The Changing Habits of CMOs in a Year of Upheaval

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A few years ago Gartner published a document called “Six Habits of the Modern CMO”. The title was pretty self-explanatory - we delved into the behaviors leading CMOs display, and how they act as exemplars for modern marketing. Understatement alert! Much has changed since we originally published this research back in 2016. Four years has sometimes felt like four decades. So, do these habits still stand? I took some time to look at them again, digging into Gartner research and insights to check the validity of each habit in turn. Habit # 1 - Modern CMOs think like a CEO The view in 2016: “Modern CMOs understand and organize around the economics of the business and, with a commercial mindset, execute to directly impact profitable revenue and measure performance with causal precision.” Evidence in 2020: Gartner’s 2020 CMO Spend Survey offers some useful proof points to support this habit. Firstly it reports an increasing proportion of CMOs who have direct P&L accountability - 37% of respondents stated that marketing has its own P&L that captures revenue, while another 42% stated that they shared a P&L with other business units. Secondly there’s proof that at least some CMOs are adopting more advanced ways of capturing the value of marketing by focusing on metrics such as customer lifetime value (CLV) - 11% of CMOs cite this as one of their top three most valuable metrics. However, the vast majority of CMOs still gravitate towards traditional, volume-based metrics to measure marketing. Furthermore, CMO still face challenges linking marketing spending with enterprise value - an issue that has been brought to the fore in 2020 as marketing’s funding has been slashed as greater scrutiny has been placed on enterprise budgets. Verdict: This habit still stands. The challenges of COVID have created the impetus for marketing to build clearer links between investments and enterprise value. Developing measurement and planning capabilities are core to embedding this essential habit across a broader swath of CMOs. Habit # 2 - Modern CMOs have mastered customer economics The view in 2016: “They (CMOs) look beyond transaction-based loyalty, understanding the detailed economics of customer relationships that they use to prioritize how and where they invest to deepen relationships and acquire more of the same. Evidence in 2020: There are certainly examples of brands that have embraced value segmentation. But, even where full value segmentation has not yet been employed, there’s evidence of a growth in persona development and journey mapping capabilities. This has offered CMOs a better view into the value dynamics of different cohorts of customers, and the channels and touchpoints that are the most valuable to them. 2020 has also seen an increased focus on customer retention and growth, as constrained budgets prompt CMOs to think about how they can better understand their existing customers to deliver growth in uncertain times. Verdict: As with habit #1, this habit stands -- focusing on your most valuable customers and prospects is always the right habit for CMOs. But there’s work to be done as significant gaps persist between leaders and laggards. Habit # 3 - They think omnichannel, act multichannel The view in 2016: “They (CMOs) invest in not every channel, but the right channels to create experiences that are both high value for customers and sustainable for the company.” Evidence in 2020: Throughout 2020 Gartner survey data has reported shifts in channel spend. Brands that traditionally spent heavily on offline channels have moved to digital. Meanwhile, some brands that previously heavily invested in digital have shifted some budget to traditional channels like TV, taking advantage of media cost fluctuations. And, as face-to-face events continue to be significantly curtailed, CMOs have had to rethink their multichannel strategies. But, have all these shifts been to the right channel? Data from this year’s CMO Spend Survey has shown a massive commitment to paid, owned and earned digital channels. But are these channel investments being made in the most efficient ways? Evidence from Gartner’s Digital IQ analysis, for example “B2B: How to Maximize the Efficiency of Digital Marketing Assets Amid Budget Scarcity” indicate that there are still issues faced by brands. Digital ad spend may have increased, but there’s evidence that this spend is not deployed efficiently, or with appropriate calls to action. Verdict: Defining the right channel for the right audience and the appropriate response continues to be a complex challenge in 2020. Journeys shift and evolve, sometimes at speed. Success is ephemeral - the right channel today may not be the right channel tomorrow. As such, this remains an essential habit for CMOs. Habit # 4 - They Actively deliver on brand promise The view in 2016: "They (CMOs) don't accept the traditional notion that they need to promise more than the brand delivers. Instead, they seek to influence the actual customer experience and let great products and experiences — and those who advocate for them — speak for themselves." Evidence in 2020: This has been an important year for brand. According to the CMO Spend Survey brand strategy leapfrogged marketing analytics to become the most strategically important capability in 2020. Many CMOs acted swiftly to respond to the COVID crisis, defining their brands’ meaning in the midst of a public health emergency. The cultural and political landscape has further stretched brand capabilities. It’s simply not enough to deliver a great customer experience in 2020. Great products do not speak for themselves. Brands need to build the capabilities to effectively engage in complex issues around race and diversity. Recent Gartner data showed that a majority of US consumers support the Black Lives Matter cause, and this support spans a wide array of different customer segment groups (see “Black Lives Matter and Brands: Best Practices for Responding to the Movement”) Verdict: This habit requires modification. Delivering great products and experiences is a given. Understanding the value and place of your brand in the hearts, minds (and journeys) of your customers is more than a habit - it’s now a primary capability for all CMOs. Habit # 5 - They think right data, not big data The view in 2016: “They (CMOs) focus on the right data, not big data, which begins with a clear articulation of questions and goals and the first-party customer data they already own.” Evidence in 2020: Gartner recently published the 2020 Marketing Data and Analytics Survey. One of the key findings of this survey is that only 54% of marketing decisions are being influenced by marketing analytics. Respondents cite poor data quality, inactionable results and nebulous recommendations as the top reasons why they don’t rely on analytics to make decisions. This comes at a time when the needle on in data-driven marketing maturity is failing to move, despite significant investment over multiple years. CMOs are struggling to justify the return on the investments they’ve made on marketing data and analytics. And, as mentioned above, marketing analytics has lost its place as the most strategically important capability in the minds of CMOs, falling behind brand strategy. Verdict: Nobody ever said that the path to data-driven marketing would be easy. Data continues to be a strategic priority, and linking investments to customer outcomes (and ultimately enterprise goals) is still of paramount importance to CMOs in 2020, and will continue to be in the years ahead. Habit # 6 - They’ve stopped talking about digital The view in 2016: They (CMOs) shifted from digital marketing as a specialized thing to digital as the starting assumption in all marketing. Evidence in 2020: In many enterprise marketing teams there’s a seamless integration between digital and offline channels. Gartner research into marketing organizations has revealed the growth in channel-agnostic orchestration roles, focused on aligning channel activation with customer journeys. From an organizational design point of view, elements of digital marketing activation have become embedded in the generalist marketing population in many instances. In a year of increased organizational flux, prompted by budget challenges, even enterprises with nascent digital capabilities are taking steps to better integrate digital marketing into their wider marketing teams. This is evidenced by the growth in structures such as centers of excellence that allow subject matter experts to scale digital capabilities across a team of digitally enabled marketing generalist (see “Marketing Organization Survey 2020 — The Evolution to Centralized, Functional and Agile Continues”). However, organizational challenges persist. Scaling digital capabilities so you have the right mix of subject matter experts who can drive digital capabilities forward alongside a fluid, adaptable team is still the goal versus the reality for many. Verdict: Organizational design is one of the biggest challenges facing CMOs, alongside budget and resource management. Silos still exist, even in the most mature organizations, and breaking-down these silos will continue to be a priority.

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