Death of the CMO?
Are CMOs about to be kicked out of the boardroom? That’s what one academic is predicting, but unsurprisingly top marketers disagree.
Powerless, misunderstood and surplus to requirements. That’s the damning verdict of one eminent academic about the chief marketing officer role.
Dominique Turpin, Nestlé professor and president of the International Institute of Management Development (IMD) in Lausanne, Switzerland, believes the CMO position is no longer tenable because instead of focusing on creating value for the customer, most are simply executing a communications strategy.
He believes that the chief financial officer role has become more powerful in the boardroom, usurping core marketing responsibilities such as product and pricing, while the chief executive is wondering what on earth marketing is all about. Turpin expounds a view held by many - that marketing is “more art than science” and therefore its worth cannot be accurately measured. Put starkly, he says: “The CMO is dead.”
Turpin tells Marketing Week: “The CMO’s power has been rapidly eroded. I recently spoke to a CMO who was thinking about quitting because he has a boss who is an engineer and that boss doesn’t understand marketing. He thinks that if the product is good enough it will sell itself. This is a common problem that CMOs are facing, especially in business-to-business and technology companies where emotions are less important.”
While some people may think his opinion is merely hyperbole, there are some worrying signs that could indicate there is more to his assertion than attention-seeking.
Several pieces of research point to serious doubts about the abilities of senior marketers. A massive 70 per cent of chief executives say they don’t trust marketers and don’t think the work that they do is impressive. In contrast, 90 per cent of the same CEOs questioned trust the work of chief financial officers (CFOs) and chief information officers (CIOs), according to a recent study carried out by The Fournaise Marketing Group.
According to the research, 64 per cent of chief executives have taken away product and pricing powers from CMOs because they believe they are too crucial for business growth to let marketers control them. Turpin believes that, in order to address these issues, the CMO title should be ditched in favour of the chief customer officer because the role would be better understood. It would be the role of this individual to listen and communicate the views of customers across the company, he explains.
But is chief customer officer really a viable replacement for CMO? And can the role really establish a reputation for itself in the boardroom when CMOs are already failing to gain the respect of their peers?
Luca Paderni, vice-president and research director of insight company Forrester’s CMO-focused division, says that “a new breed of CMO” is needed rather than removing the position from the boardroom altogether. Speaking at Forrester’s Customer Experience conference in London last month, he argued that CMOs have a vital role to play in leading companies to structure around “the age of the customer”.
Paderni’s belief is that Turpin, who formerly taught him at IMD, highlights the challenges that many senior marketers face in a tough economic climate but also that ditching the CMO position won’t solve issues that many companies face.
Instead, he suggests: “Strong CMOs can change businesses but changing companies to become customer-obsessed is a painful process, taking between two and five years. Many large businesses were set up in the industrial revolution so you’ve got to unpick 70 years or so of doing business in a certain way.”
But he also warns: “If you have an old-fashioned or traditional approach to marketing then this will be a challenge. Brands are now experienced in a much more multifaceted way [than before by consumers], with many more interaction points. The entire organisation has to rally behind the brand, and marketing has to be aligned across the business.”
According to Jesper Engelbrecht Thomsen, vice-president of customer service at the world’s biggest shipping company, Maersk Line, repositioning the brand around the needs of its customers has resulted in a high score of 40 points on the net promoter score. This measures the likelihood of customers directly recommending a company on a scale between -100 and 100.
He claims this score shows that “we have changed the way in which people think about the company by putting the customer at the centre”.
Although customer service is a major part of its offering, previously the business had been focusing on processes rather than the people it served, says Thomsen. In practice, he says, being customer-centric means the company now makes sure “customers become more involved much earlier in the process of product and service innovation”.
Thomsen, who has a marketing background, says the entire company is behind this change: “I’m not just the sole customer champion, I hope that all employees across the business are behind the customer.” But he disagrees that this shift in emphasis means that you should “do away with traditional functions, like marketing and HR”.
Although Maersk’s story shows that rallying the company behind the customer can make a dramatic difference, David Roman, CMO at the biggest PC maker in the world, Lenovo, points out that the chief marketing officer can provide the balance between listening to the customer and making changes that will benefit the bottom line of a business.
“With so much data, input and opinion now available to everyone, frankly having a strong CMO with a real point of view and a commitment to rigorously and relentlessly delivering breakthrough work from marketing is most important. You can’t listen to everything. The magic is in listening to the right things and having the support, conviction and experience required to translate those inputs into great marketing work.” (See box, below.)
Yet those who are schooled in the traditional rules of marketing are rapidly finding themselves unable to create great marketing work. Kevin Smith, the newly appointed CMO at QSoft, owner of the Gaydar gay dating brands, argues that it is traditional marketing methods that are dead, not the CMO position.
“CMOs are fighting complexity - more media choices, more informed customers. The old ad inventory and the traditional marketing methods just don’t work any more,” he says.
Smith is charged with developing a global pricing strategy and establishing a social media strategy. Gaydar managing director Trevor Martin said in a statement at the time of his appointment in October that hiring a CMO for the first time will “help maximise the brands’ opportunities for growth and development”, demonstrating that some companies and bosses still believe CMOs can make a difference to the bottom line.
The role is “mission-based”, according to Smith. “It’s about changing behaviour and aligning the business to customer needs. At Gaydar, we do have a holistic approach and everyone needs to be involved in that, not just the marketing department.”
Newly created CMO positions such as Smith’s are a healthy sign and show that marketing at boardroom level is being taken seriously, says Dee Dutta, former CMO at Sony Ericsson. He says that a major challenge he now faces as a consultant working with several CMOs is “explaining that marketing is not an expense”.
He adds that it’s a “nonsense” to claim that marketing is more of an art than a science and says that there are plenty of measurement tools available to evaluate the worth of marketing investment. The more pressing challenge for top-level marketers is to prove the worth of digital investments, Dutta adds, arguing that good marketers should be investigating this right now, “rather than doing a Facebook campaign because it’s the thing to do”.
“There are debates about social media and the measurements aren’t there yet. More enlightened companies are working to find models that measure that it works.”
He urges marketers to help their cause by using the measurement tools available to show irrefutably that they are there to make the business money and not to spend millions of pounds producing fancy television campaigns that reap no financial reward. He says good CMOs make friends with their CFO counterparts by demonstrating a return on investment.
If CMOs can demonstrate that they are key to business growth and can lead a business to restructure around a customer-focused world, then elbowing them out of the boardroom will seem foolish. Rather than being a position that can’t be trusted, the CMO has potential to be the one the CEO trusts most to grow the business. But first comes proof of effectiveness with reliable numbers.
Lenovo CMO David Roman on…
…the modern challenges CMOs are facing
The tensions raised by Professor Turpin are not new. To me, it is simply this: the world is ‘noisier’ than ever, customer bases are more diverse than ever and brands have less ability to control their message than ever before. The challenge is for CMOs to ensure their companies do nothing short of brilliant work.
…the balance between listening to customers and having a point of view
Yes, we have to listen to input from our customers because without them we are out of business; but with so much data, input and opinion now available to everyone, frankly having a strong CMO with a real point of view and a commitment to rigorously and relentlessly delivering breakthrough work from marketing is most important. You can’t listen to everything. The magic is in listening to the right things and having the support, conviction and experience required to translate those inputs into great marketing work.
…the next generation of CMOs
Let’s expect more of our CMOs and of our marketing teams. There is a new generation of global brands bursting onto the international business landscape - and these brands require the next generation of CMOs to be stronger, more diverse, more connected and more empowered than ever before.
Is the CMO role dead? The debate
Is the CMO role dead? The debate
IMD president Dominique Turpin vs former Sony Ericsson chief marketing officer Dee Dutta
Dominique Turpin says: chief marketing officers are increasingly powerless and peripheral. The chief executive sets the overall strategy, the research and development and innovation teams design the product, and the chief financial officer determines pricing and departmental budgets. Too many CMOs are constrained, focusing on PR and communications and not on products or pricing, so as not to invade the space of the innovation department or the CFO.
Dee Dutta responds: This is a description of a marketing communications role rather than that of a CMO. CMOs define products, get involved in product development, pricing, insight and are the voice of the customer. Their role isn’t just about communications. I certainly had influence in the boardroom and worked alongside the CEO and CFO. We worked together as a team.
Dominique Turpin says: Marketing impact is often hard to measure. Marketing is more art than science. It’s difficult to quantify the results of a marketing campaign and to know whether all those millions of pounds spent have led to an increase in real sales. And when a downturn comes, the marketing budget is often the first to be cut.
Dee Dutta responds: It is plain wrong to suggest that marketing is an art rather than a science. I have worked on numerous pieces of work, as has Professor Turpin, for McKinsey and others looking at the measurement of marketing. Marketers get so much data and can most definitely measure return on investment on marketing campaigns.
Put simply, Turpin’s statement is an out-of-date, Eighties view of marketing where marketers would decide if something is blue or something is pink. A successful marketer has to be able to analyse the numbers and be able to tell the business what return they can expect to get on the money invested in marketing.
Dominique Turpin says: Nobody has a clear idea of what marketing is. It’s fuzzy. Ask 20 senior managers in any company what marketing is and they will give 20 different answers. By contrast, most people would agree on a definition of finance or production.
Dee Dutta responds: I agree that there is a challenge around how the CMO is perceived. I often have to go in to businesses and explain that marketing is not an expense, but it’s there to inject growth. However, I do not think it helps the cause by saying that the CMO position is dead. Turpin is saying this to create headlines, not to further the debate of the challenges marketers are now facing.
Dominique Turpin says: Get rid of the CMO 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 organisation, taking views and messages from the market and spreading them internally.
Dee Dutta responds: The CCO job title doesn’t encapsulate everything that a CMO does. The role is not just about a communications strategy. A CMO gets involved in the product and pricing. If you look at companies like Unilever, Mars or Procter & Gamble, marketers are in charge of product marketing; it’s not a pure marketing communications role.
Dominique Turpin says: Get the CFO on board too. Doing this requires taking 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 the company’s financials. They could also take a refresher course in finance to get a better understanding of where CFOs are coming from. Even something as simple as lunch with the CFO can help CCOs become more fluent financially.
Dee Dutta responds: When I mentor young marketers I tell them to win the trust of the CFO. The CFO is there to make sure the financial parameters are being met. If you ask for £2m you have to be able to tell the CFO about the return on investment. The CFO wants to see the company grow so he or she isn’t going to turn down opportunities where the marketers can show growth.
At Sony Ericsson I had an open dialogue with the CFO. The reason for growth at Sony Ericsson was because we worked together as a team.
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