CMO.com

Those who hold the Chief Marketing Officer, or CMO, title also carry a dubious distinction: They occupy the C-level executive post with the shortest tenure. In May, former eBay CMO Mike Linton lamented that the average span of a CMO appointment is a little more than 28 months.  And that may be a generous estimate.  (See earlier story, “Why Do Chief Marketing Officers Have A Short Shelf Life?”)

To a great extent, the position’s limited life span results from the fact that what was once primarily a circumscribed branding function has ballooned into a diversified strategic and operational role. In addition to traditional market planning and communications, today’s CMOs are often responsible for sales management, product development, channel management, public relations, market research, and customer service -- a broad assortment of specialties, some of which used to report into other areas of the organization. 

The shift is rooted, in part, in the growing trend to lead companies by core values and purposes instead of traditional business metrics.  The ways those values are communicated and reinforced often falls to marketing.  As a result, CMOs increasingly have become strategic advisers to their CEOs, who are struggling to simultaneously balance the familiar and unfamiliar challenges of internal distribution of power, all the while sustaining a strong customer focus, building a learning organization, gazing into the future, and maintaining an orientation toward community service.  So how should a CMO navigate these changes to increase his or her success and longevity? Following are five strategies.

1. Know the Numbers

Maintain a detailed knowledge of the company’s financials -- not just the financial statements, but product and sales margins, pipelines, forecasts, distribution costs, channel margins, and the root causes for why sales and resellers either do or do not make their revenues and margin targets.

Understanding the financials will give the CMO better insight into how marketing can positively impact overall performance, which industry benchmarks really matter,  and where changes need to occur to drive profitable growth.  Of course, knowing the numbers inside and out also will enhance credibility during management committee and board meetings.  They will be more likely to consider recommendations seriously if the CMO speaks their language.

2. Be Strategic

Understand the totality of the business, the marketplace, and the interactions between them -- both actual and potential.  During the past decade, strategy has gravitated from being predominately financial- and operations-focused and into market-shaping.   Marketing is on the front line of these interactions, and it is ideally positioned to detect shifts in competitive landscapes, the ecosystem, and the interests of various constituents, including customers, government regulators, the media, and Wall Street.  That also fits directly into marketing’s charter of shaping the company’s long-term brand within those same groups. 

Beyond shaping the brand, product mix, and go-to-market strategies, the CMO should leverage marketing’s ability to look ahead at evolving market trends -- not just to “know the numbers,”  but to do forward-trend analyses, signpost monitoring, and strategy development.  By building the marketing team’s competencies in financial, analytical, research, and modeling, marketing can bring to the board a solid analysis of emerging 24-month trends, along with the threats and opportunities they pose for the company.  Come to the table with fleshed-out, companywide strategies that are capable of successful implemention and addressing those trends.  If sales is the first to discover a new trend that impacts their pipeline, then marketing is simply not doing its job.

3. Forget ROI

 

The corporate mantra for years has been to improve marketing’s ROI.  But it’s misleading.  The problem with ROI is that it forces a myopic view on short-term objectives while disregarding the fact that it is very rare for any single marketing activity to be directly responsible for new net revenue.  The focus on ROI fuels a never-ending debate about spending levels for brand-building activities while disregarding the fact that customers typically buy only after being repeatedly touched by a series of separate and discrete marketing activities.  The current debate about the ROI of social media is an excellent example of why this is the wrong metric.

Instead, replace ROI with benchmarks.  Benchmark marketing’s performance against itself quarter over quarter and year over year.  Benchmark against comparable competitors.   Benchmark the number of leads passed to sales that closed, the average revenue per lead, the percentage of the forecast generated by marketing, the percentage of customers actively engaged in advocacy programs, or the number of lead referrals from industry analysts.  And so on.  This entails two requirements: a single information system trusted by both marketing and sales, and robust marketing operations.  Ideally, sales and marketing operations should be one team.  Then the CMO should evangelize those benchmarks with his or her peers by showing them how to track what really matter to them.

4. Compensate for Revenue

 

A person’s pay should reflect the revenue generated.  Traditional models for compensating people in marketing do not directly link the various roles of marketing with the company’s revenue and margin objectives.  Marketers are paid fixed salaries, perhaps with bonuses tied to company and individual performance.  These performance bonuses typically focus on long-term process improvements or making progress toward future goals.

 

However, all levels of marketing need to recognize that part of the job is to directly produce revenue. Consequently, where marketers are responsible for successful lead-generation and “deal-closing” activities, their pay structure should reflect this sales-based focus.  Performance plans should include sales-based performance criteria that can be tailored to individual contributors with specific metrics.  Among the marketing positions directly involved in the sales process are product marketing, field marketing, demand generation, sales training, sales enablement, and customer advocacy.

However, not every position in marketing can or should be tightly linked to revenue goals.  That’s because marketing’s charter encompasses both immediate and long-term strategic initiatives.  Only those positions core to revenue generation should be compensated according to the sales model. 

5. Experiment or Die

 

The hallmark of marketing is innovation -- new products, new markets, and new ways to establish customer relationships.  Marketing, perhaps more than any other function in the company, is the fuel behind innovation.  Lead by example and experiment.   If marketing doesn’t continually experiment, then it risks putting the company in a defensive posture. And that will result in lost mindshare and competitiveness.  In today’s cost-containment, invest-only-if-it’s-proven world, deciding exactly where to experiment needs to be a thoughtful act.  Even so, it’s a good idea to reserve 20 percent of the CMO’s discretionary budget for experimentation; even if budgets get cut, it’s still 20 percent of whatever is left. 

Use the money on two fronts: to build stronger customer relationships through new channels, and to turn emerging customer needs into new products.  Experiment on a small scale.  Sketch out the idea, and keep the implementation flexible.  If it works, expand the scale.  If it looks like the idea won’t work, kill it quickly and move on to the next.Change is good, but don’t put all of marketing on the edge of chaos just for the sake of continuous change. That can be just as dangerous as striving at all cost to maintain equilibrium.

---

Christine Crandell is executive vice president and chief marketing officer for Egenera, Inc., a provider of data center infrastructure technology. In this role, she is responsible for the company’s business development, alliances, and global market strategy. Ms. Crandell brings more than 20 years of experience in strategic marketing for enterprise technology companies, including Ariba, SAP, Oracle, and PriceWaterhouse. She is based in California and is a frequent speaker and writer on marketing, strategy and technology. She can be reached at Christine.crandell@earthlink.net and www.christinecrandell.com.