An alarming trend in companies that claim to put the customer first
IMD’s Dominique Turpin reported the death of the CMO last month in a challenging article of great relevance to organizational developers and marketers alike. His eulogy starts “Fortunately, I'm talking about the CMO position rather than a particular person. But the decline of the CMO's influence is an alarming trend in companies that claim to put the customer first but in reality continue to be product-driven.”
As Nestlé Professor and President of IMD business school, Turpin is well placed to reach the provocative conclusion that, whereas the CEO sets the overall strategy, R&D and innovation teams design the product, and the CFO determines pricing and budgets, the CMO is increasingly powerless and peripheral.
Why has this happened? Turpin sites four key reasons:
1. Most CMOs are not really immersed in marketing activities - understanding, creating and delivering value to the customer. Too many focus on PR and communications and not on products or pricing – now seen as the territory of the Chief Innovation Officer or the CFO.
2. CFOs have become more powerful - partly due to tough trading conditions and financial market pressures. Consequently there is evidence that CFOs rather than CMOs are most likely to move up to the CEO position, exacerbating the problem.
3. Marketing impact is often hard to measure - marketing is “more art than science”, results are difficult to quantify and when a downturn comes marketing budgets get cut first.
4. Nobody has a clear idea of what marketing is – “Ask 20 senior managers in any company what marketing is, and they will give 20 different answers.” And as Turpin points out the CMO often reports to a CEO who only has a partial knowledge of the customer.
There are exceptions of course - Apple, IKEA and many family businesses, which are better than public companies at taking the long-term view needed in marketing. But in most companies the power of the CMO is being eroded.
The time for grieving over, Professor Turpin suggests, and CMOs can take the following four steps to reclaim some of their lost power:
1. Get rid of the Chief Marketing Officer title, because nobody understands it - create the new title of CCO – Chief Customer Officer. This person must be the voice of the customer in the organization.
2. Get the CEO to be the CMO - CEOs can drive the customer-centricity agenda better than anyone else, sending a strong message that the customer is the company's prime focus.
3. Get the CFO on board too - take some of the fuzziness out of marketing. CCOs should try to produce hard numbers that show a return on investment and a clear impact on profitability.
4. Use customer knowledge to build influence – ensure C-suite members asks themselves 'What are our customers headaches?' Companies that can provide a product or service that make people's lives faster, easier, better or cheaper will always be on the right track.
Peter Drucker wrote that a company has two and only two key functions – marketing and innovation – and that all other functions should support these. Professor Turpin’s CCO would echo this. Customer-centricity is critical and must come from the very top and filter down through the whole organization.
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