Archive for March, 2013
For a guy who broke in to LEGOLAND in Denmark with some friends back in September of 1978 when we realized it was closed for the season, being able to have a CMO 2.0 Conversation with Mads Nipper from LEGO felt like being a marketer in a playground.
From all the CMO’s I spoke with, Mads took perhaps the most unusual path to becoming a CMO. He started off as a fisherman, but then realized that the Danish weather was too cold for him, and fishing was actually way too hard. So instead, he went to business school, and started working at LEGO 22 years ago. Mads’ responsibilities do not only cover marketing, but also product development, innovation, and all of the commercial activities.
Digitalization and gamification of their consumer base, trends that have been accelerating since the first introduction of the 8-bit Nintendo machine in 1990, present both threats and opportunities for LEGO. Digitalization has affected all parts of their business, including marketing, retail, and the whole play experience. Marketing campaigns are now always integrated with digital dimensions, e-commerce has become a dominant retail channel, and LEGO so far has sold over 100 million video games developed in partnership with TT Games, which is owned by Warner Brothers.
A major innovation effort at LEGO right now is to bridge physical and digital play, as they believe that is where the future of play will be in the next 5-10 years.
One of the big changes that LEGO had to make as they became more digital was to accept that they could no longer strive for the same level of perfection that they had grown accustomed to in the analog and physical world — the speed of change in the digital world just does not allow that. That does not mean that they compromise on consumer perception and experience, and certainly not on child safety — they just became faster at new products iterations and allowed their corporate product development heart beat to increase significantly.
At LEGO they don’t consider themselves in the business of toys or games; they consider themselves to be in the business of play. That is why Mads uses terms like communicate, socialize, and play when talking about his customers, and not toys, or games. While the concept of being in the business of play was on the mind of the founding family, the Kirk Christiansen family, they did not articulate it explicitly until five to eight years ago as they were emerging from a business crisis. Starting to consider themselves in the business of play, instead of being in the challenging and non-growth toy business, proved to be a very liberating experience. The business of play is right up there with food and love — one of the most important activities in people’s lives.
At LEGO they feel like they never know enough about children and shoppers — agreeing that if they were to know everything there is to know about their customers it would lead to the company becoming arrogant.
While children may display very similar play characteristics across different cultures, the people who buy them LEGO products — the mothers, the teachers, the grandparents, etc. — do not — they are much more shaped by the local culture than the kids are. That makes for a complex marketing challenge for a global company.
LEGO is very much a substance brand — meaning that the essence of the brand is built around the experience and the longevity of that experience. In fact, LEGO products, which are not a cheap play experience, often get more than a 30-40 year lifetime — much more than most other products in the world. LEGO is also a legacy/heritage brand — one that many parents and grandparents grew up with as children. It stays consistent, yet relevant to modern times, by having a digital component as well as a storytelling component while also having a compatible building system and design style with the LEGOs from 20 years ago.
Next we switched to the topic of culture. As you can expect, the LEGO employee culture is a very strong one — with people sharing a passion to make a positive difference in children’s lives. There is also a strong correlation between the internal cultural values and the brand values — and many employees consider themselves brand guardians, without being tasked to act that way by management.
While they do have a strong-shared beliefs system, they do not expect employees to memorize those. They think of their belief system as the smell in the bakery — if you like the smell of the bakery, you will know immediately that you belong. If you don’t, you don’t need a belief system to know that you don’t fit in. One of the ways the belief systems comes to life at LEGO is through storytelling. Storytelling provides the emotional bond that drives the world much more so than paychecks and orders. Employees are also encouraged to bend the rules and processes if it means improving the experience of a child.
LEGO is successful in multiple national and regional cultures because it appeals to a very ancient set of cultural traits — the need for humans to play and innovate. You can then add other cultural layers on top of that, like national cultural elements, or pop-culture elements (e.g., Harry Potter, Star Wars, etc.), but it is the deeper and more ancient human cultural connections that makes LEGO universally successful.
Another interesting aspect of play is gender based — boys like conflict play while girls like socializing. When boys see LEGO, they often ask themselves: What does it do? Can I kill anyone? Can I win over my enemy? Girls, on the other hand, are much more apt to ask themselves: Is it pretty? They don’t have the need for it to do something. They want to create platforms for social interactions.
Other things that we discussed include:
- The importance of content marketing in the marketing mix.
- The role of online communities and social media in the marketing mix.
- How they do not focus on the quality of the building blocks or the games first, but the quality of the experience.
- The differences between marketing LEGO in Western cultures vs. Asia.
Tags: consumer culture, cultural layers, digitalization, employee culture, experience marketing, future of play, LEGO, Mads Nipper, play
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Peter Mahoney, the CMO at Nuance, and I have been crossing paths on and off for the past few years in social media. So, it was great to finally speak in person and prove to one another that we were in fact not social media bots.
After getting a degree in Physics, Peter started his career in marketing and sales at IBM, even though that was the furthest from his aspirations at the time he started to work. After stints at PictureTel he ended up with Nuance, where he has been for the past nine years — seeing it grow from $150M in revenue to more than $2B in revenue this year.
Peter believes that marketing has become more strategic in the past few years — especially in the tech sector, where it had not been seen as a strategic piece of the business on par with some others. It has also become much more technical — involving optimization, lot’s of data, and digital capabilities. However, fundamentally, marketing is still about connecting people with the right product.
Even in B2B environments, marketers need to realize that it is people who are buying products, not companies. Another huge change in marketing has been caused by social media, which allows a marketer to have a different and deeper kind of conversation with their customers. It also allows your customers to have conversations about you without you being there. In fact, engaging in social conversations may be the biggest sea change in the marketing mix.
Nuance has grown primarily through acquisitions, and in the nine years that Peter has been there, there have been around 65 acquisitions. The good news of being in constant integration mode is that there is a good relationship between marketing and IT — a requirement for success as marketing is becoming more and more technical. That being said, marketers also need to beef up their technical capabilities internally.
Part of Nuance’s brand is to humanize technology — they sell, after all, technology that can hear, talk, reason at some level, see you, and have memory and context, — so having a humanized brand, especially the ability to listen to social conversations, comes almost natural to them — it’s part of their DNA.
The role of marketers has really shifted to one of being connectors rather than communicators. Marketers no longer need to consider themselves the spokespeople of the company in market place but instead need to think of themselves as the company advocate within the company.
When it comes to branding, companies need to be honest — and honesty means many different things. It is about connecting the right audience with the right product — not some kind of made up hyperbole. Marketers need to communicate very precisely what the product or service does in the terms that are interesting and relevant to their audience. Honesty is also something marketers need to have when engaging in social media conversations — which at scale are really good at outing falsehoods.
Next we talked about the importance of culture in marketing — both employee culture and consumer culture. As many other CMO’s I interviewed recently, Peter is convinced that there cannot be a dissonance between the internal employee culture and what the brand stands for. You cannot come up with a brand attribute and make it happen — it has to be part of your true essence and your values for it to be perceived as real in the marketplace.
The way Nuance deals with the various cultures that come through acquisitions is by celebrating diversity — including diversity of culture — as part of their culture. They don’t try to strip new groups of their personality or their individual group culture, but they instead understand how that links to the overall corporate message and culture. Peter compares it to marrying into a family that comes from a different culture — you do not want to completely throw out the old culture. You want to bring it along and add it to the mix and change it a little, but also recognize the fact that there’s this broader thing that has a set of values and a culture that they are interested in.
Other things that we discussed include:
- The importance to having a good core set of technical vendors as partners to marketing.
- Understanding the role of the marketer in social conversations — when to engage and when not to.
- The changing role of content marketing in the age of social recommendations.
- The challenges for marketers that have products embedded in other people’s solutions.
- The future applications of speech recognition, and the possibilities that open up when you combine speech recognition with data.
- How to walk the fine line of promoting “do good” applications as part of your marketing mix when you in fact help people with disabilities and other impairments.
- What to do when the culture of partners is different from your own culture.
- The importance of understanding consumer cultures as part of marketing.
Tags: branding, culture, customer trust, listening, marketing, nuance, peter mahoney, social media
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I have known Steve Mann for a few years now, and so it was great to have a CMO 2.0 Conversation with him now that he is the CMO for the research and litigation solutions at LexisNexis. Steve has a PhD in neurosciences and started out as a software engineer before joining the ranks of sales and marketing.
Based on his background in neurosciences and marketing, we started the discussion around what the perfect academic background might be for understanding and predicting consumer behavior. We settled on a mix of neurosciences, behavioral economics, cultural anthropology, and the arts.
With customers becoming increasingly digital and social, and taking recommendations from peers while tuning out corporate messages, marketers need to focus on becoming conversationalists and think about the value they deliver within those conversations. Marketers also need to become better listeners — and listening does not just mean listening for what customers want so you can add it to your next marketing offer. They need to listen to what the customer really cares about and then decide whether or not they can add value by becoming participants in that conversation. Marketers also need to become better conversation starters. They also need to realize that the most important conversations are not necessarily those conversations between the brand and the customers, but the conversations among customers and prospects.
Now that the most important content about products and services flows between customers, marketers also have to think differently about the content they put out there — ensuring that the content they create is re-tellable and can make its way into those customer-to-customer conversations that matter. They also need to think differently about their target markets in order to identify these conversation flows that matter.
In the legal space, 76% of customers who seek legal advice will use online resources to identify an attorney that will suit their needs. Being a business that has traditionally been fueled by word-of-mouth, with lawyers recommending one another and passing clients among themselves for ages, it is surprising that they have not been innovators in helping fuel the customer word-of-mouth that now leads to a majority of their new business.
Marketers don’t just need to do a better job at listening — they need to find the actionable insights that may lead to better products, better programs, and better relationships with customers. Marketing in general, needs to become more insights-informed.
When it comes to market segmentation, LexisNexis has thrown away the firmographic segmentation model in favor of a behavioral segmentation model, where they are coupling a segmentation model based on needs, attitudes, and behaviors of buyers with buying personas. Those buying personas are then the starting point for campaign development.
There are 4 fundamental metrics that LexisNexis is focused on when looking at social channels — strength, sentiment, passion, and the reach of a particular customer in a particular social channel. The strength refers to the percentage of brand mentions in a social channel. The sentiment is the ratio of positive and negative mentions. Reach refers to how many people are talking about your brand, and passion refers to how passionate they are — are they, for example,repeatedly talking about you.
As many other CMO’s I interviewed recently, Steve too is convinced that the fundamental premise of employees being the brand ambassadors only works when there is alignment between the internal culture and the brand value. If there is a dissonance between the two, the difference between the voice of the brand and the voice that’s put out there to represent the brand will cause confusion in the marketplace. Eventually consumers will shut down the communication rather than try to understand what the brand stands for.
Steve believes that marketers have had to go through a harsh set of realignments and realizations as to the ownership of brands. You can put out information about what your brand stands for, but it is the consumer that will disseminate that information, either positively or negatively, and thus control a good part of your brand. While companies still have ways to influence their brand, the brand’s influence over its own brand is not nearly as strong as it was in the past. In that process, marketers cannot sit back — they need to go and participate, in an authentic way that represents the core values of the brand in the consumer-to-consumer conversations that happen about their brand in social media.
We closed the conversation on the need for CMO’s to have good balance: Balance among our efforts to drive demand for our products and services, balance to deliver on brand promise, and balance in terms of the amount of effort that you put in customer retention. These all need to be weighed against the appropriate channels that CMO’s need to leverage to achieve their business objectives. CMO’s also need to become strong partners with the CEO and translate strategy into fundamental tactics that will support the business.
Other things we discussed include:
- How law firms leverage social media as part of their business.
- Where potential new uses of social media are in the legal market.
- The importance of a having a well-developed content strategy.
- What the proliferation of consumer choices means to consumer behavior.
- The importance of keeping things simple.
Tags: branding, consumer behavior, consumer insights, content marketing, lexisnexis, marketing, steve mann
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I thoroughly enjoyed conducting this CMO 2.0 Influencer Conversation with the T. Austin Finch Senior Professor of Business Administration at the Fuqua School of Business at Duke University, Chris Moorman — discussing the latest results from the annual CMO Survey. Chris has been in academics for 25 years and a professor at Duke since 1999.
The CMO survey, which has been conducted since August 2008 and happens twice a year, seeks to get the perspective from 500 or so top marketers in organizations on where markets are going, what companies are doing, what some of spending patterns are, and how companies track marketing excellence. While the interview happened before the new February results were published, you can review the latest results of the CMO survey here.
Here are some of the top findings that Chris picked for further commentary in our discussion.
Social Media Spend
Social Media spend, which was at about 7.6% and projected to grow to 18% in the last survey is now at 8.4% and projected to grow to more than 21% in this latest survey, is clearly becoming a considerable chunk of marketing budgets. The interesting part of this budget item is that there are very few in-house people who are actually allocated against it. In August, that number was 3.6 and in the latest findings, that number came down to 1.7 people. So for a fairly sizable portion of the budget, there are very few people engaging with that strategy. Chris thinks that it could be that companies have not quite caught up in terms of building their human capital around this particular strategy.
Interestingly enough, many successful companies are not approaching social media as another marketing silo — instead integrating it as part of the other marketing functions (e.g., lead gen, thought leadership, innovation, customer support, etc.). Even though those companies are probably in the minority, and with the survey showing that most organizations are not well integrating their social media with their marketing strategies, it could account for why the number is lower than what it really is.
The next topic we covered was that of marketing analytics. Companies in August reported they were spending 5.7% of their budget on marketing analytics and that number was projected to go up to 9.1% ( 6% and going up to 10% in the February survey). It is interesting to see a predicted 60% increase in marketing analytics budgets even though overall marketing budgets have only grown by 8.3% in the last two years.
Now keep in mind that this does not include budgets that might be spent in IT to support marketing analytics. Chris believes that when IT departments take over marketing analytics, they spend a lot time creating the infrastructure for it but then don’t spend an equal amount of time and effort on making sure that the information is getting used by decision makers. In fact usage is a problem with marketing analytics in general, with managers not using the analytics that are available to them or that have been requested 62% of the time. Chris is not surprised by this number, as her research in the past 25 years has shown a general tendency for managers to ignore market research. Interestingly enough, when companies have an evaluation process for the quality of the marketing analytics data, the date has a much higher likelihood of being used.
Performance metrics is another area of the CMO Survey that Chris finds interesting. The survey measures a lot of performance metrics, including growth, marketing leadership, and others. They do a really good job at looking at growth rates across multiple geographic areas — finding for example, not surprisingly, that companies were growing strong in China.
A real interesting exercise that they went through, and which Chris describes in one of her blog posts, is how much risk companies are willing to take with their growth strategies. As the economy has tightened up, they have not found an increase in low risk growth strategies, such as market penetration strategies targeting existing customers with existing products and services , but instead found an increase in more risky growth strategies — like launching new products or entering new markets.
Another growth strategy, found especially in the tech sector is — tech, software, and biotech, — through acquisitions. What is interesting in that space, as Chris describes in another great blog post, is that many companies are doing acquisition to acquire patents which they ultimately do not show an interest in developing — so in effect using acquisitions as a defensive strategy.
On the other performance metrics front, many of the metrics are pretty dismal. Customer retention is down, customer acquisition is down, and brand value is down. That trend continued in the latest February CMO Survey. Note that the numbers are still positive with companies still acquiring customers, but the fact that the growth has slowed shows that there clearly is a lot of negativity and uncertainty going around.
Despite the tough economic times that we are going through, a lot of marketing indicators are on the rise — including overall marketing spending. Not surprisingly, the CMO Survey also found that investments in traditional advertising is on the decline. Somewhat surprising is the investments that companies were making in marketing knowledge, developing knowledge about how to market, although that number dropped in the last survey.
The CMO Survey also has a great set of interviews with CMO’s that can be found here.
Other things that we discussed include:
- How lack of integration of the various marketing channels leads to not being able to track the customer journey.
- How marketing analytics really should be supported by both IT and Marketing.
- Why Apple has consistently won the CMO Survey Award for Marketing Excellence.
- How customer priorities are shifting towards price and what that means for marketers.
- Top rated skill sets that marketers were looking for in their new hires.
Tags: Chris Moorman, CMO Survey, Duke, Fuqua, marketing excellence, marketing performance metrics, marketing spend, social media
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