Lengthening the CMO’s Lifecycle

Advertising Age has an article that every CMO should read: “Are Your Customers Holding You Back?” (http://adage.com/cmostrategy/article?article_id=148145).  The three authors—Rajesh Chandy, D. Eric Boyd and Marcus Cunha—conducted a study on the impact CMOs have on the financial value of the firms where they work.

They really got it right on three important points:

  1. CMOs can have a tough time justifying their existence, which leads to ever shortening tenures with a firm (anywhere from 18 months according to CMO.com to 34.7 months from Brandweek).
  2. CMOs report to multiple constituencies inside and outside the company: investors, executives, customers, etc. You can’t please everyone all of the time—and often you can only make one group happy at the expense of another.
  3. CMOs have the least direct influence on shareholder value of nearly any corporate department. It’s easy to quantify the effects of trimming expenses, but much harder to show the benefit of longer term branding actions.

I also agree with the authors that large customers and stakeholders can lead the agenda for both B2B and B2C companies.  If you’re a supplier to Ford or GM, they’ll tell you what kind of product to offer and at what price.  We all know the power Wal-Mart and Costco wield with brand marketers. 

What’s Missing…

A clear definiton of the marketers’ customer.  In my opinion, this is Mrs. Smith who shops for her family and has been buying your product consistently for a while.

This is the person a large number of CMOs routinely forget.  They are so focused on acquiring new consumers that they don’t pay enough attention to the customers they already have

Check out the metrics traditionally used to assess CMO performance.  New acquisitions.  Traffic.  Customer counts.  Number of prospects converted into customers.  Of course these are important to monitor.  But why do CMOs so often forget that it’s almost 17-times more efficient to retain existing customers than it is to acquire new ones?  That it takes $10 of new business to replace $1 of lost business.  That the average spend of a repeat customer is 67% higher than a new one.

So if you’re a CMO, having a customer-centric view of marketing is the best way to positively affect a company’s current and future performance—and lengthen your stay there.


Categories: about me, Analytics, brand strategy, consumer behavior, crm, database, loyalty, marketing, measurable, retail, segmentation

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6 replies

  1. So, the word a wise incoming CMO would be to make sure all stakeholders understand that you are taking a customer centric view of the customer. In the wireless arena, and I am sure this applies to other areas as well, the Board of Director lays out the plan that says that they want to see a growth story and a profitability story – every quarter! The challenges are at conflict as it takes an upfront investment to get a new customer that will not pay off in the near term. All the more reason to invest in keeping your existing customers to support your acquisition activities and not the other way around. It is a tough world for CMOs, but one that can be navigated by setting the right short-term and long term-expectation.

    • Bill,

      Yes, it is an interesting challenge. A focus on existing customers does tend to drive more profitable growth. Most companies that begin there seem to show sustainable success.


  2. Zain-

    Agreed! You’ve always been a big proponent of the importance of a retention-focused strategy. CMOs shouldn’t overlook their current customers in favor of getting more bodies in the door.

    It seems like this is a perfect way to utilize the hottest channel of the moment – social media. Brands should be using social media outlets like Twitter and Facebook to further relationships with existing customers. Having the opportunity to interact directly with Mrs. Smith could do a lot for her brand loyalty!

    As always, I enjoy reading your posts.

    • Amy,

      Thanks. It is good to get your thoughts. Retention and loyalty are becoming the key drivers to profitability. If CMO’s embrace these principles, they will drive economic value to their businesses.


  3. No matter what company I worked for, the prevailing wisdom was “we need more customers”…when the real wisdom was we need to sell more to our existing customers.

    In reality, both are great components of a great marketing structure…IF the new ones really assimilate and are not one cart wonders.

    • Agree. If we choicefully attempt to acquire new ones that fit the profile of our best customers, they will assimilate and create profitable growth. That is the key. Understand your best customers and try and find more like them.

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