Earlier this autumn, Forrester Research announced its predictions for 2016, a year which the company’s CMO, Victor Milligan, says the company feels will be “extremely important” and one of “extreme leadership change.”
Milligan has been with the Massachusetts-based research and advisory firm for a year, having previously worked as CMO of mobile advertising specialists Nexage and analytics firm Lavastorm. CMO.com spoke to him just before Forrester’s predictions were launched, so the first thing we discussed was what he called “the top 10 strategic levers that will determine who wins and who fails” in 2016.
Milligan: Firstly, personalisation is the new bar. Customers expect personalised services, not just good services. They expect firms to contextually understand who they are, to respond to their needs and in many cases to anticipate them. CMOs need to combine the power of analytics to deliver personalised experiences across customer journeys.
Number two is that, although CX is now a common priority for companies, many are still thinking small--that will impact financial results. People at the early stages of journey mapping and looking at different voice-of-the-customer results but not really looking hard at how to make the deep-rooted change within their operations to deliver those experiences will begin to struggle in the marketplace.
Third, digitally savvy executives are more likely to lead tomorrow’s businesses than the folks who built the firms. We see 2016 being a year of extraordinary leadership change, because operating a business in a digitally agile manner is very different than in a bricks and mortar structure.
The fourth is that culture is a critical path to business success. Culture is typically perceived as touchy-feely stuff, but the truth is it’s the way people in the company act and make decisions. It’s their behavioural norms and the extent to which they can easily align into new norms. When culture change happens at the beginning of the transformation process, companies can make those other changes more quickly and have them deliver significant value for a longer period of time.
Culture is hard. It deals with people, and it’s messy. Some firms will defer or avoid cultural changes and hope their prior culture is sufficient to move them to the next way of doing business. We think those firms that take on culture shifts now will be highly advantaged going forward.
Fifth, traditional companies will stand up to disruptors. Disruption itself is no longer disruptive; it’s a normal part of the way markets work. Traditional companies need to operate with that in mind and at the speeds that implies. They have significant strengths in brand, scale and data, and the leaders will be able to leverage those strengths while operating in a truly agile fashion.
Sixth is loyalty programs. Increasingly, especially among millennials, consumers want to participate in businesses, whether that means earned media, joint hackathons, data product development work or product design itself, and they will reward those firms that let them. That dynamic will have a significant effect on how loyalty programs are formed and how well they perform. I will add that the shift to a customer-obsessed operating model necessarily requires companies’ customers to participate in those operations.
Seventh, analytics is becoming a key competitive weapon. It’s not about making big data bigger but making it more useful and able to anticipate and deliver superior experiences to customers. Those that can master that will show competitive advantage.
Digital is becoming the DNA of the company, and those that treat it that way will do well in a world where the customer is increasingly engaging with you digitally. Those that are dabbling inside their labs and testing ideas surrounding the core business will master digital to drive growth and market share. The laggards will face the risk of extinction because they’re not engaging the marketplace in ways customers will reward.
The next one is privacy. Privacy used to be a niche issue and mostly a question about legal and risk. But well-publicised security breaches, identity theft schemes and socially devastating privacy incidents have changed that. Customers will now reward those companies that defend and protect their privacy, and they’ll punish those that can’t. Therefore, privacy is beginning to show up on the CMO’s table as a point of competitive differentiation.
The tenth one aggregates all these things. It says that to do all this--personalised services, privacy, analytics--means changing the fundamental way you operate.
Leading businesses are doing that in four ways. They’re moving from being customer-aware to truly understanding and predicting a customer’s wants and needs. They’re going from wrangling big data to using analytics to enable personalised services across human and digital touch points. They’re changing from seeking perfection to imperfectly moving at the speed of dynamic customers and disruptors. You can’t work with a level of perfection and control at those speeds. What startups do really well is they ignore the control and perfection thing and go to the speed thing, and consumers are used to that now. They’re used to little mistakes being made and adjusting accordingly.
Then the last one is they’re optimising within functions, truly working cross-functionally, meaning the whole enterprise is now organising and agilely responding to changing customer needs.
CMO.com: How much does Forrester incorporate these ideas into its own business?
Milligan: We’re trying to be role models, taking onboard those things we think matter most. Our priorities are very much like other marketing organisations. We launched a CX program in March because--if we believe that the customers’ experience is a primary determinant of how they behave, what kind of affinity they’ll have towards your firm and how they’ll spend--than we need to ensure we are delivering experiences that are personalised, high-value, and consistent.
It’s a Forrester-wide effort consisting of everyone involved directly or indirectly in delivering experiences to our clients across all our different products. We’ve done the basics and we’re now making the operational changes to ensure we make improvements where we need to, that we can sustain those improvements, and that this becomes part of the way we do business.
CMO.com: Business have always said they put the customer at the centre. What does it mean now that it didn’t 15 years ago?
Milligan: There’s broad recognition that empowered customers are changing the fundamentals of the market. If I just improve my messaging and my talking points, if I put more customer faces in my brochures, whatever, I’m missing the point because customers are not measuring you on that. They’re measuring you on two things. One is the distance between your brand promise and the experiences I actually have; if there’s any distance there, I’m going to punish you. The other is the distance between what I think is a good experience--meaning it’s personalised, high-value and predictable, and in some cases anticipates my needs--and what the actual experiences are.
For any firm wrestling with these issues, it’s about significant operational change. It’s about changing who leads the business, because many of the leaders in today’s businesses led how the company got there, but now customers primarily measure you on your digital experience. A new cadre of digital-savvy leaders--in which the CMO has a more prominent role in the design and future of the company--is a very different leadership structure than that which existed in the past.
You’re certainly going to make changes to how fast you move in the marketplace, so you’ll start blowing up annual budgetary processes and planning processes and moving much more towards agile, almost like a working capital approach; “I’ll further fund it as it starts to shed light and make progress; I’ll start defunding it if it doesn’t”.
In the next three years there is going to be a significant adjustment to how companies are structured, how they work, what they prioritise and who leads them that is as dramatic as happened in the movement towards digital.
CMO.com: What is the role of the CMO in all this?
Milligan: The executive team needs to rally around the idea of winning based on the value of their customers’ experiences. The CMO is central to this for at least two reasons: The CMO takes a lead position in customer engagement throughout the customer life cycle, and the value of the experiences is often perceived relative to the brand promise. We see may CMOs leading their firm’s CX effort, working in concert with the CIO, head of sales, and business unit heads to enable a cohesive program to measure and continuously improve CX.
A notable item in running CX is very often driving a shift in operations. Therefore, the CMO is playing a central role in designing the new operating model that is based on placing the customer at the centre of the universe. This is a new and bold role for the CMO; a role that is essential to enable the company to compete and win in a customer-led market.
CMO.com: We now know it’s not math men or mad men; it’s both. Are we seeing a cadre of CMOs that are starting to embody that?
Milligan: Yes. For example, customer-centricity is an analytic exercise. If I’m going to deliver personalised experiences to you, and your data rests in multiple systems, then I need to do two things. Every time you touch our firm--whether it’s human or digital interaction--accurate, contextually useful information about you is available to either the system or the person or/and I can anticipate your needs and actually come to you proactively. That is an analytic exercise underpinning an experience. CMOs have to understand those relationships to be credible in the role they’re being asked to play.
CMO.com: The best example I’ve seen of that level of joined-up thinking was Metro Bank in the UK. They operate off a single platform, and every touchpoint refers to the same set of customer data, but they could only manage that because they were a brand new business. What does this look like for an established business?
Milligan: Traditional firms aren’t going to market in a disadvantaged manner. They’re disadvantaged relative to speed, agility and innovation, but they are extremely advantaged in brand and market footprint, and they have more data than disruptors could ever hope to have.
It’s what they do with those assets. It’s how they animate their scale, their customer data, their brand equity, and place it in an agile set of business processes. Leaders are increasingly able to do that to compete against disruptors.
It won’t make the disruptors go away. You’ll see an increasing pace of disruption coming in with new ideas unanchored from old ones. It’s just that traditional players now know they can’t operate at “slower-than” speeds and still effectively compete.
At Forrester we think 2016 is an extremely consequential year because most people have intellectually bought into this “age of the customer”. The real question in 2016 is whether you’re going to put in the operational changes in a serious manner, because you have to come out the other side with a different company. If you’re going to fake it, the risk you’re taking on is fairly significant.
See what the Twitterverse is saying about CMO Interviews: