Much has been written about the role of the Chief Marketing Officer (CMO). Industry data suggests CMO tenure is short and becoming shorter. Some firms have experimented with eliminating the position or renaming it with terms like Chief Growth Officer and Chief Brand Officer. Academic studies offer mixed results about the value of the CMO. It is also clear that the way the CMO role is defined, like the marketing function itself, is different across organizations. Representation of marketing on Boards of Directors is barely there. Numerous surveys of CEOs and CFOs indicate a lack of trust in the CMO. Given the importance of marketing in the generation of revenue and cash flow, in the short- and long-term, such a state of affairs is baffling.
The CMO: Setup To Fail
Part of the explanation for this circumstance lies in the way the CMO role is defined in many organizations (hello, CEO). A recent paper published in the Sloan Management Review suggests that there is often a mismatch of expectations, responsibilities, and qualifications of the CMO. The paper is appropriately titled “Setup to Fail.” It argues that CMOs are often tasked with revenue generation and growth but are not given the resources and decision rights required for this task. This problem is not unique to the CMO but seems to be especially vexing for marketing because of the scope of activities that are included in the marketing portfolio, as well as the close link between marketing and firm performance. It also occurs because marketing job descriptions, the CMO included, are often written in terms of specific tasks and activities rather than the contribution to the overall business.
While there is clearly an organizational design problem related to the role of the CMO and the marketing function, more generally, there are things the CMO, or aspiring CMO can do to reduce such dysfunction. A characteristic often sought when hiring CMOs is the ability to tell a story. This ability is usually defined in terms of telling a brand or product story to customers. While this is important, there is an even more important story to be told, and the telling of this story has profound implications for the tenure of the CMO and the success of the business. That story is the story of the business and how marketing expenditures and activities contribute to business success.
The marketing story is too often told in terms of marketing outcomes like customer awareness and feelings or awards for creative ads. History is often used to justify future actions: “Remember that award-winning campaign that generated so much buzz; give us $ 5 million to do that again”. To be sure, customer awareness and feelings matter and there is nothing wrong with celebrating past work. But, the business is about making a profit and obtaining the best returns on investments. This is the story the CMO must tell: how and when will specific marketing investments contribute to the bottom line.
Some marketing actions are reasonably expected to produce nearly immediate returns. This happens in many direct marketing contexts. However, other actions may have an immediate impact that only leads to sales in the future. Some products have buying cycles that are months or even years long. Investments in a tradeshow may generate immediate leads, which can be measured, but sales may only occur after a long sales cycle in which the customer goes through an elaborate decision process. It is important for marketing to explain the whole process and why marketing expenditures today will not contribute to the bottom line for 18 months. Similarly, a minimum level of advertising may be necessary to obtain and maintain shelf space in important distribution outlets, which assures continuity of sales volume.
The CMO: Credibility To Succeed
The CMO must understand the customer, the market, and the business well enough to be able to tell a very detailed story about business-relevant outcomes: sales, revenue, margins, and response to competitors’ actions. These outcomes themselves need to be linked to cash flow, which includes a time dimension. Futures sales also require discounting to account for the firm’s cost of capital and opportunity costs. A marketing story that includes consideration of the firm’s cost of capital will increase credibility.
Marketers cannot expect CFOs, CEOs, or board members to do their work for them, and the occupants of these roles may not have the expertise or time to think through the logic of a detailed marketing plan. It is the role of the CMO to explain it. Such explanations are not just about sales or revenue. Some marketing actions, such as brand building, increase margins and tend to maintain those margins over a long period. Branding can also make a product more resistant to price discounting by competitors. Indeed, not all marketing will increase sales or margins, but it may reduce the likelihood of losing sales to competitors or be necessary for assuring access to distribution. So, part of the story is about what might happen in the absence of marketing or a particular marketing activity.
The CMO: Power Through Story
The ability to tell a compelling story goes a long way toward building credibility. But a well-told story also helps identify places where data might be useful for buttressing the story. It is not difficult, nor expensive, to determine the effect of an ad on market share or the size of price premium a brand can command. Such storytelling, when supported by data, will increase the likelihood of CMO success and more positive business performance. These are compelling outcomes.
What this means is that a necessary qualification of a CMO, or any “C” level role, is a deep understanding of the business and how marketing activities contribute to the bottom line.
Contributed to Branding Strategy Insider by Dr. David Stewart, Emeritus Professor of Marketing and Business Law, Loyola Marymount University, Author, Financial Dimensions Of Marketing Decisions.
The Blake Project Can Help Your Brand Grow in The Brand Growth Strategy Workshop
Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth and Brand Education
Post Views: 0