CMO 2.0 Conversation with Jim Davis, CMO at SAS

Written by on February 26, 2013 – 5:50 pm -

My CMO 2.0 conversation with Jim Davis, the CMO at SAS was  insightful and covered a lot of ground. Jim grew into the CMO position through the ranks of R&D and product management — a great path for a technology company. At SAS, Jim is not only the CMO, but he also runs HR, professional services, and education; positions at the executive table that should work much more closely together than they usually do. With his responsibility, Jim can  not only focus on providing a great product experience for the customer, but also a great place to work — resulting in being Number 2 on the Great Places to Work ® list and having a 2-3% employee turnover rate in an industry that averages 20-22%.

We discussed the long term benefits of investing upfront in the employee base and how unfortunately, public companies, driven by Wall Street’s relentless search for cost-cutting,  cannot always make those investments. For Jim, there are three types of relationships: the company-customer relationship, the customer-employee relationship, and the company-employee relationship; which is where most people fall down. At SAS, they are convinced that if you can satisfy the last leg of that relationship triangle, the other two will work well as well. Or as their CEO, Jim Goodnight, says — “If the employees are happy, then the customer is happy and if the customer is happy, the business thrives.”

While the cultural SAS Way and attitude in terms of how they treat people  is the same all over the world, employees in different cultural regions have different expectations of what it means to work for an exceptional employer — hence the need to execute a little bit differently depending on where you are in the world.

Realizing that people spend the majority of their waking hours at work, they treat their employees as family. A great example of that was what happened when the global financial crisis hit in 2008. Instead of hunkering down and laying off employees, as most companies would have done, the CEO did a global webcast and said, “I want to tell you something right now: I promise you I will guarantee no one will lose their job. I just need you to look after the company, look after the expenses and continue to produce quality software and build great relationships with our customers.” As a result, employees did not rush to update their LinkedIn profiles, and instead watched out for the business — resulting in the most profitable year in SAS’s history.

Next we talked about the impact of customers becoming increasingly digital and social on marketing plans and strategies.  Gone are the days of marketing getting the message out. Instead marketers now need to focus on listening and responding to the sentiment of the crowd. Marketers no longer need to be the company advocate in the marketplace — customers will do that, — but they instead need to become the customer advocate within their company.

Next we switched to the topic of big data and big data analytics. Jim described the various big data problems companies have and mapped them out in a two-by-two matrix that includes Business Intelligence (BI) and Big Data BI, both focused on reactive analytic capability; and Big Analytics and Big Data Analytics, both focused on proactive analytic capabilities. Jim has a great blog post detailing the different big data problems that companies may have.

Big data didn’t just happen. We have always had it. What was missing was the ability to gain meaningful and actionable insights from it to allow us to proactively make future marketing, product, and customer decisions.

We also talked about the benefits of real-time analytics, which has recently become in vogue. When you can place real time analytic models in line with the process by which we’re communicating with the customer, amazing new  up-sell and cross-sell opportunities present themselves.

In a recent poll SAS did with 800 executives at their Premier Leadership Series conference, 81% of respondents said that they are not doing a good job in terms of real-time, fact-based decision making. While we are still in the early stages of maturity, big data is definitely going mainstream, often driven at the board level.

In order to truly capitalize on the promise of big data, CIO’s and CMO’s need to work hand-in-hand. A good way to make that happen is to make sure that the CIO and the CMO have shared metrics for success. If the CMO is measured on customer retention or customer response or cross-sell, up-sell, then the CIO needs to be measured on those same metrics, not uptime and fall within budget. Here again, we are in the early stages of seeing this marriage between CIO’s and CMO’s happen, with many CMO’s still going at it on their own.

Lastly, we talked about the need to develop a fact-based decision-making culture — one in which human decision making gets supported by analytics and data modelers. If the human decision maker gets replaced with analytics and modeling, then we are in for big trouble — just look at the derivatives and the subsequent financial collapse.

Other things that we discussed include:

  • We briefly reviewed the results of the Social Workplace Trust Study that Human 1.0 produced with The Great Place to Work Institute, IABC and the Society for New Communications Research.
  • How they do not differentiate between consumer brand and employee brand.
  • The benefits of not being a public company with a quarterly time horizon.
  • How SAS has a deep culture of innovation and what that means.
  • How agencies are struggling with the decision to get into data or not — with the value of how you address the customer not being available in external data.
  • How to leverage social media data as part of Big Data solutions.
  • Metrics used by the SAS CMO to gauge progress and success.

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CMO 2.0 Conversation with John Kennedy, VP of Corporate Marketing at IBM

Written by on October 2, 2012 – 7:38 pm -

My CMO 2.0 conversation with John Kennedy, the head of corporate marketing at IBM, was a truly great discussion. John started his marketing career at one of the best on-the-job training companies for branding — Proctor & Gamble, where he worked on some well known brands like Downy, Spic and Span, and Cinch. Following that he joined IBM’s consumer division in the mid-90s, and subsequently, spent 8 years with IBM in Tokyo in a variety of product marketing, geography marketing, and sales roles.  So, John is another true and true marketer in this ongoing series of  CMO 2.0 Conversations.

According to John, the main causes for the recent changes in marketing come from the digitization of business and the increased interconnectness of people. The fundamental change that marketing has undergone is that it has once again become a social science — it is about understanding how people connect, what they aspire to, and what motivates them to do what they do.

At IBM they use three lenses to understand how the marketing function is fundamentally changing — knowing the customer, knowing markets, and knowing audiences. In the past marketers were mostly limited to understanding their customers in terms of big demos and big psychographics. Now, big data allows marketers to understand their customer at the individual level. Big data also gives marketers the ability to serve market segments better — moving from a transactional focus to a much more customer-centric conversation around the benefits of products and services.  The last lens relates to the fact that both companies and customers now have a much higher visibility and transparency into one another’s business —  with customers who now being able to see behind the firewall and assess whether the way a company operates actually matches with what it promises through its marketing.

Like other leading marketers that I interviewed recently, John too believes that the brand is not just embedded in the promise that marketing makes about its products and services and how well those products and services deliver against that promises, but it is also embedded in the culture of the company — how the company actually behaves behind the firewall. Along those lines, IBM has done a lot of work in humanizing its brand by allowing the IBM brand to be defined by the IBMer. They see themselves as an intellectual capital company, with their employees delivering the value that gets created and offered for their customer.

Next we talked about the shifting advocacy role that marketers need to embrace. They increasingly need to take all the learnings that they develop about the customer and bring that back to the C-Suite rather than think of themselves as the corporate spokesperson in the marketplace. While marketers will continue to have the need to communicate messages to the marketplace, a majority of the content about a company’s products and services now flows through word-of-mouth.

Once again, marketers need to become more inter-disciplinary, and be concerned about more aspects of the company’s operations than they have traditionally been involved with. With the brand being impacted by so much more of the company’s operations, marketers need to think way beyond the four P’s when they think about their role. Not only do they need to become more knowledgeable, they also need to rely on more of their C-Suite counterparts to help execute the brand. And with marketing becoming increasingly technology-enabled, which is especially true of their relationship with the CIO.

Marketing in the future will not feel like marketing. It will increasingly feel like a welcome service. With marketers developing a better understanding of consumer behavior, both through social sciences and data, marketers will be able to deliver a whole new level of value to their customers. In order to so, however, marketers will need to develop a level of “digital empathy” — by not only contacting customers with the goal of achieving commercial results.

Following this conversation on the changing role of marketers, we switched to the topic of culture. According to IBM research, leading marketers are focusing more on corporate character than on the products they sell. As I said before, marketers have to become concerned with not only how a company comes across in its marketing, but how the company actually operates — and that is called culture, or in IBM parlance corporate character. Culture, of course, is the externalization of shared corporate values and beliefs.

We closed the conversation on the topic of measurements and ROI, which is increasingly tricky as marketing contributions spans both the range of hard things and soft things. Marketers are going to have to be careful to select those key analytics in this growing amount of information that best represent their contributions.

Other things that we discussed include:

  • How market researchers need to shift their thinking from consumer segments to consumer tribes.
  •  How to leverage social media and communities as part of marketing.
  • The importance of listening to what is being said about your brand and gauge the sentiment of those conversations.
  • The importance of matching internal tribes with external tribes.
  • The changing need for talent within the marketing department.
  • How the promise of gaining actionable insights from big data is still very much in the early stages.
  • How to transition from a transactional customer relationship to one that is focused on the customer journey.
  • How to balance an historic/iconic brand like IBM with having a brand that appeals to new generations and consumer tribes with the example of Smarter Planet as a platform to make that happen at IBM.

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CMO 2.0 Conversation with Martine Reardon, CMO at Macy’s

Written by on September 11, 2012 – 1:40 pm -

My CMO 2.0 Conversation with Martine Reardon, who is the CMO at Macy’s was a great one. As usual, Martine started by describing her career path that led to becoming CMO at Macy’s. She started her career in retail early on with an internship at a local Brooklyn retailer, called A&S. During her career in retail, Martine covered just about all aspects of marketing, from PR, events, direct marketing, media buying, and analytics – so she is a real deep-rooted marketing person.

Next we discussed the biggest change that Martine has seen in the world of marketing – that of course being the shift of media into the digital space and social space. The pace at which the shift happened is astounding. The shift in technology, the shift is how people use it, and the rise of millenials all have forced marketers to challenge themselves to stay ahead of the curve.

Macy’s does an especially good job at integrating the digital space with the bricks and mortar stores. There are clearly no walls between the digital marketing efforts and the marketing efforts for the stores — it’s all one integrated branding campaign. They focus much effort in making sure that people have similar experiences online and in stores — something many companies could do a better job at. There are challenges in doing that — stores don’t have the rich navigation capabilities that online environments have, and online you cannot really recreate the richness of merchandising displays that you can have in stores. So they focus on taking best of both worlds and making sure that both worlds have the best of each other. They put technology in stores to enable customers to share potential purchases with friends, and they are making online navigation real easy by adding hints and rich media to allow the online customer to put their whole outfit together.

The next topic we tackled was branding – and how Macy’s deals with the fact that while it is a national brand, it also needs to stay locally relevant. They deal with that in three ways – through marketing, products, and local events. On the marketing front, they have dedicated regional marketers who have their own budgets. They integrate with national marketing campaigns but also add a local flavor. So, for example, while they may be marketing a national fall fashion event; California may be talking about sandals and sleeveless dresses for the fall while Oregon may be highlighting fall boots and coats. They divide up the country into cold, mild and hot for seasonal events. Another way to stay locally relevant and be a real part of the community is by celebrating local events. So, for example, they celebrate the Kentucky Derby by buying Derby hats and marketing those locally with a tie in — “Come to Macy’s for Refreshments after the Derby.”

Another marketing challenge that Macy’s faces is that while they are a national brand which has to stay locally relevant, they also need to stay relevant to different generations, different genders, different ethnic groups, and different type of buyers (e.g., value-conscious buyers vs. fashion buyers). They do this by making sure to balance the marketing calendar with big store-wide events that would appeal to all and other events that are very targeted to millenials, or the beauty customer; or just a men’s customer.

Martine then talked about how in the last three to four years they have been able to leverage customer data to come up with a better customer segmentation system. So, for example,  they can now focus on women that like to buy fragrances and jewelry versus the ones that like to buy for the home and children. They also have identified new types of customers, like the service seeker. Those are the people that want hands-on sales associate interaction. They want to be taught how to apply their makeup. They want someone bring them three different shoes, or they want someone to tell them “if you like this, you might also like this.” Another example is the practical spenders — those who, like me, just get in and out when we need to replenish something.

The promise of big data surely seems to be realized at Macy’s. Mining the rich data that they collect through many channels allows them to become more customer-centric and also to be able to focus more on the customer lifetime journey rather than just the transaction. That is especially powerful for Macy’s considering that when they start engaging with a customer at 18-19 years of age, they generally keep them for life. So, being able to follow a customer throughout their life is important — college, first job, first home, holidays, etc.

The last topic we tackled was that of balancing the iconic brand, which dates back 156 years,  with the need to develop a brand that also has a future and will appeal to future generations. Using the heritage of the brand allows them to instill trust, loyalty, and credibility in the mind of the customer. At the same time they are an entertainment brand and use their heritage in new and innovative ways to continuously be part of pop culture. A good example of this is the 85-year-old Thanksgiving Parade, which they have been able to keep new every year, with new licensed characters or new artists.

Other things that we discussed include:

  • The importance of content and user generated content in marketing
  • The importance of listening to customers
  • How to leverage the fact that shopping is a social experience
  • The importance of loyalty programs in the marketing mix

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CMO 2.0 Conversation with Michael Mendenhall, COO & President at Lipman and former Head of Marketing at HP and Disney

Written by on October 25, 2011 – 11:12 am -

mendenhallThe CMO 2.0 conversation with Michael Mendenhall, who is currently the COO and President at Lipman and who was formally the CMO at HP and the Head of Marketing at Disney, was most informative.

Michael started his career with a small agency and later developed a rich background in corporate marketing at Disney. At HP, he learned a great deal about technology and consumer behavior, content and storytelling, and social and mobility. Most recently he became part of a group that bought Lipman, an 80 year old advertising agency, where Michael is trying to rebuild an agency with an outdated advertising model into a modern marketing, branding and digital communications consultancy.

During our conversation, Michael mentioned that one of the biggest mistakes that marketers made was to allow new media marketing to bifurcate off from the rest of the marketing group. Based on their lack of understanding on how to monetize new media, and justify ROI’s to their CFO’s and CEO’s, marketers set up  groups on the side and gave them minimal dollars to test and beta. Not only did they allow those groups to be siloed, they were also underfunded. Marketers did the same with e-cmmerce groups, which became disjointed from the people developing the corporate web site.  And they are doing it again with the social – CMO’s are once again not sure what to do with it and are under-funding those efforts in small groups on the side.  The marketing department became functionally aligned with channels – a social channel, an e-commerce channel, an m-commerce channel, etc. Agencies did the same thing, aligning themselves against those same channels – resulting in the rise of social firms, digital agencies, commerce types and mobile shops, etc. The problem with a siloed marketing department it that it forces the CMO to spend a lot of time trying to integrate all those groups so that they have one voice instead of focusing their efforts on what matters: How will I grow the business? How am I increasing share? How am I increasing margin? How am I taking share?

It also makes it difficult for the marketer to focus on the customer journey – from discovery to purchase and hopefully repeat purchase and evangelism. The customer does not think of a company as a set of siloed groups or channels and will engage with companies across all those channels at different stages of their journey. In addition, the customer will increasingly engage with touchpoints that are not controlled by the company – peers, friends and other tribal members that are out there making buying recommendations. When Lipman engages with their clients, they try to break those siloes by having every single expert at the table – the head of brand, the head of technology, the head of digital, the head of creative, and the head of media buying.

A new skill-set requirement for marketers in this digital age is the analytical skill-set – the ability to develop a 360 degree view of the customer as they go through their buying journey; the understanding that information is knowledge that gives you a competitive advantage; and the idea that raw data coming from the bricks-and-mortar transactional environments can shape R&D, as well as customer engagement, cross-sell and up-sell opportunities, and even shape customer loyalty. Most marketers do not reap the benefits from all the rich customer data that resides in their repositories. Understanding that opportunity will become as important for marketers as understanding the importance of the compelling story that will engage their customers and prospects. When CMO’s don’t have the wherewithal to deal with big data, they should team up with their CIO to make sense of it. The problem is that CIO’s often focus on storing the data, securing it and serving it up – not so much on providing services to help the business glean insights from it. At Lipman, Michael is trying to fill that gap by having his own Consumer Insights Group and by acting as a go-between between CMO’s and CIO’s. If you are interested in this topic, and are involved with Digital Marketing, you may consider taking the Digital Marketing 2.0 survey which we just launched with the Society for New Communications Research (or pass along the URL to the survey to a colleague - digitalmarketingtwo.com)

All that being said, marketing and advertising are not likely to be become pure technology plays – according to Michael – because what makes the difference is the content and the storytelling that you use to express your brand. Technology, which can be used to make us smarter about when, where, and how to engage with prospects and customers needs to be balanced with great content.

It’s important to understand culture, not only consumer cultures but also corporate cultures. For companies that have a considerable heritage that can be especially tricky. You want to build on that heritage, by pulling out those attributes of the heritage that are relevant in today’s marketplace, without building a museum out of your brand.  When it comes to consumer cultures, too many companies chase after the “cool factor” or the novelty – which can be very short-lived and which often detracts from building solutions that have a real purpose,relevancy, and are tied in with current initiatives.

On the future of how companies measure the impact of the relationship they have with their agency, Michael does not think that the push toward sharing risks and rewards will work, because agencies do not control the whole process that determines success. Marketers will need to monitor KPIs that the agency can actually affect, such as KPIs on the information side, and not the internal KPIs related to product success.

In closing Michael had the following words of wisdom for fellow marketers – don’t lose focus on the customer and their journey. While this may sound basic, with most companies being structured around functions and channels, and in some cases having the wrong skill-set,  that is not usually something that comes naturally.

Other things we talked about:

  • How agencies have been successful at buying all the functional expertise through M&A’s but often failed to do a good job at the integration of all those functions.
  • The importance of having stories that are authentic and transparent, because through technology the customer can see and hear almost everything you’re doing as a business
  • How consumer data can give you insights into all aspects of the customer-buying journey – when they will buy, when they will leave you, etc.
  • How most companies should focus on existing customers rather than new prospects that can cost as much as 10X in terms of customer acquisition cost
  • How listening has to become a great shill for marketers
  • How the trend towards purchasing creative through procurement is a real bad idea

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