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What Does [Should] A CMO Do? December 18, 2007

Posted by Elana Anderson in Integrated Marketing, Marketing, Marketing Measurement, Marketing Strategy, Marketing Technology.
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In its quarterly SEC filing, Orbitz announced that it has (also see related AdAge article):

…decided to eliminate the global Chief Marketing Officer position and continue managing the Company’s marketing efforts on a regional basis. In connection with that decision, Randy Wagner, Chief Marketing Officer of the Company, is expected to leave the Company in mid-February 2008.

That’s unfortunate. I’ve met Randy — she was a keynote speaker at the Forrester Marketing Forum last year which I hosted. She’s a bright, strong leader and I’m sorry to see her go. But, I’m more concerned about Orbitz and all of the other companies out there that are cutting CMO positions and/or clearly struggling to define the role.

I think Orbitz is missing the point. I don’t disagree at all with the idea that defining and managing campaigns on a regional level can be a more effective way to drive to growth goals. I just don’t think that the job of the CMO is to define and manage campaigns.

So, what SHOULD a CMO do?

Well, we’ve been talking for years about integrated marketing, customer centricity, customer relationship management, customer experience management, 1:1 marketing, etc… I’ve been intimately focused in this arena myself for a over a dozen years and I feel like we (the broad and royal “we”) have made little progress towards these goals. To be sure, a lot has also changed in the last 12 years but if we EVER want to get there (or even close) then we need a strong leader. And, from my perspective, that leader is the CMO. The role of the CMO should be to:

define and lead a customer-focused marketing strategy that crosses product, channel, geographic, and even functional boundaries.

I realize that this is much easier said than done. It starts with a CEO who believes in the business benefit of being customer-focused and a CMO with the vision, leadership capabilities, and charter to make it happen. It will also require:

  • A complete overhaul of the marketing organization. I’m talking structure and reporting hierarchies, metrics, culture, and process — all of it. What’s the right answer here? Well, as all good consultants say, “it depends”;-) I haven’t found a perfect organization yet. The key is understanding where the organizational weaknesses are and then putting tools or processes in place to help bridge the gaps. First and foremost, however, I believe it starts with the metrics. The CEO, CMO, and CFO need to sit down and figure out how to measure marketing impact in ways that don’t result in marketing teams competing with one another for customer mindshare or quibbling over which team gets credit for customer conversion.
  • Acquiring and nurturing new skills. What skills am I referring to? Left-brained skills: business acumen, process orientation, quantitative analysis, and technical knowhow. We’ve been talking about this one for a while and it is slowly happening. But, marketing leaders often complain that it’s hard to find these skills along with a love of the customer and a passion for marketing all in the same body. I suggest looking for consultants (Accenture, Bain, etc.) who want to get off the road, pillaging your internal IT organization for the systems analysts or project managers that always ask the business questions, or plucking young marketing analysts for whom there is no technical barrier and putting them all in an aggressive mentorship and cross-team training program. 
  • Significant investment in technology and infrastructure. How boring is this one? My POV on this is that rather than going goo-goo gaga over the next trend and treating it as a antidote to all of marketing’s woes, it’s high time for marketing organizations to recognize that technology — and integrated technology at that — is a crucial enabler. To achieve our goals of customer-centric and integrated marketing, we need to manage the marketing process on top of a framework that is, itself, integrated. Again, no easy answers here — there’s no vendor or application out there that will take care of this for you. And, I’m not saying that the CMO has to be a techie. But, a good leader recognizes his/her strengths and weaknesses and surrounds him/herself with a team that can fill the gaps. The bottom line here is that marketing organizations need to have a technology strategy. Those that don’t will NEVER achieve the customer-centric vision or be able to effectively integrate their activities.   

Who is responsible for driving this agenda – on a global level? The CMO.

Now, I also want to be clear here that I was not implying above that the CMO doesn’t have responsibility for the global brand(s)…  She does! Today’s consumers are really good at sniffing out and publicizing inconsistencies between what corporations and their brands say and how they act (think the recent Unilever Dove/Axe controversy). So, today’s CMOs must own aligning every brand under the corporate umbrella with the core values of the corporate entity and reconciling the brands with one another. Companies that fail to do this are at the mercy of the consumer.

Web Analytics Needs To Grow Up (Web analytics series, Part 1) December 11, 2007

Posted by Elana Anderson in Customer Analytics, Customer Experience, Database Marketing, Integrated Marketing, Marketing, Marketing Measurement, Marketing Technology, Online Marketing, Web Analytics.
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Last week I was privileged to spend the day in the company of several thought leaders in the field of Web Analytics. Dr. Alan Hall, Avinash Kaushik, Judah Phillips, and I participated in several taped panel sessions that focused on how to best leverage web data to improve marketing effectiveness and how to effectively leverage investments in web analytics technology. We were joined by, Steve O’Brien, Akin Arikan, and Karen Hudgins from Unica which sponsored the get together. What struck me most about our conversations (on camera and off) is how committed each of us is to moving Web analytics beyond what today is largely a passive, report-centric discipline towards one that:

  • Improves the effectiveness of individual customer interactions
  • Actively contributes to the understanding of the customer
  • Is a key part of improving marketing’s ability to measure across channels

Five key stages of web analytics maturity

One of the bits of original thinking that I contributed to the discussion was a framework that breaks down five stages of Web Analytics maturity.

Web Analytics Maturity Framework

Don’t pay attention to the stages for the moment… This is not a new picture (I pulled the base graphic from a from a client deck I presented in 1998). And, few would disagree. If a marketer is not leveraging any data to drive marketing communications, just adding a little bit of filtering or segmentation will have a tremendous positive impact on results. But, at some point, our ability to continuously improve results through segmentation levels off. At that point, the way to get the next hockey stick impact on results is to use individual customer data. Definitely not new thinking, but I think it helps level set us that is what “1:1″ or “customer-centric” (you pick the cliché) marketing is all about – using knowledge about the individual customer to drive interactions that, at the end of the day, benefit both parties.

This framework can also help us think about how we are using the mountains of web data that we’re collecting to help us move up and right on the chart. I break the role and the progression of web analytics down into five stages:

  • Stage 1 – Site analysis: When we get started, we’re really just trying to get our arms around the data and the traffic on our site. The focus is to understand how visitors are getting to the site and what they’re doing there. But you also need understand why they’re there and whether they were able to accomplish what they set out to do. How do you do that? Avinash suggests that’s quite simple, ask.
  • Stage 2 – Site optimization: The goal, of course, is to avoid analysis paralysis and look for ways to leverage the insight we are gaining about how visitors access and use the site to drive more visitors to the site, to optimize the experience of visitors once they are on the site, and to help more visitors accomplish what they were trying to do.
  • Stage 3 – Segment targeting: As we continue to focus on improving customer experience, we inevitably start to look for ways to segment visitors into different groups either through data explicitly provided by the visitor or through insight inferred from the session and prior interaction data. We then apply the segmentation to customize visit experiences and target content.
  • Stage 4 – Individual customization: At some point, our ability to continually apply finer segmentation and impact results levels off. That’s when we start to apply individual-level web interaction data to customize online interactions.
  • Stage 5 – Integrated marketing: Of course, the holy grail of all of this is fully integrated and customer-centric marketing in which we seek to integrate insight from online behavior with what we know of an individual across other channels. And, we do this in order to inform and optimize all interactions – regardless of channel – with the individual.

The sad part of all of this is that few companies have matured their Web analytics capabilities beyond Stage 3. In fact, I’d estimate that 80% (not based on a quantitative study!) of firms are at Stage 1 or 2. Why? Well, it’s darn hard! There’s tons of data to wade through, the industry is learning as it goes, and the technologies that help marketers move up the curve are still pretty immature and poorly integrated.

So, how will this framework help?

Use the framework to understand where you are today and what you want to work towards and over what time frame. Each stage of maturity focuses on unique business objectives, requires a different level of analytical savvy, and demands different functional capabilities from your supporting marketing technology.

Over the next several weeks, I will continue to drill down on this topic with additional posts. Please add to the discussion by commenting and providing feedback on the blog or feel free to contact me directly.

My new favorite YouTube video December 5, 2007

Posted by Elana Anderson in Marketing, Web 2.0.
1 comment so far

No commentary required. Enjoy!

Five steps to understanding customer retention December 4, 2007

Posted by Elana Anderson in Customer Analytics, Database Marketing, Marketing, Marketing Measurement, Marketing Strategy.
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6 comments

 I recently responded to a question from a network that I participate in.

What is achievable customer retention and is there a level of customer retention that is not profitable to reach?

I’ve talked with a lot of marketers about this question and, frankly, there is no easy bake answer. It’s easy to look for a quick published statistic or benchmark and call it a day. But, how much does knowing that your retention rate is better than your competitor’s really help your business? It may help CYA, but it doesn’t help your bottom line.

IMO: marketers rely way too much on benchmarks (open rates, click rates, retention, etc.). Rather than rely on industry benchmarks (I don’t even know of a comprehensive source for retention by industry), I encourage marketers to:

  1. Establish a baseline for current average retention. Examine your customer base to understand average retention. Better yet, do it by customer segment if you can.
  2. Understand the timeline to customer profitability. Every business has different acquisition and services costs so if you don’t already know how long it takes for a new customer to become profitable, then you need to figure it out. Subtract your costs to acquire and serve the customer from average customer revenue over time. Companies that are really good at this use individual customer revenue and get into cost minutia to attribute costs at an individual level and even include costs like physical plant and electricity. But, if you’re just getting started, keep it simple and stick with averages.
  3. Set a target retention rate. The longer it takes to become profitable, the higher the retention rate needs to be. Establishing and monitoring a retention KPI will tie retention directly to business performance.
  4. Define marketing tactics to improve retention. If current retention is not at the target level, then set improving retention as a key business objective and drill down into a series of tactics aimed at moving the needle. Don’t shoot in the dark though. Engage a statistician to do some data analysis to better understand what key factors that correlate to longtime customers or customers that attrite. Then, establish marketing and customer service practices and campaigns that are specifically focus on encouraging the factors that are correlated with long-term customers.
  5. Measure results consistently. Periodically, reevaluate the retention rate to see how what you are doing is impacting customer retention. Make sure you are also considering metrics that help you tweak your programs at a tactical level too. Specifically, are the tactics you have implementing really encouraging those factors that correlate with long-term customers?

Early New Year’s Resolution December 4, 2007

Posted by Elana Anderson in Marketing.
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I will post at least once a week on my blog. I will post at least once a week on my blog. I will post at least once a week on my blog. I will post at least once a week on my blog. ETC…

Some friends have asked me why I “stopped” posting – they said they like my blog. Yippee! Sorry, I got caught in the holiday rush and I got busy with some end of year BILLABLE deliverables. Hardcore blogger friends tell me that I should post on a regular and consistent basis.

Moving forward, I commit to post to the blog at least once a week — on Tuesdays (seems like a good day).

My strategy work at the moment is focused on a few areas of current passion:

1.       Technology Enabled Marketing and the consolidation in the online marketing technology sector

2.       What’s next for web analytics

3.       Automating mid-market marketing

Please reach out through the blog or via email if you are interested in connecting on these or related topics.

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