My blogging friends here at MarketingProfs sent me an advance copy of their new book, Marketing Champions, and I like their thinking....
Spencer Stuart released their updated study on the length of CMO tenure, where they show surprising results that the average tenure has dropped again this year to 23.2 months, the lowest among the C-Suite. ANA Marketing Maestros had a great follow up post, highlighting that the first and most important step for a successful CMO is to establish a contract with the CEO on what he/she expects from marketing.
Marketing has most probably the most inconsistent role of all functions across companies (for example, compared to finance, where the role varies less) and aligning on expectations and charter has become essential. My blogging friends here sent me an advance copy of their new book Marketing Champions (Wiley Editions) and I like their thinking. Their main argument is that CMOs have to a great extent failed so far to draw the linkage between marketing and the harvesting of cash flow.
They have developed a hierarchy of cash flow responsibilities that I resonate with at a high level. In their pyramid model, the responsibilities gradually build in their relevance to cash flow. I thought I would describe the model and add my own comments and recommendations:
Level 1: Communications. This is the foundation of marketing activities from PR, to advertising, internal communications and other vehicles. These activities are critical to the company, but are often perceived as disconnected from the generation of cash flow.
Marketers should focus on more clearly linking them to business results. For example, brand valuation activities greatly help move up the role of Marketing in the pyramid by treating the brand as a financial asset and linking communication activities to shareholder value.
Level 2: Lead Generation. This is especially valid in B2B companies where marketing is primarily considered as a support to the sales activity. Marketing's role is focused on activities that increase the pipeline size and velocity such as direct marketing and events. However marketing has gradually disconnected its activities from sales: fewer marketing generated leads get accepted by sales and marketing struggles to understand the ultimate impact of these campaigns on win/loss.
Marketers need to place more focus on clearly demonstrating their contribution to the pipeline by structuring and streamlining the end to end campaign management process, especially in its breaks with sales.
Level 3: Revenue. Some top executives perceive marketing as a function that generates sales. They intuitively know that additional marketing dollars can help drive short term demand in the market for their products (especially in B2C).
Marketers should focus on more clearly communicating to the C-level how they are contributing to helping the customer go though the decision funnel from awareness to consideration, preference and purchase.
Level 4: Profits. The Marketing Champions book identifies the packaged good industry as the only industry where marketing practitioners have P&L responsibility. They manage the demand and supply side of a product or product line.
Without going to that extreme, I think all marketers have the opportunity to tie more closely their marketing activities to business results by determining their return on investment (ROMI). This requires the development of sophisticated analytical and statistical models that correlate marketing activities and incremental sales and gross margins.
Level 5: Customer equity. The marketers in these roles are responsible for customer acquisition, customer profitability and customer retention. This implies from a measurement perspective the development of customer lifetime value models (similar to what Fred Reichheld recommends) and net promoter scores. It requires marketing to take a broader role in designing and managing the entire customer experience and lifecycle.
Independently from what you aspire to, understanding the cash flow hierarchy and aligning with the C-level are critical steps to appropriately positioning the marketing function. This requires also the development of measurement systems that align with the cash flow hierarchy from brand valuations, to marketing's contribution to the pipeline, ACPP, ROMI or net promoter scores to name a few.
What has been your experience? Where would you position the cash flow contribution of your marketing organization?
Read also "Marketing Excellence - Next Generation Wanted"
Eric Kintz is VP Global Marketing Strategy at HP. You can read his blog here
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