According to the 12th annual CMO tenure study by executive search consulting firm Spencer Stuart, the average tenure for chief marketing officers of leading U.S. consumer brand companies dropped from 48 months to 44 months. One of the reasons for the relatively short lifespan of your average CMO has been revealed by the new Deloitte CMO Survey, which highlights marketing's worst kept secret: even as marketing expenses continue to rise, marketing results continue to lag behind.
The CMO Survey, recently released by Duke University's Fuqua School of Business marketing professor Christine Moorman and sponsored by Deloitte, the American Marketing Association, and Duke's Fuqua School of Business, indicates continued investment in marketing, alongside much room for improvement.
Key findings from the survey include:
- Marketing spend is expected to increase 6.9% in the next 12 months, driven by a 13.2% digital spend increase, and in spite of a 3.2% decrease in traditional advertising spend.
- Less than 4% of respondents believe their companies are very effective in integrating customer information across purchasing, communication and social media channels.
- Sixty three percent of companies have yet to prove the short-term quantitative impact of marketing.
"As marketing has shifted from one-way, controlled messaging to unscripted, multi-channel conversations, it has completely transformed the role of the chief marketing officer," said Deloitte CMO Diana O'Brien about the survey results. "The findings show that while social, mobile and analytics spending is on the rise, they're falling short when it comes to boosting the bottom line. It's clear that more data doesn't always equate to more insight, and new technology has no intrinsic value to marketers unless it helps a company better understand its customers and enhances the customer experience."
The Bullet Point: O'Brien speaks the gospel truth. While there's no doubt that modern digital platforms such as programmatic ad buying, online retargeting, and mobile advertising have improved marketing efficiency, the Deloitte survey points up the lack of improvement in marketing effectiveness. It's in this gap between efficiency and effectiveness that customer-centric marketing will continue to play a leading role.
Today's digital marketing tools provide unprecedented ability to get the right message to the right consumer through the right channel. We can now deliver messages targeted to increasingly smaller consumer segments based on demographic, behavioral, and even psychographic data - and we can now deliver those messages at impressive economies of scale in near real-time.
But it isn't enough to get a message to a receptive consumer. Nor is it enough to convert that message into a purchase. Marketing effectiveness won't improve significantly without a concerted effort by CMOs to place all marketing in service to improving the quality, value, and duration of customer relationships.
How do we leverage marketing tools and consumer data to strengthening customer relationships? By focusing our efforts on data most predictive of customer value. By using that data to demonstrate loyalty to our best customers through targeted application of reward and recognition. By moving newly acquired customers along the relationship path through dialog, engagement, and relevant offers. By focusing on the continuity of the relationship, and making sure that every interaction reinforces that value of that relationship in the mind of your customer.
Soon enough, your analytical insights will help you identify potentially valuable customers early in the relationship so that you can direct your marketing dollars toward building engagement and loyalty with them, and let low-potential customers fall by the wayside. The resulting behavior change in frequency, basket size, referral, and lifetime value will provide measurable ROI.
In short: It's all about the relationship. Marketing dollars spent outside of relationship building will continue to result in survey results in which CMOs admit that marketing effectiveness continues to lag behind marketing efficiency.
-Rick Ferguson
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