At the recent 2010 CIO Summit – The Year Ahead – Tony Scott, the CIO from Microsoft asked the audience the question: “who here is best friends with their CMO?” Only about 1 in 5 hands went up, to which he made the comment that by next year everyone should be friends with their CMO or risk to no longer be in their role.

That struck a chord with the audience. CIO’s should be best friends with their CMO counterparts and here is why:

1. Changing processes will require a different infrastructure
   Whether companies pro-actively embrace the social wave that is currently hitting businesses or not, most marketing and sales processes have already profoundly been affected by the social. People no longer listen to companies and instead make their buying decisions based on recommendations from peers. The funnel disappeared and is being replaced by a messy, swirly social buying process. Innovation and support can now be turned into social processes involving customers and employees whose job it is not to design and support new products. The CMO cannot enable his team to support these new processes without the CIO and the CIO’s team cannot build the right infrastructure without thoroughly understanding the new processes. They need one another to succeed in this area.
2. Cultural environment conducive to high technology adoption rates
   CIO’s need to find pockets of culture within their company that are ripe for social technology adoption or enterprise 2.0 adoption. In many companies the marketing department may be that department. Most marketing departments are being forced into adopting social tools by their customers, prospects and detractors. So for CIO’s to get a win under their belt with social tools, they may benefit from befriending the CMO.
3. Together create an opportunity to regain senior strategic roles at the executive table once again
   Many CMO’s and CIO’s have lost their strategic place at the executive table. At a recent large investment banking portfolio company retreat, the three execs from the portfolio companies that were invited to represent the  executive team were the CEO, the CFO and the Exec in charge of Human Resources. Look at many executive teams on company web sites, many of them don’t have a CMO or CIO reporting all the way to the top. The CMO and the CIO can team up together to regain a strategic seat by representing the voice of the customer within the company. That will require for the CMO to stop thinking of their role as the company advocate in the marketplace and instead become the customer advocate within the company, and for the CIO to stop thinking about how to build hard walls around the company and instead to find ways to extend the edge of the company to encompass customers, prospects and detractors. 

There are many other reasons why CIO’s and CMO’s should be best friends, but those three alone should make for the divide that exists between them to disappear now.

[self-serving ad coming up]That is also the reason why the upcoming Hyper-Social Mini Summits are now focused on both CIO’s and CMO’s – which should make for a great brainstorm session.[/ad]

Shel Israel last week asked me if companies should have a Chief Community Officer, to which I replied that communities, with the customer insights that they can provide, would allow CMOs to transform their role in that of Chief Customer Officer – representing the voice of the customer at the executive table.

That reminded me how Forrester has been pushing for the role of Chief Customer Officer for awhile – as a separate entity from the CMO.

Somehow this seems odd to me. I understand that many CMOs have been relegated to running pre-sale programs, and that many developed real bad habits in the name of promoting the brand. But does that mean that we should have a parallel organization to ensure that someone looks at the consistency of experience across all the touch-points that a customer can have with the company? Or should that become part of the CMOs role?

Maybe you need an empowered temporary team to look at all the touch-points and develop cross-organizational processes to ensure consistency across all those points, but that team should report under the CMO as (s)he should be the person responsible for the voice of customers, prospects and detractors in the marketplace.

What do you think?

An interesting question that came up during our workshop (slides here) at the community 2.0 conference was whether CMO’s and their marketing departments are changing with the advent of successful customer communities.

The answer so far is unfortunately: no… While a majority of customer community initiatives seems to migrate towards marketing, they are doing so by accident – not by design. In fact we have seen cases where communities were transitioned under marketing, only to have marketing push back and have them end up with the CFO.

It makes sense for customer communities to end up under marketing – whether new product innovation communities, customer support communities or marketing communities. But they should come with a transformation of the CMO role and that of their marketing department – one in which they become the representative of the voice of the customer within the company instead of the brand builders or the sales support department.

Unfortunately, and in a majority of the cases that we surveyed as part of our study, that is not what is happening. In companies with large marketing budgets, community spending is too small to even make it on the radar screen of the CMO – who often manages the importance of programs and initiatives relative to marketing dollars spent on it. In many companies, the CMO does not have the mandate to represent the voice of the customer within the company – sometimes having no say on new product innovation and in most cases being completely detached from customer support. Yet when looking at companies like Zappos.com, you could argue that customer support is the new sales and marketing channel.

So where does that lead us? For those companies who are not transforming the role of the CMO and their marketing departments, many community activities will fail – as there is no connection between what customers do and expect in those communities and the internal business processes that can actually make things happen. In the long run, and because of the game-changing nature of successful communities, those marketing departments will become totally irrelevant to the company strategy.

The BRITE conference at Columbia was a great one. Much has been written about it already by David Berkowitz, Tom Guarriello, Max Kalehoff, Lois Kelly, Valeria Maltoni, Amanda Mooney, Christine Whittemore and then also on the BRITE blog.

Here are some of my (heavily biased) takeaways from the conference:

• Many companies are truly in need of help – their traditional marketing programs to attract and retain customers have become much too costly.
  And when a competitor in their space figures out the secret formula, the benefits to that competitor are game-changing, not just level-setting.
  There were some good examples of that at the conference – including Eli Lily (more on them in a future post), Cisco, GE, P&G and Lego.
• Companies have to radically rethink how they do marketing and how they staff it – marketing can no longer be viewed as a collection of programs, but instead as way of behaving in the marketplace.
• Many marketers are complaining that in the new social media world there are not enough opportunities to reallocate their traditional fat advertising budgets – i.e., not enough keywords in search marketing, etc. Forgive my French, but isn’t this looking at marketing in the social media age totally ass-backwards? Maybe you do not need the same traditional fat budgets to achieve the same results – what do you think it cost to produce the coke/mentos video, which resulted in increased sales of 5-10% for Diet Coke and 15% for Mentos? Sure, programs like this may not be replicable, but neither are the results of ad campaigns. Another good example is Amazon – with zero “interrupt” marketing dollars in their budget – which does not mean they don’t do marketing, in fact they are a marketing machine.
• It is clear that agencies are trying hard to redefine themselves, which is a must if they are to survive. Most of them are just using new buzzwords to talk about the same old programs that they’ve been doing for ages. Saying that you will be delivering 3D marketing programs – the right message to the right person at the right time and in the right place does not make it so. Interrupt marketing messages delivered on a computer screen, a cell phone screen, even if powered by GPS, or in an electronic game will work no better than they do on a TV screen or in print. And to say that TV viewing has not gone down as a way to continue to justify non-measurable expensive ad campaigns is totally ignoring what really happens in that marketplace.
• Many marketers have learned that they need to put the customer at the core of their offering, not their company nor their product. It does not matter how a person feels about your product; it matters how they feel about themselves in the context of your product.
• In an attempt to fix the fact that 90% of all new product introductions fail – mostly because they do not address the right market requirements – there may be a bit of an over-correction in the direction of getting your customers involved in designing your products. In certain product categories as with disruptive innovations, getting your customers to help you design your products may in fact not yield the best results. Do you think we could have had the walkman or the iPod through customer co-creation? All that said, an over-correction is still better than the alternative.
• The barriers to marketing innovation are still based on the same fundamentals – which are mostly organizational and cultural in nature. Maybe we need to invent a new marketing department – one in which either nobody reports to the CMO, or one in which most people report to the CMO. And like Eli Lily, maybe we need to change our event horizon and measure it in years instead of in quarters.
• While most companies are confused about what communities really are and how to leverage them, some examples presented at the conference, including the Eli Lily communities, the Lego community, or the P&G innovation communities, clearly demonstrate the power of those communities on achieving game-changing results or results that would just not have been possible without them. You need to be willing to let go of control, go where your most ardent community members hang out, and be supportive but not necessarily provide incentives.

So all in all BRITE was a great conference, with some thought provoking session & presenters, some great insights, and best of all – good discussions and conversations among the audience members. Let’s hope that the blog conversations will extend the life of those great face-to-face conversations.

I’ll be attending the BRITE conference at Columbia this week and I’ll be leading a session with my partner Lois Kelly during the CMO day. The broad topic is: what do you do when traditional marketing is no longer working for you, when customers and prospect don’t want to hear from you, when they don’t care that much about you to give you meaningful feedback, and when all the cool new viral stuff only seems to work for others. If you have ideas or examples that might work well, please post a link in the comments.

We will also be blogging the conference – with 10 of us (David Berkowitz, Don Dodge, Paul Dunay, Tom Guarriello, Max Kalehoff, Lois Kelly, Valeria Maltoni, Amanda Mooney, and Christine Whittemore) participating and reporting on what promises to be very interesting discussions.

There are still a few seats left – so if interested please register. You can get a 10% discount by using the code briteblog08 during the registration process.

We hope to see you there or to receive suggestions for our session through the comments.

A few of my friends IM’d, emailed and called me yesterday to talk about the post I wrote on ROI not being a good indicator for how well marketing is doing. That prompted me to elaborate on the subject a bit in this post.

First, lets look at the statement that Marketing is not a set of simple linear processes that can easily be measured – but rather a complex multi-variable and non-linear process.

Assume you have a new product version, for which you develop a special upgrade price and an extra sales incentive. Lets further assume that you have done well and therefore enjoy some positive word of mouth in the marketplace. You now decide to launch this product upgrade with a massive email campaign and by participating in a industry trade show. What does the ROI on the email campaign tell you about the efficacy of email marketing in this case?

Answer: NOTHING!

The email campaign could bomb because you could have the wrong offer for that audience, or a sales incentive that competes with a better one which causes the channel to push an alternative product. You could have had a few of your products explode a few weeks before the whole campaign, resulting in negative word of mouth. Or you could get 30% of the good leads that both read the email and went to your show. How do you then determine ROI? And assuming that you can, what does it tell you?

NOTHING! You can not predict the behavior of the whole system by understanding the individual parts…there are too many variables in the whole system…the system will exhibit some emergent behavior, which cannot easily be measured with standard ROI metrics.

All of this leads to the next statement I made yesterday. Lets assume that you can find a solution to measure ROI which takes into account all the inter-dependencies and variables that rule your market at this particular point in time. What does it tell you about the future performance of marketing programs, incentives and promotional pricing schemes?

NOTHING!

Because ROI is a trailing indicator, not a leading indicator…

So are there leading indicators that marketers could use? The best one I found so far is ROI, but not as in Return on Investment – but as in Return on Information, as defined by John Hagel. You measure ROI both from your company’s point of view as well as from the customer’s point of view. As John says: “From an organizer (company) perspective, the question becomes: How much effort and cost did I invest in acquiring information about individual participant and how much value have I been able to generate in return, both for the participant and for me? From a participant (customer) perspective, the key question is: How much information about myself and my needs have I provided, how much effort did it require and, relative to both of these, how much value have I received in return from the information provided?” You could extend this concept to also measure the amount of information you need to provide a prospective buyer for him/her to make a buying decision.

Looking at it this way is definitely a more holistic systems approach to measuring success. And unlike the traditional ROI, it could help you predict future behavior. If the Return on Information from a customer’s point of view is positive, chances are that all your messages will be amplified by positive word of mouth…

So how could measuring marketing ROI be harmful to your marketing department? As I said yesterday, by insisting on measurability, companies will force marketing execs to break marketing into a collection of simple linear processes, which is not how marketing really works. By doing so you will miss all the opportunities at the intersections, and kill programs that should be leveraged in certain circumstances at at certain times. And for as long as you will have an ROI-driven marketing department, the credibility of your marketing department will continue to diminish, and the frustration of the executive team with the CMO will continue to increase.

According to the CMO Council’s latest annual Marketing Outlook survey (via Marketing Charts), CMOs are upbeat about spend levels, which are supposed to stay steady or trend higher, and frustrated and stymied by organizational culture, senior management mindsets, and insufficient budgets.

According to the survey, more dollars are going towards the analytics side of the business and the use of more tangible and targeted forms of personal interaction, contextual communication and online demand generation.

When asked how they measured success of their marketing spend (well they were asked for return on marketing spend – more on that later), 20% of respondents said they were not measuring marketing ROIs, and 32% said they were planning to introduce a formal ROI tracking system.

The leading area of marketing dollar allocation – strategy & branding! Following that are events and trade shows, operations, direct marketing, sales support, online marketing, advertising, and market research.

The main reasons why marketers switch agencies – which was very frequently, with 41% who switched ad agencies – are:

• Lack of innovation
• No value-added thinking
• Poor creative
• Quality of work
• Results and deliverables

Duh – maybe all the interrupt-based stuff that they use is just not working anymore

Unfortunately, the increased focus on ROI will likely not be the expected savior that will return credibility to the marketing department. First off, ROI-driven companies are often focusing their measurements on transaction-based buying activities. In the long run, however, it is not the efficacy with which you can get one person to buy something once that counts, but rather the customer lifecycle value and the ongoing amplification in the form of word of mouth that goes along with a long term customer relation. ROI is also a trailing indicator, and as all financial services companies will tell you – past performance is not an indicator of future results. Lastly, and by measuring ROI on discreet processes (i.e., a specific lead generation campaign), which most companies who measure ROI do, companies are reducing marketing to a collection of simple linear processes, when in reality it is a complex multi-variable and non-linear system. So by oversimplifying marketing to make it measurable, many companies will actually break marketing more so than it already is.

Nowhere in the survey was there any mention of consumer generated content – somewhat of a surprise considering that fewer and fewer buyers make their buying decisions based on information coming from the vendors.

A new report jointly produced between Forrester Research and Heidrick & Struggles paints a bleak picture of the (d)evolved CMO (Chief Marketing Officer). You can download the report here, but only after agreeing to become a “lead.”

While two thirds of CMOs want to get a higher involvement with business strategy development and increased P&L responsibility, the reality is that far too many of them are in fact disconnected from where the real action is.

Some of the findings are mind-boggling:

• Only 45% of CMOs have responsibility for product, service or solution development. Only 37.5% are responsible for pricing.
• Only 27.5% are in charge of sales  training.
• Only 25% are responsible for in-store buying experiences.
• Only 12.5% are accountable for the activities associated with customer service and support.

How can you be the Chief Market Listener and not be in charge of what customers say after they buy your product? If you are the Chief Market Officer, how can you not be in charge of deciding what gets sold in the marketplace and how much it will cost the buyer to acquire it? And if you are the Chief Customer Officer, how can you not be in charge for the in-store customer experience? The sales training issue is either a cause or effect for the ongoing rift between most sales and marketing department…

But wait, it gets worse…here is some data about their top objectives:

• Only 27.5% have “increase customer life-cycle value” as one of their top objectives.
• “Innovate” is an objective for only 40% of the survey takers
• Only 27.5% have “increase customer retention” as an objective

And just when you thought you got the extend of the sorry state of CMOs, you find this:

• Only 12% consider “personal knowledge of your customers” as one of their top 5 competencies to their personal success.
• Only 17% consider technology savviness to be one of those top 5 skills

Thankfully (sarcasm intended), more than 65% see people management as one of those top skills. But wait a minute…isn’t it leadership characteristics that get you into the C-suite? Management skills are so Industrial Revolution/last century skills…

Other interesting tidbits from the report include:

• On a scale from 1-3, with 3 being the most important, CMOs found marketing measurement (2.55) to be way more important than customer community development ((1.89) and social computing/web 2.0 tools (1.73).  That goes hand-in-hand with the fact that 92% have advertising as one of their main responsibilities.
• There is room for new industry marketing organizations, conferences and publications. Those three resources come in dead last in a list of 16 resources that CMOs ranked most valuable to their professional career development.

 The recommendations from the authors to improve the situation?

• Spend more time on career development
• Seize the opportunity to lead the organization towards customer-centricity
• Build credibility through the marketing team and leadership contributions.

How about not accepting the CMO job if it does not mean you are really the Chief Market Officer, or the Chief Customer Listener, or the Chief Voice of the Customer Officer, or the Chief Customer Lifecycle Value Owner?