Is customer experience and the voice of the customer the CMO’s salvation?

The Economist Intelligence Unit has recently published a report titled ‘Outside looking in: The CMO struggles to get in sync with the C-suite’, sponsored by SAS.  This report has showed up as rather interesting for me and I want to share with you that which has caught my interest.

CMO’s face a number of big problems

The fundamental problem is that CMOs don’t get much respect from the rest of the C-suite.  CMOs say that they are doing a difficult job well: making a contribution/delivering significant value to product development, sales and customer service.  The problem is that the rest of the C-suite don’t agree – they question the value/contribution that CMOs are making.  And it doesn’t look like they listen to CMOs with much respect.  Here is how the EIU report puts it:

“CMOs believe they are constrained because the rest of the organisation does not consider marketing to be strategic; the C-suite believes marketing has not earned the right to be more strategic because it is ineffective at demonstrating value of its investments.”

Here are the other big problems that CMOs face:

1. Many organisations have trouble defining, clearly/exactly, the CMO’s role and responsibilities. Which could explain why it is that there is no agreement on what business objective the CMO (and the marketing function) should focus upon and be held accountable for.  Worse still there is a fundamental disagreement between what CMOs see as marketing’s priorities and the priorities that the other members of the C-suite assign to the marketing function.  Which makes me wonder if members of the C-suite actually talk with each other, share and agree what they expect of one another.  Doesn’t look like it. The EIU report says “..their greatest challenge: getting everyone to agree on marketing’s priorities.”

2. The  marketing function is not coping with the challenge that comes with the territory that falls under the market umbrella: advertising, brand, market research, communications, customer analytics, social media, mobile and so forth.  Why?  First, the marketing function lacks people with the necessary skills and expertise to cope/deal with this broad/dynamic challenge.  Second, members of the C-suite do not feel the CMO’s pain – they are not approving the necessary marketing investments.

So whilst it looks like CMOs are in a difficult position, there is no need to despair.  The EIU reports offers a route to influence, credibility, impact and respect from the C-suite.

What can CMOs do to make an impact and amass influence/respect in the C-suite?

The EIU report advises CMOs to focus on the customer experience and the voice of the customer. The authors pin their hopes on the following quote from Steve Cannon, CEO, Mercedes Benz USA:

“Every single customer experience is a brand moment of truth. If we create an aspiration through our advertising, and a customer walks into a store and does not deliver on that promise that reflects on marketing.” 

Any intelligent person could drive a coach and horses through this assertion.  And for the the time being lets just accept and go with this assertion.

OK, if Customer Experience is the unifying theme and the rallying call for the organisation then how exactly can the CMO contribute to this play given that the CMO is not the CEO and does not control all the touchpoints, which as a whole, generate the Customer Experience?

Focus on the voice of the customer:

Chief marketing officers (CMOs) stand a better chance of increasing their internal influence – and changing lingering doubts about marketing’s strategic contribution to the business – if marketing can consistently deliver insights and tools that benefit others across the organisation, from salespeople to call centre agents to merchandising teams.”

How feasible is this ‘success route’ being put forward by the EIU?

I say that there is a big difference between a poor strategist and a good strategist.  A good strategist takes into account feasibility.  Specifically, he asks this question: what is the likelihood that my client can execute this strategy?  And the good strategist keeps on going until he comes up with a strategy that the client has a good chance of being able to execute successfully.

So let’s ask this question, how likely is it that marketing can:

a) marshal the voice of the customer from all the disparate sources and turn this into a comprehensive view – single view of the customer;

b) generate actionable insight into customers, how they interact with the business as a whole, the jobs that they hire the business to do for them, and their experience of using the product and dealing with the company?”; and

c) inspire the various members of the C-suite to act – to make changes in their priorities, policies and practices – so as to improve the customer experience?

I’ll let you decide for yourself.  For my part I could not help noticing the following hurdles identified in the same EIU report:

1. Single customer view.  “The airline [BA] has spent the better part of the last decade integrating its systems to support the effort; data warehouse not stores 200 separate data sources from different parts of the business to provide a more granular view of the customer, based on information they have volunteered.”

2. Converting data into actionable insight. “For all the talk about data-driven customer insight, marketers are just starting to understand how they should be using the growing repository of information they are collecting through digital media and other channels.”

What do I say?

I say that if you and your organisation are serious about building your competitive position and commercial success on the Customer Experience then follow the example of Steve Cannon the CEO of Mercedes Benz USA.  Why?

Because, the role and this responsibility or organising the business around the Customer Experience is a huge change full of organisational politics. And as such it is beyond the remit and the capacity of the CMO and the marketing function.  This role/challenge – that of aligning the organisation around the customer experience requires marshalling resources, reassigning resources, engendering and dealing with organisational conflict – belongs to the CEO.

Here is what Steve Cannon did in the words of the EIU report:

“..aligning the organisation around a superior customer experience has been the focus of Steve Cannon since he took over as CEO in January 2012…. Investments in customer experience programmes have been large – such as the formation of a dedicated customer experience team – and small – like providing Mercedes Benz dealers with iPads equipped with custom apps and videos.” 

As regards what Steve Cannon is doing at Mercedes Benz USA I draw your attention to the following:

1. Steven Cannon was the CMO before he came the CEO.  When he was the CMO he did not take charge of “aligning the organisation around a superior customer experience” No, he did it when he became the CEO.  I say he is a smart man who has a sound grasp of reality.

2. If the CMO had come up with the clever idea of buying hundreds of iPads for dealers it is highly likely that he would have reinforced the C-suite’s already always listening of the marketing function as the “department of coloured pencils” (how one CEO described the marketing function) and s/he would not have got the budget approved by the CEO/CFO.

What do you say?

Tesco: great example of the perils of data driven marketing & neglect of the customer experience?

Tesco continues to do ‘badly’ in the UK

The other day I was reading the business press and the following piece on the poster child loyalty schemes/analytical CRM/data driven business management caught my eyes:  Tesco UK sales fall for more than a year.

If you don’t know then let me remind you that for many years the loyalty/CRM folks were holding up Tesco as the shining example of how to run a business intelligently/smartly and out compete your competitors by harnessing data and using this insight to drive/run the business.  And about a year ago the wheels came of the bus.

What got Tesco here?

Looking at it from the customer perspective, I say that the difficult economic environment forced customers to take a closer look at Tesco.  Some of these customers noticed that the ‘great deals’ from Tesco were actually more marketing gimmicks than genuine value.  And they noticed the poverty of the overall shopping experience – stores, products, service….. Here is a comment that speaks of the marketing gimmicks:

“..   It is consistently more expensive than Asda, Morrisons, even Sainsburys. It’s offers are phoney.  Strawberries “half price” at £2. Never seen them at £4 at Tescos or any other supermarkets. Asda had them at £1 so Tesco offered 2 for £2.50 next day, but smaller punnets. Their price drops are a joke, they drop from inflated price (Sometime BOGOF price) and are still expensive. They must think the public are fools and I suppose some are – they don’t even look at prices.”

As a strategist and business consultant, I say that like many successful businesses that end upon hard times Tesco’s strength became its weakness.  Put differently, Tesco placed pretty much all of its emphasis on data driven marketing and business management.  And in the process it gradually sucked the life out of brand and the customer experience. Rather like a television whose picture quality degrades gradually such that you don’t even notice these small changes until one day you happen to view a television that works properly. The recession was the wake up call for customers.

The data driven marketing allowed Tesco to maximise response and sales by personalizing the offers and coupons to the needs/interests of shoppers.  One the business management side, the Clubcard based analytics allowed Tesco to stock the right products in the right stores.  It also allowed the business to penny pinch on various areas including the stores, the products and the staff in the stores.  This is the classic example of the ‘extraction’ mentality powered by data driven analytics – in my view they power each other.  If you have worked  with database marketers you might have learned that their focus is on optimising return on the campaign as opposed to maximizing the long-term value of the customer. Often what optimises the ROI on the campaign does the opposite for longer term customer lifetime value and loyalty.  The opposite also applies.

What do retail experts say?

According to the Guardian piece (bolding is my work):

“At its annual results in April, Tesco’s chief executive, Philip Clarke, announced a £1bn makeover of the UK chain designed to “put the heart and soul back into Tesco” after domestic profits fell for the first time in more than 20 years. With more than 2,700 stores, Tesco’s domestic chain pumps out two-thirds of the group’s profits and Clarke admitted it had taken “a little bit too much away from the shopper” during years of penny-pinching to boost the bottom line.

And according to the Telegrah piece Phil Dorrell, a director at retail consultants Retail Remedy, says the following ( the bolding is my work):

“Tesco is treading water but the paucity of its long-term marketing strategy could still drag it under. Tesco… continues to offer a bland and soulless shopping experience and will be hard pushed to maintain its market share over this financial year. The leadership still seems to be focused on the quick fixes, more appropriate to running a store than a business”

And finally 5 questions for you to ponder

1.  If Tesco was genuinely customer-centric, all those years that it was touted as being the poster child of customer-centricity, then why is it in the state that it is in today?

2.  Is it possible that customer-data/insight centricity (which is what often passes of as customer-centricity) is not actually authentic customer-centricity?

3.  If intuition is such a poor guide to decision making and salvation lies in data driven insights that drive rational decision making then how is it that by pursuing this path Tesco has ended up here?

4.  Is it possible that what is rational over the short-term is not rational over the longer term?

5.  Is it possible that what occurs as rational to data scientists and data driven marketers and business managers is actually irrational because customers are human beings and as such irrational factors such as the brand, the customer experience, authentic customer care matters and weaknesses show up over the longer term?