Interview with Prof. Mohan Sawhney on the future CMO

Feb. 15, 2017
  • Viewpoints

Marketing is entering a new phase as the digital transformation progresses and evolves. Companies are building their own databases and accumulating various behavioral data on their customers. It is fair to say that, looking forward, the big questions for market management will be how to make use of digital data and how to link these data sets to value creation. We asked global marketing authority Professor Mohan Sawhney from the Kellogg School of Management at Northwestern University to talk on this theme.

The CMO as value creator

Companies have tended to view their marketing communication department’s role to be carrying out market research, establishing positioning strategies, executing media campaigns, and measuring brand recognition.

But looking forward, a new and entirely different role will be required of marketing. This role is creating value. In other words, the role of marketing will be increasing revenue, creating customer journeys, managing marketing automation, and analyzing customers. Above all, the chief marketing officer (CMO, the person ultimately responsible for marketing) who oversees marketing activities will have to be a creator of value.

The creation of value is intimately connected to the innovation of business. This is because business innovation makes it possible to provide new value to the customer by creatively transforming various processes of business.

To make business innovation happen, it is necessary to adeptly combine new inventions with insight on sei-katsu-sha. The indicator of innovation should not be products, but the value products generate. Moreover, this innovation has to consider the entirety of business processes.

Applying the Innovation Radar, a framework to encourage business innovation

Innovation Radar is a useful framework to conceptualize the aims of business innovation. The framework consists of four key pillars and a total of 12 dimensions.

1.Products and services
Offerings, platform, and solutions

2.Customers
Customers, interaction, marketing communication

3.Operations
Processes, customer acquisition, management

4.Partnerships
Ecosystems, channels, supply chains

The following are examples of practical applications of the Innovation Radar:

  • Visualization: Mapping innovation strategies
  • Coordination: Fostering common understanding of innovation strategies
  • Brainstorming: Producing the impetus for new innovation
  • Benchmarking: Comparing innovation strategies with the innovation strategies of competitors
  • Policy formulation: Identifying directions for innovation development

And what should the CMO pay attention to in this framework? That would be the customer dimension. That’s because marketing is an activity that is always directed toward the customer.

The CMO has to transform marketing activities into a more appropriate form while keeping an eye on the customer. This transformation is a long journey, and it is does not always follow a nice single path.

Five lanes for realizing marketing transformation

I think of marketing transformation as a five-lane highway. Let’s look at each of these five lanes in detail.

Lane 1: Engagement and content

Transformation in the first lane can be expressed as shifting from exposure marketing to engagement marketing. Rather than the one-directional marketing (exposing) of products and services, marketers provide information that addresses the customer’s concerns and issues and that satisfies the customer’s needs in order to produce engagement. In short, this is executing engagement marketing. This is the target in the first lane.

What’s important in engagement marketing is to create and distribute content that is meaningful to the customer in order to construct deep ties with the customer. In other words, engagement marketing has a neutral relationship with content marketing.

The principles of content marketing are as follows.

•Be useful for the customer: Content must always be beneficial for the customer. Content must either address customer needs that have not been adequately met or answer customer questions or doubts.

•Establish a personality: When deploying content, envision a specific personality for the content–as if the content has a particular individual’s voice–and aim for communications that are faithful to the personality.

•Avoid sales talk: Content should concentrate on telling a story, not selling a product. The more the conversation veers toward the company or the product, the fewer the customers who will identify with the content.

•Create the highest grade content: If you want your audience to be glued to the content, you, as the distributor of the content, must be well-versed in the content’s theme. You must also keep providing content that impresses the customer. Think of content deployment as HtoH (human-to-human) communications, not BtoB or BtoC.

To produce engagement, you have to provide real value to the customer. There are many types of value: information value, convenience value, social value, community value, emotional value, entertainment value, and so on. The customer obtains this value as a reward for engagement with the company (return on engagement: ROE).

Lane 2: Data collection and analysis

The second lane is concerned with data. What marketers have come to rely on for customer analysis is transaction data stored in CRM systems. Transaction data, however, do not give you a complete picture of the customer; they only indicate past customer behavior.

To gain true customer insight, you must combine transaction data with other data sets, such as social media data and location data, and construct a full 360-degree picture of the customer. This, in effect, is executing a transformation from the customer image as seen from a transaction viewpoint to the customer image as seen from an all-encompassing viewpoint. This transformation enables you to create customer experiences grounded in detailed contexts.

To develop this all-encompassing viewpoint, you will need data connected to intentions, behavior, location, sharing tendencies on social media, referral channels, and brand-centered interactions, in addition to conventional demographic and psychological data.

What is realized by making use of this broad range of data is behavioral marketing. Behavioral marketing is a method of automatically analyzing data connected to customer intentions, profiles, actions, and other attributes and executing personal and real-time marketing communications. This is a shift from conventional marketing that targets diverse segments and audiences to marketing that targets individual customers, from post-event bulk processing of data to real-time analysis. The application of all-encompassing data makes this type of transformation possible.

Lane 3: Process and execution

The transformation in the third lane is from waterfall marketing to agile marketing.

As you are aware, waterfall marketing is a technique to advance a process in a step-by-step fashion following a master plan. This technique assumes that you never go back to an earlier step, just like water falling down a waterfall never goes upstream.

On the other hand, agile marketing is a technique to advance a project dynamically (agilely) while repeating small planning and testing steps.

The difference between these two approaches can be restated in the marketing context as campaign marketing versus interactive marketing. Campaign marketing is a technique that deploys a campaign along the axis of a story and constructs the brand experience linearly. Conversely, interactive marketing is a technique to deepen engagement through repeated interactions with the customer using various media channels and tools. Interactive marketing is always-on marketing; its communications are executed continuously.

The following points are necessary to execute agile, or interactive, marketing.

  • Determine the customer’s concerns and what the customer is into at the moment, and implement early and ongoing marketing.
  • Revise and implement the marketing program in short cycles, such as biweekly or bimonthly.
  • Strive for differentiation from competitors by reacting quickly to changes.
  • Work in close collaboration with operations divisions, sales divisions, ad agencies, and other parties.
  • Do not fear mistakes, but do not repeat the same mistakes.

Lane 4: Staff and organization

Marketers have been thought of chiefly as communications leaders . From now on, however, they will have to morph into leaders of value creation. To accomplish this change, organizations and staffing will also likely have to change. This is the transformation in the fourth lane.

The new marketing organization should be constructed so its main roles are managing content, data, and marketing systems appropriately and creating value. To achieve this, it will be necessary to establish new positions and create mechanisms to instill new skills. It will also be necessary to hire and bring new people into the marketing division.

The new marketing organization is an organization in which the CMO brings together and consolidates the following functions:

  • Content director
  • Analysis director
  • Operations director
  • Partner director
  • Customer experience director

Moreover, the following conditions are necessary to implement organizational change and transition.

  • Explain to the staff the final vision after the organization change.
  • Create interfaces between the functions inside the marketing division.
  • Create interfaces with sales, operations, IT, product development, customer care, and other internal divisions.
  • Prepare training programs designed to improve employee skill sets.
  • Move ahead with new hires and joint operations with contractors to further meet the skills required by the organization.

Lane 5: Platforms and automation

The aim in the fifth lane is the transformation of systems. This is a transformation from conventional function-specific and division-specific systems to an integrated engagement system that unifies customer contacts. This transformation makes it possible to seamlessly connect with customers in all different channels and enables integrated engagement. This can be referred to a transformation to create a platform for Customer Engagement 3.0.

In Customer Engagement 1.0, the main touch point with the customer was mass media. In Customer Engagement 2.0, social media became the main touch point. This development led to multidirectional communications, including CtoC, in addition to bidirectional communications. But in almost every case at the Customer Engagement 2.0 stage, communications were carried out separately by channel or by internal division. Customer Engagement 3.0, on the other hand, refers to the unification and automation of these social media touch points and the implementation of integrated communications.

The new leadership required for marketing management

As I have described, marketing transformation has five lanes. Furthermore, the transformation must proceed simultaneously and in parallel along all five lanes.

Heading up this total conversion is the pivotal task of current CMOs. This is why the CMO must be well versed in the cutting edge of digital and be a leader of the company. The CMO must embody the image of new leadership not seen before.

The people who will assume the position of CMO in the coming years will face enormous challenges. But at the same time, they can seize massive opportunities as well. I expect a long succession of new leaders and new CMOs to emerge and create new marketing.

Profile of Mohan Sawhney
Professor at the Kellogg School of Management, Northwestern University
Professor Sawhney is a globally renowned expert in the fields of innovation, strategic marketing, and new media and is in charge of these fields at the Kellogg School of Management. He is also a Fellow of the World Economic Forum and is active as a consultant on corporate strategies for such clients as Accenture, Adobe Systems, AT&T, Boeing, Dell, GE, Johnson & Johnson, Microsoft, and McDonalds.
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