechambadi
Exactly. And even when it does come out, sometimes you don’t know what you’ve got for it.
Bob Thompson
Like that old saying, “I know that I’m wasting half of my advertising dollars. I just don’t know which half”?
Accountability
Naras Eechambadi
That’s exactly right. That saying, Bob, is more than 110 years old. It was from the late 19th century and we’re now in the 21st century. I guess I would venture to say that, perhaps, it’s not half the advertising, anymore, but it’s still a very significant percentage. I think CFOs and CEOs simply don’t find that acceptable, any longer.
There’s a lot pf pressure for more accountability, and marketers are feeling the pressure from inside and outside. The book was intended to help them have a framework and a guideline to respond to this pressure. It’s a guidebook for how do you work your way out of this box and how do you, in fact, make marketing an operational discipline like supply chain management or something else?
Bob Thompson
Is this focused on the chief marketing officer or senior marketing executive?
Naras Eechambadi
Primarily, the senior marketing executive. But we also expect that it will sell with senior financial people: general managers, who have to approve marketing budgets and other people who work with marketing, such as people in customer service or people that are in sales or IT. These are all areas that interact heavily with marketing and are, sometimes, perplexed by what they see in marketing.
Bob Thompson
I liked your tagline for the book: Bringing Method to the Madness of Marketing. It seems like there’s a dichotomy in, at least, some facets of marketing. It’s a very creative process. You’re trying to build impressions. There’s a lot of the advertising and so forth. And then there are also very disciplined processes that go on. It just seems to me like this might be one of the big challenges in marketing, much like how you get an artist to practice Six Sigma. Do you find that’s one of the conflicts within the marketing organization, this creativity vs. discipline?
Naras Eechambadi
No. As a matter of fact, I don’t think it’s a conflict. There is a great quote in my book from Cathy Bessant, who is the chief marketing officer of Bank of America. She’s got a marketing budget that exceeds $1 billion. I interviewed her for the book, and she said, “World-class processes set you free.” What she means by that is that if you really have very disciplined processes and if you kind of know what you’re doing, then you actually free yourself up and you have more time to do the creative things.
Bob Thompson
So they’re not mutually exclusive. You can be creative and disciplined at the same time.
Naras Eechambadi
Absolutely. In fact, not only are they not mutually exclusive, we would say that the more disciplined you are, the more time you free up to be creative. In fact, the one helps the other.
Bob Thompson
Then, together, that’s part of what brings this high performance marketing to life.
Naras Eechambadi
Absolutely. Yeah.
Bob Thompson
What does improving marketing performance have to do with being successful in CRM?
Naras Eechambadi
One of the aspects of improving marketing performance in this day and age is the fact that so many channels of communication with customers or interaction with customers, more broadly, have become very interactive. Traditionally, marketing talked to the customer through television, radio, print, whatever. The new channels all allow the customers to talk back to the marketer; whereas, we know in our personal lives, listening can be a very hard skill. Marketing organizations, in particular, don’t listen very well.
Bob Thompson
They’re used to communicating out.
Naras Eechambadi
Exactly.
Bob Thompson
This is the message we want to deliver to the market and to influence what they do.
Naras Eechambadi
Exactly. But they are not very good at listening to what the customers have to say. The high performance marketing, a lot of this is about: How do you listen better? If customers talk and companies listen, everybody wins. The company wins, and the customers win.
Bob Thompson
In the studies that we’ve done of successful CRM programs, those that build their strategy around being customer-centric—which, by and large, means this listening process, getting customer input, both systematically through data and through interactions with customers—are more apt to be successful. So it certainly, makes sense to me.
Naras Eechambadi
Absolutely. But all of that has to happen through a central organization or be coordinated by a central organization. And marketing, in most organizations, is the best placed department to do that.
Strategy execution gap
Bob Thompson
Then let’s talk about this planning approach. You say that there is a strategy execution gap in companies. I don’t know if you could share whether you believe it’s most companies or some percentage, but to close this gap, what approach are you recommending to handle that?
Naras Eechambadi
I’ll share an example with you that’ll illustrate, I think, the larger point that I want to make. We had a client work with us about a year and a half ago. It was a large financial services company that had changed their strategy, significantly, after 9/11. When the market was collapsing and things were pretty bad in financial services, they decided, “Hey, we want to shift our strategy from acquiring lots of new customers, which is what we’ve done for the last 20 years, managing our existing relationships and growing our existing relationships. While we want to continue to acquire customers, that won’t be the primary focus, anymore.”
This was the stated strategy that had been communicated all over the company, including to marketing. But there was some frustration within the organization as to whether marketing was really in step with that. Marketing claimed to be in step with that strategy. Well, we went in and took a look at the entire marketing budget and ignored the usual budget line items telling you, “How much is PR? How much is advertising? How much is direct marketing?” and looked at it in terms of where the money is going. Is it being used to acquire or to cultivate existing customers? It became very clear that the bulk of the money was still being spent on advertising, which, largely, was an instrument for increasing awareness and acquiring new customers.
Bob Thompson
Right. And we’ve seen that trend, as well, in some studies that we’ve done, where loyalty programs are invested. There’s kind of this feeling like, “Yeah, we want customer loyalty. We want to retain them.” But the monies—two out of three dollars, at least—goes to acquisition.
Naras Eechambadi
Exactly. One reason is acquisition is easier to count. It’s easier to declare victory and move on. Building customer relationships is much harder work. So that is one example of a gap. What we are saying is, if you have a planning approach where you absolutely link what your strategic goals are to the things that you’re spending money on—and make sure that you can explain why it is that each budget item links to the strategy, the declared strategy—then you start to narrow that gap between strategy and execution.
Bob Thompson
Let’s talk about strategy for a second. It’s one of the most overused and abused words in business. What does strategy mean, in the context of marketing? What would be an example of a strategy, well stated and clearly understood vs. the sort of muddled versions that we tend to see in many companies? Do they really have a strategy to begin with?
Naras Eechambadi
To me, in plain English, strategy is about where you want to go. And what that means, in marketing terms, is as you’re growing a company, how do you want to grow it? Going back to this previous example, do you want to acquire new customers? If so, what kind of customers? Do you want to grow your relationships? If so, which relationships? Because you don’t want to really be trying to grow all of your relationships. You have to be focused about it.
Bob Thompson
So acquisition is really getting to the customer strategy.
Naras Eechambadi
That’s correct.
Bob Thompson
Growing. Retaining. And what flavors are going to be in the best interest of the company?
Naras Eechambadi
Absolutely. Marketing strategy and customer strategy are heavily interlinked.
Bob Thompson
In your experience, how often do, let’s say, medium to large companies have a clearly articulated marketing strategy that has this customer orientation?
Naras Eechambadi
I would say less than half the time the companies that we work have clearly articulated the strategy.
Bob Thompson
Is the first step, simply, to get a clear strategy developed and defined? And then you work on the execution and gap issue you mentioned?
Naras Eechambadi
Yes, it is, and just one additional thought on that. The strategy has to be really crisp and focused. Part of the strategy could be, what are you not going to do? Too many strategy statements are too broad and try to do too much, and they end up doing nothing.
Bob Thompson
Can you dig just slightly deeper into this process? I think everyone would agree that executing your strategy’s a good thing to do. But you have a specific methodology you have developed. Can you give us the highlights of how that process works? People who are interested in the details, of course, can read your new book.
Naras Eechambadi
Sure. We use what we call a six-dimensional performance framework for marketing. It starts with what we call “actionable strategies,” which means the very specific strategies. Then we say, if you want to execute those strategies, you need to have good measurements to know whether you are succeeding or not.
To get good measurements, you need good information about customers and about markets. And to get good information, you need solid technology that is functional. Also, to get to your goal and your strategic objectives, you need good processes, effective processes, that are very clear, so everybody knows what they’re doing. And then you need organizational alignment, which means that your people have the right skills, you have the right people, you have the right incentives and they’re all in the right boxes in the organization. All of those things need to come together for you to really execute superbly.
Bob Thompson
How long does it take a company to go through this process?
Naras Eechambadi
Anywhere from three months to three years. Then, of course, for the most part, it’s an ongoing thing. But what we, typically, do when we work with our clients, is to identify of these six dimensions—where is the weak link for that organization? Let’s fix the weak links, and then let’s focus on your strengths and build on your strengths because all organizations have one or two dimensions that they are strong on.
Weak links
Bob Thompson
You’ve mentioned some things that, to me, sound very much like CRM-type issues when you talk about processes, organizational alignment, metrics and, of course, the strategy, to begin with. These are all things that CRM programs worry about in a larger sense, whether it’s service-related or sales. I wonder if you have a comment on where the weak link is. Does it tend to be that they have a strategy but don’t know how to measure their progress? The measurement metrics are not there. The organization’s not on board. Is there any sort of common theme that you see more often than another?
Naras Eechambadi
Yeah, I would say the three areas where most companies really fall short are measurements, processes and the organizational alignment. Of the six areas, those three are usually the weakest links. Unfortunately, most companies tend to spend time on the other three areas, which are strategy, information and technology.
Bob Thompson
So we know where we want to go and we can figure that out. Then we can go buy tools, and we know what information the tools can deliver. But it’s getting it implemented in the organization; the work processes; figuring out how to actually create and use the metrics; getting the people to do all of what they need to do.
Naras Eechambadi
Or getting the right people.
Bob Thompson
Yeah.
Naras Eechambadi
Those are all difficult things, and too many organizations like to avoid them, if they can.
Bob Thompson
These problem areas seem to be areas where the leadership of the marketing organization is extremely important. I notice that one of the things you’ve said in your book is that it’s very important to have a decisive marketing leader. Can you share an example of a company where you feel the leadership really made such a huge difference?
Naras Eechambadi
Yes. I think I would point out a couple of different companies that have had tremendous leadership in marketing, especially in terms of process. One is a financial company that has done a tremendous job on the marketing measurement and process front and bringing things together, to the point where marketing is now seen as a leader of all customer-related activities in the organization, which was not the case a couple of years ago. They’ve really done a very good job.
Bob Thompson
Is it due to a new leader coming in and making these changes?
Naras Eechambadi
No, it was an existing leader who reacted very positively to the pressure coming from the CEO’s office that said, “Hey, you guys really have to show us what it is we’re getting for all the money we are spending.”
Rather than just coming back with a simple ROI kind of thing, these guys actually stepped back and said, “Let’s look at the entire framework and what we are doing here.” They completely turned the organization upside down. It was internal leadership. They just completely stepped out of their comfort zone and were able to achieve some remarkable results.
Bob Thompson
It sounds like the impetus for this came from the CEO, and that, in many cases, may also be important. Isn’t this part of the accountability issue that you’ve been talking about, that CMOs are going to be accountable to the CEO and to the board to actually make sure that these marketing investments are delivering a return?
Naras Eechambadi
Absolutely. That’s exactly the case. I don’t know if you are familiar with this, Bob, but of all the C-level executives in large corporations in the U.S., CMOs have the shortest tenure.
Bob Thompson
What is the tenure?
Naras Eechambadi
Typical tenure of a CMO is less than 24 months, it’s about 23 months.
Bob Thompson
Wow.
Naras Eechambadi
Less than two years.
Bob Thompson
So they’re competing with CIOs for their careers.
Naras Eechambadi
Yeah. Interestingly enough, for CIOs, the average tenure is 36 months.
Bob Thompson
Is that right?
Naras Eechambadi
So CMOs are significantly less long-lasting than CIOs, and it’s partly because they are not able to prove their effectiveness.
Bob Thompson
Let’s talk about the role of technology, because we know that strategy in these other software areas are the most difficult. It seems like everyone has a fascination with what the tools can do. From what I’ve seen, the marketing tools, especially in the analytics area, can do some fabulous things that you just could not do without technology. Could you highlight a couple of areas where you feel that the technology has enormous leverage in improving marketing performance?
Naras Eechambadi
Absolutely. Technology is integral. It’s a foundation for the high-performance marketing organizations. There are three specific areas that can help marketing organizations be successful. The first is just having the right information, whether it’s market information, comparative information or customer information. The second is having it all be clean, accurate, timely and available in a database of some sort. The third is having the right applications to leverage it.
There are three applications I’d like to mention. One is campaign management applications that allow you to dialogue with your customer on a regular basis, whether it’s through direct mail, email or the web. The second is business intelligence kinds of applications that allow you to understand what’s happening out in the marketplace and get reports out to all of the operating managers, so they can make better decisions. And third, data mining kind of applications that allow you to go in and mine the information so that you can figure out what your next strategy ought to be or how your tactics ought to evolve over time.
Bob Thompson
Could you give us a word of advice for an executive—a CMO, I would presume—who says, “I need to improve marketing performance. In fact, I need to do it or I’m going to be looking for a new job”? What would you tell that executive?
Naras Eechambadi
The advice I would give is, take a look at those six dimensions and make an honest assessment of where you and your company and your department stand relative to each of those dimensions. Then first focus on shoring up your initial weaknesses. Then, try to build on your strengths. I don’t want to make a plug for my company, here, Bob, but we do have a tool that allows our clients to do that in a very objective way. But many of your leaders could, certainly, do that on their own. It’s a little bit more difficult, but they need to make the attempt. That’s the first step. Understanding where you stand is the first step to figuring out where you want to go or how to get to where you want to go.
Bob Thompson
Naras, thank you very much. That’s great advice. And congratulations on getting your book out. I know that’s a tremendous amount of work. I appreciate your sharing some thoughts with us today on this Inside Scoop program.
Naras Eechambadi
It’s been my pleasure, and thank you for having me.
Find out more about Eechambadi’s book at www.high-performance-marketing.com and download a chapter.
