As companies strive to meet the needs of an ever-more diverse and sophisticated customer base, marketing has become an increasingly important competitive differentiator and driver of corporate growth and success. In response, more and more companies have elected to bring marketing into the C-suite by establishing a chief marketing officer (CMO) role.
Yet, the role remains poorly defined in many organizations, and its strategic influence varies greatly across companies, potentially limiting the CMO’s ability to establish a marketing agenda that drives profitable revenue growth.
How can a company determine whether it’s time to create a CMO role for the first time? And what can first-time CMOs and their organizations do to increase the CMO’s odds of success? To answer these questions, Spencer Stuart interviewed several executives who are or were the first CMO in their companies. Their perspectives form the basis of this article.
Is it time for a CMO?
In a world where marketing has become increasingly important, the arguments for the creation of a CMO role are many. But CMOs agree that organizations are most likely to truly accept a new CMO when it’s understood that doing things the way they’ve always been done is no longer sufficient.
Certain scenarios may serve as an indication that it’s time for a stronger, CMO-led marketing department: missing sales targets, the rise of new or stronger competition in a particular segment or market, or a compressed margin in an environment where the ability to raise prices is constrained.
"Without a marketing department that can put it all together and understand the value from the customer perspective, you will eventually run into a situation where you’re not achieving your goals without knowing why. I really believe that the day you're big enough to have a CFO, you should have a CMO, though that rarely happens. But you certainly need one if your growth rate is slower than your competitors,” said a senior marketer at a global industrial company.
Even successful companies can benefit from appointing a CMO if the current business model may not be sufficient for the future. This can be the case for industrial companies that have not traditionally been marketing-driven, and even for consumer companies that boast a rich marketing heritage and recognizable brands.
Creating the role
The CMOs we interviewed agreed that the first requirement for success as a first-time CMO is for the role to be clearly defined. If the CEO is not clear on what he or she wants from the CMO, the organization won’t be either.
In addition to needing a clear mandate, the first-time CMO is most likely to succeed if the role is a true C-suite position reporting directly to the CEO. If this is not the case, or if the company is not prepared to back the CMO with staff and a budget, it may be an indication that the position is actually a CMO role in name only.
Since a true CMO typically functions as an agent of organizational change, bringing customer insight and a marketing perspective to the strategic decision-making process, the role is implemented most successfully in companies undergoing a fundamental transformation.
Setting the new CMO up for success
Once the role is defined and the right leader is selected, the CMO and the organization have roles to play in ensuring the business gets the most from a newly created CMO position.
Assembling the team. While truly changing the marketing culture of an organization can take years, getting buy-in from key influencers in the organization quickly is important. One way this can be done is by making strategic hires. “The smartest thing I did when I started was to go out and hire four or five of the best people I could find in key disciplines,” one CMO recalled. “They were people who had a lot of weight in terms of skill-set and experience, and that helped enormously. I think that, very early on, the organization saw them as a skill-set that they didn’t recognize, and therefore they tended to be invited in more.”
Most CMOs agreed that assembling the right team quickly is critical. “If I had to do it over again, I would have moved even faster in structuring the marketing team,” said another CMO. “I would’ve tested people’s capabilities earlier. You need to have the right people with the right expertise in place and make tough personnel decisions quickly.”
Other early decisions that typically require quick action include the company’s agency structure, which can sometimes be fragmented in an organization that has never had a center-led marketing presence.
Posting quick wins. The CMOs we spoke with agreed that quickly proving the value of marketing is critical in gaining buy-in across the organization for larger initiatives. This can be done through the careful selection of a few initial projects, some of which might be smaller and more tactical by nature, that are likely to make a difference and win over key supporters.
“I ranked our brands based not on the size of the business, but on which brands I thought had the best chance of success from a consumer communication approach,” one CMO explained. “I looked for brands with low awareness but really high levels of repeat. We were able to get rapid increases in awareness, resulting in high levels of trials and penetration at repeat rates that were significantly above company norms. And that established credibility with the other members of the C-suite, who became evangelists for what we were doing.”
Meeting agreed-upon timelines is another key to building credibility. “Most companies that you will work in view marketing as a lot of theory and fluff — as people who don’t get things done on time and don’t add a lot of value,” said a former CMO. “So you quickly have to get things up to speed and get your team to deliver on time to debunk those myths.”
Building key relationships. The executives it is important to get buy-in from can vary depending on the organization’s focus, but can include leaders in HR, sales, supply chain, engineering and others, in addition to business unit leaders. But CMOs agree universally that while the backing of the CEO is integral, that alone is not enough to enable success.
“The CEO has to support the program, but at the end of the day you’ve got to fight your own fights,” one CMO explained. “If you’re staking your claim on the fact that you’re close to the CEO, you’re probably barking up the wrong tree. You want to stake your claim on the fact that you are providing a common value. I didn’t really focus on winning our CEO over as much as on delivering value to the businesses. The business leaders were the big enablers, and having those leaders collaborate with you is fundamentally important, and in my view more important, than having the CEO endorse you.”
In a business world where marketing often isn’t understood and its value frequently questioned, it is also important to align with the CFO. “You want to establish credibility that the money you spend is well-thought-out and that you are a good steward,” said one marketer. “You need to be able to explain why it’s a good investment — this is what we’ll get in the short term financially, and this is what we’ll get over the longer term from an equity standpoint. When it comes to budgets, the CEO’s first instinct is to look to the CFO, and having him on your side and advocating for you is invaluable.”
Culture before strategy. Despite the pressure a new CMO may feel to take quick action, it’s important to take the time to get steeped in the company’s business and culture. A CMO needs to understand where marketing can have the most impact in order to know where to focus; a first step is to build an understanding of the priorities of others, including merchandising, store operators and the management team.
Being too aggressive initially before building these relationships and a sense of trust can undercut a CMO’s efforts by making the senior management team uncomfortable with the speed at which marketing is moving. Instead, it is often better for the CMO to focus on clearly defining where marketing can add value and then to patiently earn respect over time by delivering. In organizations where the value and function of marketing is little understood, effective communication can make the difference between success and failure.
To gain this respect and buy-in from the business units in a company where marketing isn’t intrinsic, marketers need to shelve their marketing jargon. “You can’t speak marketing. You have to be willing to speak the dominant language of the company, whether it’s engineering, or manufacturing or equipment.”
Conclusion
In the end, the decision whether to institute a CMO role depends on a variety of factors, and certain conditions are more likely to facilitate a first-time CMO’s success. And, over the longer term, all CMOs are ultimately judged on whether they deliver better performance in the form of increased sales and revenue, and on whether they successfully put metrics and analytics in place to highlight that improvement.