Kyriacos Kokkinos IBM Executive Director Analytics Consulting
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1 Kyriacos Kokkinos IBM Executive Director Analytics Consulting
2 Contents CMO demographics The CMO s changing world The CMO s relationship with the C-suite Profiling the CMO What it takes for success in a digital world Use advanced analytics for deep customer insight Design rewarding customer experiences Effectively execute on the customer promise 2
3 This installment focuses on the responses of 524 CMOs in 56 countries North America 61 South America 69 Western Europe 180 Central and Eastern Europe 57 Japan Middle East and Africa 46 Asia Pacific Source: Question E Participant Country 3
4 Our CMO respondents represent a wide range of public and private sector organizations, covering more than 19 industries 31 % Financial Services Industrial 17 % Public 5 % 524 interviews Source: Question M In which industry does the participant s enterprise primarily operate? Communications 19 % 28 % Distribution Communications sector Energy and Utilities Media and Entertainment Telecommunications Distribution sector Consumer Products Life Sciences Professional and Computer Services Retail Transportation Travel Financial Services sector Banking and Financial Markets Insurance Industrial sector Aerospace and Defense Automotive Chemicals and Petroleum Electronics Industrial Products Public sector Education and Research Healthcare Government 4
5 CMOs from outperforming organizations were compared with those from underperforming organizations key differences are highlighted Three performance categories Particular attention on Outperformers Outperformers High revenue Underperformers growth and Low revenue profitability growth and profitability 18% 34% 2013 CMO 48% Peer Performers All other performance combinations In this study we focus on common performance factors, while highlighting the most significant differences between outperformers and underperformers Relative performance is defined by self-assessment of revenue growth and profitability compared to industry peers Source: Question E4 How does the revenue growth of your enterprise (or budget growth for public sector) compare to your industry peers over the past 3 years? Question E5 How does your enterprise s profitability (or efficiency for public sector) compare to your industry peers over the past 3 years? 5
6 Contents CMO demographics The CMO s changing world The CMO s relationship with the C-suite Profiling the CMO What it takes for success in a digital world Use advanced analytics for deep customer insight Design rewarding customer experiences Effectively execute on the customer promise 6
7 In 2011, we identified several CMO priorities for transforming the marketing function in response to the emerging digital economy Identify customer preferences and trends across every touch point Grow digital expertise, using partners to supplement in-house resources Stimulate customer conversations and new relationships using new digital channels CMO priorities Engage with customers throughout the customer lifecycle Increase technical and financial skills Use advanced analytics to improve decision making 7
8 In the past three years, CMOs have made surprisingly little progress towards implementing key digital marketing strategy components Activation of digital strategy components Customer collaboration using social networks Integrated customer touchpoints across physical and digital channels Networked workforce with skills aligned to business opportunities Advanced analytics to capture customer insight across all touchpoints Digitally enabled supply chain 20 % 28 % 52 % 16 % 38 % 13 % 13 % 29 % 37 % 46 % 51 % 59 % 11 % 30 % 59 % Large extent Somewhat Limited extent Source: Question CMO1 To what extent have you activated the following digital strategy components within your enterprise? 8
9 CMOs feel as underprepared for two of the biggest technology shifts as before; the rate of change seems faster than many can cope with Preparedness for the data explosion Preparedness for social media 71 % 82 % 68 % 66 % 29 % 18 % 32 % 34 % Prepared Underprepared Source: Question CMO4 How prepared are you to address the following market factors (data explosion and social media)? 9
10 That said, CMOs expect to accelerate the introduction of digital marketing technologies over the next three to five years Intended use of digital technologies (3 5 years) Advanced (predictive) analytics Mobile applications Customer relationship management Collaboration tools Content management Search engine optimization Reputation management marketing 63 % 47 % 46 % 66 % 94 % 68 % 87 % 73 % 81 % 62 % 80 % 80 % 94 % 81 % 89 % 79 % Source: Question CMO7 What is your plan around the usage of the following technologies over the next 3 to 5 years? 10
11 Contents CMO demographics The CMO s changing world The CMO s relationship with the C-suite Profiling the CMO What it takes for success in a digital world Use advanced analytics for deep customer insight Design rewarding customer experiences Effectively execute on the customer promise 11
12 CEOs are looking to the CMO as well as the CFO for strategic input at the enterprise level CxO involvement in business strategy development 72 % 63 % 42 % 37 % 35 % CFO CMO CIO CSCO CHRO Source: Question CEO2 Which senior executives are involved in formulating the organization s business strategy? 12
13 CMOs have a strong working relationship with the CEO, but need to strengthen ties with the CIO and CFO in order to move further ahead CMO Source: Question B6 Which C-suite peers do you work most closely with in support of the enterprise? 13
14 Where the CMO has a close working relationship with the CIO, the enterprise is more likely to perform better overall Close CMO-CIO relationship 76 % more 17 % Underperformer 30 % Outperformer Source: Question B6 Which C-suite peers do you work most closely with in support of the enterprise? 14
15 Contents CMO demographics The CMO s changing world The CMO s relationship with the C-suite Profiling the CMO What it takes for success in a digital world Use advanced analytics for deep customer insight Design rewarding customer experiences Effectively execute on the customer promise 15
16 Three distinct profiles emerged from our analysis, with one making significantly more progress in preparing for a digital marketing future Digital Pacesetters 30 % 37 % CMO profiles Traditionalists 33 % Social Strategists 16
17 Traditionalists are just setting out on their quest to build capabilities around social, mobile and digital marketing Challenged by the data explosion, growth in social media, and the plethora of new channels and devices Traditionalist profile 37 % Yet to integrate their physical and digital sales and service channels Seldom engage with customers via social networks Rarely use advanced analytics to extract insights from customer data. 17
18 Social Strategists put social at the front and center of their sales, marketing and customer service strategy Focusing on social media as their primary means of engaging customers Social Strategist profile 33 % Actively integrating their physical and digital sales and service channels Making some progress towards building the infrastructure required for mobile Rarely use advanced analytics to extract insights from customer data. 18
19 Digital Pacesetters are making good progress toward building end-toend connections between the customer and their organization Reasonably prepared for the data explosion 30 % Digital Pacesetter profile Well set for the growth in social and mobile channels, and the proliferation of devices Actively integrating their physical and digital sales and service channels Regularly use advanced analytics to extract insights from customer data. 19
20 Organizations with CMOs who are Digital Pacesetters are more likely to be financial outperformers* Distribution of outperformers 43 % 31 % 25 % Digital Pacesetters Social Strategists Traditionalists 0% 50% 100% * Performance is determined by self-assessment of the organization s revenue growth and profitability relative to industry peers Source: Question E4 How does the revenue growth of your enterprise (or budget growth for public sector) compare to your industry peers over the past 3 years? Question E5 How does your enterprise s profitability (or efficiency for public sector) compare to your industry peers over the past 3 years? 20
21 Contents CMO demographics The CMO s changing world The CMO s relationship with the C-suite Profiling the CMO What it takes for success in a digital world Use advanced analytics for deep customer insight Design rewarding customer experiences Effectively execute on the customer promise 21
22 CMOs identified three key factors for tackling their priorities, each of which relies on the effective use of emerging digital technologies Use advanced analytics for deep customer insight Design rewarding customer experiences Effectively execute on the customer promise Source: Question CMO5 What is the single most important factor to be successful with regard to emerging digital technologies? 22
23 Digital Pacesetters invest significantly more in analytics than Social Strategists or Traditionalists across the entire customer lifecycle Source: Question CMO2 To what extent have you invested to capture, analyze and act on data generated during the following customer lifecycle phases? 23
24 Having created a platform to extract insight from information, CMOs focus on the customer journey (and how to deliver value at each step) Use advanced analytics for deep customer insight Design rewarding customer experiences Effectively execute on the customer promise Source: Question CMO5 What is the single most important factor to be successful with regard to emerging digital technologies? 24
25 Digital Pacesetters expect to interact with customers via digital channels to a greater extent than other CMOs in the future Landscape change (3 5 years) Digital Pacesetters 82 % 10 % 8 % Social Strategists 76 % 11 % 13 % Traditionalists 64 % 13 % 23 % More digital interaction No change More face-to-face interaction Source: Question E9 How do you see the landscape changing over the next 3 to 5 years? 25
26 Looking ahead, Pacesetters are more focused on the latter stages of the customer lifecycle: strengthening existing customer relationships Traditionalists are particularly concerned with creating initial awareness and educating their customers Social Strategists are very focused on click-throughs and order-taking Digital Pacesetters are all about turning customers into advocates and enhancing the overall experience Source: Question CMO3 Which customer lifecycle phases will make the most difference in 3 to 5 years? 26
27 The final criterion for success involves turning strategy into action by leveraging new technologies to deliver great customer experiences Use advanced analytics for deep customer insight Design rewarding customer experiences Effectively execute on the customer promise Source: Question CMO5 What is the single most important factor to be successful with regard to emerging digital technologies? 27
28 While their top priorities for managing change are the same, CMOs seem to have given up trying to tame the beast that is social media Design customer experiences for tablet/mobile apps Position social media as a key customer engagement channel Deploy an integrated software suite to manage prospects and customers Measure the ROI of digital technologies Conduct online/offline transaction analysis Monitor the brand via social media Develop social interaction governance, guidelines, policies, etc. Gain comprehensive visibility of supply chain Monetize social media Source: Question CMO6 What are your priorities for managing the shift toward emerging digital technologies? 28
29 Digital Pacesetters and Social Strategists are miles ahead of Traditionalists in developing an integrated physical-digital strategy Fully integrated physical-digital strategy 50 % 48 % 16 % Digital Pacesetters Social Strategists Traditionalists Source: Question B4 What kind of digital strategy does your enterprise have? 29
30 Thank you!! We invite you to continue the conversation Connect with us For more information about this study and to get the full version of this report, see Access interactive content and listen to CxOs in their own words by downloading the IBM IBV app for Android or ipad 30
IBM Institute for Business Value
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