If you thought that the move from the Industrial Era to the Digital Era was the last major economic transition that your business would have to deal with, think again. We are in the middle of yet another transformation of comparable magnitude. The slow but steady shift of power away from companies and to customers as we moved into the Digital Era will reach its zenith in the years ahead.
Today’s customers, clients, and consumers are instrumented, interconnected, intelligent, engaged, informed and empowered. They want companies they buy from to know them, interact with them on their terms, and personalize marketing offers and customer support. They even want personalized products and services. IBM (my employer) calls this the Connected Consumer Era and it will lead into a digitization of the front office comparable to the back office digitization of the past two decades.
Nowhere is the impact of this change more dramatic than on the chief marketing officer (CMO), who must radically reinvent his or her role. Success now requires mastering permission marketing, social media 2-way communication, omni-channel integration, marketing return-on-investment measurement, experimentation and other new research techniques, micro-targeting and a host of other capabilities that marketing leaders more than a few years out of school are having to learn on the job. Compounding these tasks is a mass of data about customers and prospects that holds the keys to the kingdom, if only the CMO and her staff can make enough sense out of it to gain actionable insight.
Not surprisingly, new start-ups offering software and services are joining the branding consultancies, agencies and vendors like IBM and Salesforce.com to empower CMOs in this new era. Collectively they are helping CMOs in the Connected Consumer Eras become far more competent demand managers, able to use data to drive demand by tailoring the marketing offering to the specific needs and buying patterns of each individual.
On one level, this transformation is very positive. I have long argued that the most expensive resource a company has (in terms of opportunity cost) is its sales force. Every minute a sales person spends away from those prospects sure to generate a sale is lost gross margin for the organization. Marketing groups that can use new technologies to generate more and higher quality sales leads or brand preference are creating tremendous value for their organizations. Marketing departments that make digital channels highly effective and efficient are earning their salaries many times over. When they present customers with offers that lead them to select their company’s product off the shelf, from the rack or with a click, that’s marketing magic.
But there is a dark side to the digitization, one in which technology and technique become the master and marketing leaders get so caught up in the trees that they fail to see the forest. This happened to some CIOs who got so focused on implementation issues that they failed to ask how IT could best advance their organization’s growth and business model innovation. In the same way, CMOs may become so focused on driving demand in the near term that they forget about the drivers of demand in the long term – business model innovation and the hard-to-copy differentiated customer benefits that they create.
In today’s copycat economy where a Connected Consumer can more easily compare offerings from different vendors for both personal and business decisions, the basis of competition is no longer individual products and services and effective tactical marketing. Rather, the business models in which offerings, marketing efforts and customer experience processes are nested are determining winners and losers. HP and Dell lost company value relative to Apple not because of weaker tactical marketing efforts, but because Apple transformed its business models as technology changed, grabbing the lion’s share of changing industry profit pools.
Somewhere in the strategic thinking and planning cycles of an organization, CMOs must step away from demand management considerations and look at the organization as a whole vis-á-vis its customer base and ask questions such as:
- Do we have differentiated and hard to copy business models that offer superior customer value promises and experiences?
- Are they leveraging hard-to-copy platforms that will sustain our differentiation?
- Is the concept of our business evolving to remain highly relevant to customers?
- Are we fully leveraging our capabilities to capture new market opportunities?
In other words, the best CMOs will be those that make sure that the make-this-quarter’s-numbers urgent does not drive out what is strategically important for long-term customer and company value. And they will work collaboratively with other C-Suite leaders to investigate these questions. Why? The organization as a whole, not new marketing techniques alone, creates the brand that customers and prospects experience.
Kay Plantes is an MIT-trained economist, business strategy consultant, columnist and author. Business model innovation, strategic leadership and smart economic policies are her professional passions. She was an economic advisor for former Wisconsin Gov. Lee Dreyfus.
