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CMO Matters/ General Management

The CMO’s Path To Power: Customer Experience Management (Part 1)

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by Kimberly A. Whitler, Ph.D.
Assistant Professor of Marketing
University of Virginia's Darden School of Business

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Article Highlights:

  • A potential alternative path to power for the non-P&L managing CMO focuses on the totality of the customer’s engagement,
  • The path to profitability must be seen through the eyes of the customer and their aggregate experiences.
  • When you use measures that aren’t directly linked to specific activities, it’s possible that there are a myriad of different explanations for the outcome.

The path that CMOs have followed to wield power has historically been through P&L management. Look no further than the consumer packaged goods (CPG) industry, where the brand management (marketing) function is typically organized to manage the brand’s P&L and, as such, wields power through significant financial responsibility.

However, recent research conducted by The CMO Club and Neolane (acquired by Adobe, CMO.com’s parent company) suggests a potential alternative path to power for the non-P&L managing CMO. This different path to influence, impact, and power may well be through the process of helping convert their firms from “brand” centricity to “experience” centricity–or one focused on the totality of the customer’s engagement with the firms.

As Pete Krainik, the founder and CEO of The CMO Club, suggested: “P&L ownership is important because it can provide demonstrable proof of your impact. This research, in combination with the dozens of conversations I’ve had during our CMO Club dinners, indicates that CMOs are desperately struggling to get their arms around the totality of the customer experience. The CMOs who are successful at helping their firms figure out how to optimize the customer experience end up migrating from being service providers to being integrators, conductors, and leaders. Through this role, they are able to earn power and influence, which may ultimately be more valuable.”

While many companies (click here for examples in the financial services industry) are beginning to focus on understanding and designing a holistic “customer experience,” few companies, in general, are doing it well. Customer experience sounds like a wishy-washy term that some might critique as another example of marketers creating responsibility for nonquantifiable activities. However, at a conceptual level, it’s obviously important because it is centered on understanding, and ideally managing, how a customer engages with the brand across all touchpoints. The customer’s interactions with the brand enable them to arrive at a composite belief about their experience–that, if positive, should lead to enhanced financial performance.

While managing the “brand image” and “customer satisfaction” have long been important, these are outcome metrics that represent either individual experiences the customer has with the brand (in the case of customer satisfaction) or a holistic impression they have of the brand (in the case of brand image). The notion of customer experience management acknowledges that to achieve brand, satisfaction, loyalty, and financial outcomes, there must be a holistic understanding of–and influencing of–the customer-brand interaction. It’s simply an acceptance that the path to profitability must be seen through the eyes of the customer and their aggregate experiences. However, as the research conducted by The CMO Club and Neoprene indicates, figuring out and leading the develop of “the customer’s experience” isn’t simple.

The research indicated that while 90% of CMOs are personally responsible for the overall customer experience, they are facing significant headwinds that make this a formidable challenge. Based on the research, the No. 1 challenge CMOs face is the ability to actually impact the customer’s overall experience. The top obstacles CMOs cite that get in the way of creating a positive customer experience are:

  • Missing processes and accountability–51%
  • Organizational silos–42%
  • Incomplete, inaccurate, or missing data–42%
  • Change management / cultural issues–34%

Another issue implied in the research is the fact that the metrics used to measure customer experience are not closely connected to the activities that lead to them. Academics would suggest this lacks “causal adjacency.” For example, measuring an email by looking at its open rate, CTR, and the number who proceed to checkout and purchase shows strong causal adjacency. In contrast, the research indicated that some of the top measures marketers are using to manage customer experience are aggregate outcomes of a lot of activities.

  • Retention rates–42%
  • Customer surveys–42%
  • Revenue increase–40%
  • Stock price–35%

While these measures are interesting terminal barometers of overall firm performance, the challenge is that when you use measures that aren’t directly linked to specific activities, it’s possible that there are a myriad of different explanations for the outcome. For example, if a CMO uses stock price to measure how the firm is managing the customer’s experience, what happens when the stock price declines based on: 1) a popular CEO who Wall-Street likes indicates s/he is leaving, 2) general market contraction, 3) key suppliers announce a significant price increase, or 4) lawsuit filed by disgruntled employees, etc.? Said differently, if the stock price declines, how do you know it’s the customer experience that is causing the decline and, if so, what part of the customer experience is causing this decline? There is a big gap between a call-center program, a customer-service approach, a marketing engagement program, and the firm’s stock price.

The final insight generated from the research is the tools that CMOs consider to be most important in managing the customer experience. As Stephan Dietrich, president of Neolane, suggested: “With consumer expectations rising, there is a greater need to deliver a relevant, personalized experience. The data showed that real-time support of personalized, cross-channel interactions is critical for CMOs to ensure the optimal customer experience.” The research suggested that the most essential tools marketers need to deliver the best customer experience are:

  • Interaction management–39%
  • CRM solutions–37%
  • Loyalty management–35%
  • Predictive analytics–34%

Overall, the research suggests the important role CMOs have in leading an understanding and architecture for building superior customer experience. Despite the importance of this, the reality is that it isn’t easy.

My next post will include steps that CMOs can take to understand, design, lead, and build superior customer experience. If you have a story to share and want to be part of the article, please contact me @kimwhitler.

About Kimberly A. Whitler, Ph.D.

Kimberly Whitler (@kimwhitler) has spent nearly 20 years in senior marketing and general management position. A three-time CMO, she spent most of her career in brand management at Procter & Gamble, building brands including Tide, Zest, Era, Safeguard, Bounce, and Downy. More recently, she served as the CMO of David’s Bridal, the country’s leading bridal apparel retailer, the CMO of Beazer Homes, a Fortune 500 home-builder, and as an officer at PetSmart, the country’s largest pet specialty retailer.

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