OUTLOOK

How CMOs and CIOs can work together to win the digital customer

As the digital revolution reshapes the customer experience, the CIO just might be the CMO’s new best friend.

Introduction

Technology now enables almost all customer interactions. What’s more, it generates unprecedented volumes of both data and content. The ability to analyze all that information and integrate it into ongoing campaigns designed to engage customers across sales, service and loyalty is becoming a hallmark of marketing success.

Yet most chief marketing officers remain focused on such traditional marketing initiatives as brand strategies, campaign effectiveness and marketing ROI, and are still absorbed by episodic campaigns (back-to-school in retail, for example, or new car launches in automotive). Digital is largely viewed as simply another channel, the technology function as little more than a platform provider. A recent Economist Intelligence Unit survey sponsored by Accenture asked C-suite executives who in their organization was responsible for digital innovation: 23 percent said the CTO and 22 percent said the CIO. Only 1 percent said the CMO (see chart, below).

The result: Many CMOs are left on the digital sidelines. At one major company, despite repeated requests from the CEO that the CMO do a better job of managing the entire customer experience— including improved collaboration with sales and service on integrated channel initiatives and with the CIO on technology decisions to enable more relevant experiences in real time—designing workable operating models across these functions continued to elude the marketing, sales, service and technology departments.

So the CEO created an entirely new role—the chief experience officer—to champion a higher level of customer-centricity, including setting direction for the execution of holistic customer experiences and being ultimately accountable for customer outcomes—responsibilities the CMO used to manage. Moreover, the CMO, as well as heads of sales, service and distribution, now report to her.

Indeed, more and more companies are appointing chief experience officers, though they’re sometimes called chief customer officer or chief digital officer. Our research shows that mentions of such roles in key industry publications have more than doubled over the past three years, from 293 in 2010 to 727 in 2013. The new marketing mavens are found across industry sectors, from media and entertainment to industrial goods to energy. In fact, more than 6 percent of companies in the S&P 500 now have executives with one of these titles. And although many are relatively new to their positions, more than half are internal hires with significant history at their companies.

Plainly, CMOs urgently require a different mindset- and a new best friend: the CIO.

Common ground

Right now, at most companies, the two are not working well together. CIOs routinely disapprove of CMOs’ obsession with speed and scant regard for institutional processes, while CMOs have little patience with the technology function’s standardization and security concerns. Nonetheless, there’s mounting evidence of a quest for common ground.

In a recent Accenture survey, a significant percentage of respondents from both functions told us that marketing–tech alignment is among their top priorities (80% of CIOs and roughly half of CMOs). And at some companies, both functions are beginning to break out of their silos. Those at the forefront recognize that by collaborating as strategic partners they can become truly relevant to their customers in the digital age—across all customer experiences with the company and brand.

Data and analytics are key to successful collaboration. CIOs, of course, have deep expertise in both—and thus the whole-enterprise view that most CMOs still lack. Indeed, the tech executives are already in the marketing business, even if they don’t know it yet. And by aligning the CIO’s insights with the CMO’s knowledge of the brand, and then sharing metrics, the two functions can craft truly valuable customer experiences.

One car rental company, for instance, has transformed its marketing by combining diverse data sources, including the records of its 40 million customers, information generated by its car rental transaction system, website transactions and reports that detail which cars customers choose. The exercise, which involved specialists on data integration, performance management and reporting, and analytics, resulted in what the company calls a “customer lifetime value model,” which gives the CMO a deeper understanding of the customer, improves segmentation and thus helps drive inspired experience design and differentiated service solutions across the full customer journey.

Armed with a “single view” of the customer, information can be consolidated into a Web-based dashboard that customer-facing employees can easily access. The company can project how many times an individual customer will rent in a year and thus how profitable that customer will be. And decisions can be customized across product, distribution and communications.

Skill-set challenge

By having CMOs learn the language of CIOs—and vice versa—a collaborative approach can also help the marketing department tackle its technology skill-set challenges, and give CIOs a deeper understanding of marketing.

At the interactive toy retailer Build-A-Bear Workshop, for example, the two functions have forged a partnership that has helped both to serve the end user better. The CIO regularly attends agency reviews and works closely with the CMO to hire both internal project teams and external agencies. By interviewing candidates together, they ensure that each type of hire shares the same essential qualities—fluency in both technology and marketing (see Sidebar).

Content is yet another area ripe for collaboration. Digital businesses generate vast amounts of it, from user-generated content such as blogs and social media ratings to customized and curated content, video, interactive widgets and apps, third-party expert commentary and syndicated content. Analyzing and understanding all this diverse (and often confusing) content—and formatting and tagging it, so it can be accessed, used and optimized across myriad technology devices—needs to be a joint enterprise.

Consider, for example, how digital disruption is driving counterintuitive thinking in the retail grocery industry and creating new KPIs. Traditionally, the industry’s marketers have focused on maximizing the time that customers spend in-store on the assumption that this will also maximize the amount they buy, and thus their loyalty. Analysis now tells them, however, that many people just want to get in and out fast. By working with the technology function to develop such innovations as smartphone apps (combined with geo-analytics and beacon technology) that guide shoppers swiftly to what they’re looking for, they can not only meet the demand for speed—they can also persuade people to come back and repeat a satisfying experience. Better yet, they’re encouraging them to share that positive experience with others.

New success metrics

Digital challenges more than just traditional thinking; it also changes the way companies organize and operate. Retailers, for example, have been forced to rethink their distribution and fulfillment models to meet new expectations in shipping speed. Self-service and empowerment are critical customer experiences in financial services. And in other industries, new success metrics have been developed to reflect new realities.

Case in point: A cable TV vendor that considered removing the phone number of its call center and the click-to-chat feature from its digital platforms when it learned that its digital media, social and mobile marketing endeavors were driving traffic to its call centers—and that those call centers, rather than the digital team, were getting credit for customer conversions. Logic prevailed, however. The call center number was not removed from the digital platforms. But the company realized it needed to completely revamp its operating model, including who reported to whom and the incentive structure.

The name of the game is no longer the four “P’s” (product, price, place, promotion)—it’s customer experience design. Our research shows that references to “service design” or “experience design” have increased significantly in key publications over the past three years. And while most occur in connection with high-tech and research institutions, they are not restricted to particular industries.

CMO–CIO collaboration is indispensable to customer-experience design success. By making better customer outcomes a common goal, and by developing a consistent view of the customer through shared metrics, CMOs and CIOs can create the seamless brand experience that today’s customers demand.

But first companies need to empathize with the customer—to prioritize customers’ goals and then reverse engineer initiatives, operating models and skills to help them achieve those goals. CMOs and CIOs need to think in terms of “doing with” the customer, rather than “doing to” them, abandoning words like “target”, “capture”, “convert” and “retain” and adopting such terms as “influence”, “engage”, “stimulate” and “share”. Instead of asking whether the CIO and CMO should collaborate, or even how best to collaborate, they should be adopting a heightened customer-centric mindset and asking: how can the CIO and CMO team up to advocate for the customer?

This is the key driver for CMO/CIO collaboration and the catalyst for true transformation.

Sidebar: Marketing KPIs: New Metrics for New Realities

Digital disruption and the need for a broader perspective on what matters most to customers make close collaboration between CMOs and CIOs critical to success. This means aligning the CIO’s data- and analytics-driven insights with the chief marketer’s knowledge of the brand.

As seen in the tables below, this collaboration has also created new ways to measure success in marketing (shown here in three dimensions). For example, successful marketing used to be about brand awareness; today it is about brand engagement. Similarly, analytics have evolved from simple dashboards into real-time decision tools, while the success of technology is measured in effectiveness rather than efficiency. (Back to story)