The Disconnect Between CEOs & CMOs
by Pamela J. Batalis

The current economic times are amplifying an age-old challenge: The disconnect between CEOs and their CMOs. With the goal of every CEO being to hit revenue projections and increase market share, to achieve profitability and increase shareholder value, the CMO pressure-cooker is on overdrive.

In a world where most categories are having an increasingly more difficult time finding larger audiences, and in categories where brands are finding it nearly impossible to differentiate themselves from one another, CEOs are cutting marketing and advertising budgets and moving the money to the bottom line. That might be an acceptable short-term, the-economy’s-going-to-hell strategy except for one problem. CEOs still expect their CMOs to produce measurable, positive results. Welcome to the 21st Century. They want them to do more with less.

So what happens? CMOs tend to focus on their inherent strengths: positioning, product development, brand development, audience drill-down, communications, and the like. CEOs on the other hand, are touting the virtues of new-business development and expanded markets. Generally speaking CMOs “get” the basic premise that the company needs to make money. It’s just that because differentiating nearly anything these days is so hard they tend to involve themselves in the process end of the things. It’s reminiscent of an old couplet that went: “when the brand’s in trouble or you’re in doubt, reposition, scream and shout!” Given that – with the actual exception of profitability – most of the marketing staff in most companies have dodged the accountability bullet for a long, long, time. Is it any wonder that they naturally shy away from the obvious need CEOs have to aggressively drive profits? Fellow marketers, the time has come to step up our game, & embrace the challenges that come with a seat at the grown-ups table.

The disconnect between CEOs & CMOs requires a massive paradigm shift. It’s a shift that will affect the entire thought process and it’s a shift that will require the development of a new strategic approach for marketers. New challenges require new strategic tools. You can’t deal with 21st Century consumers using tools developed in the mid-20th Century. To do more with less, to produce winning new business ideas, & to become a vital part of the business strategy team CMOs must realize that they need to adopt, develop and use new metrics. Metrics that actually reflect what is going to happen in the marketplace when they put their program into place. Not lagging metrics like ‘satisfaction’ scores. Today ‘satisfaction’ is the price of entry. No, they need leading-indicator metrics. For that you need ‘customer loyalty metrics.’ When we say that, by the way, we don’t mean the standard questions that were appended to the annual tracking study that asked “would you buy us again” and “would you recommend us to a friend.” No we mean real customer loyalty metrics.

Unlike the traditional brand measures of satisfaction, awareness, imagery (& even derived importance about stuff), customer loyalty metrics determine what your customer really thinks; not what they say they think. No assumptions and generalizations of the findings. Pure, consumer-driven, quantitative assessments. Results generalizable at the 95% confidence levels. Assessments that the Advertising Research Foundation proved in their 1990 seminal Copy Validity Study were most-highly correlated to actual sales. Nearly three times more powerful than ‘persuasion’ measures.

Everyone will acknowledge that his or her customer base has gotten more sophisticated. With the virtual universal adoption of computers and the Internet, information is available to them 24/7. With nearly 300 cable networks and myriad specialty publications it gets increasingly harder for you to get your message – let alone aspects of persuasion – to the target audience in an effective manner. This just contributes to the difficulty in going out into the marketplace and trying to measure “what the consumer wants.” Virtually every company knows that it needs to deepen their insights about how customers get product information and make buying decisions. They know that they need to anticipate their customer’s and prospect’s shifting needs and expectations. But generally speaking, they’re stymied. They get excellent answers that correlate to nothing. Well, not profitability (remember profitability?), and that’s what matters. To reiterate: it just can’t be done the way you’re used to. And if you aren’t living this nightmare yourself, and don’t believe me, just ask one of the big (un-indicted) consulting firms who just conducted an enormous study and found the same thing. Trust me, instituting customer loyalty metrics is going to be a lot more cost-effective than bringing them in for a consult!

To actually attain such measures you need to get under the radar of the customer. And if you want to do it before your competitor you need to track the direction and velocity of customer values. You need to think about using metrics for your brand the way Wayne Gretzky did with hockey: skate to where the puck is going to be!

To do it you need to assess the rational and emotional needs and desires of your audiences. You need to measure the values that actually bond a customer to the category/brand. Results? Amazing. It is possible to link spending priorities to future profit potential, (not past performance). It is possible to focus spending on the brand drivers of loyalty – the features most important to customers – (not the features & benefits of the brand). And because you can actually gain insights into the actual percent-of-contribution that customers hold for various brand values and category drivers, you can actually cost-effectively know – not guess – how to sequence marketing initiatives. ROI? It’s as simple as developing a brand-specific equation. You just need to make sure that your metrics correlates as well to profitability as customer loyalty assessments.

If marketers are willing to invest the intellectual capital necessary to embrace customer loyalty metrics, the doors of “new-business development” and “ROI” swing wide open. Both of which, CEOs require to sustain long-term shareholder value. That’s how CMOs and CEOs will better connect. And that’s how you get a place at the table.


Pamela J. Batalis is Vice President of Brand Keys Inc. (New York), a brand and customer loyalty consultancy. Visit www.brandkeys.com for more.

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