A New Operating Model for Marketing to the Connected Customer
The disruption unleashed by the digital and customer experience revolutions is here to stay. The future success of marketing rests upon its ability to continuously anticipate and deliver against the fast-changing expectations of the connected customer. Marketing to this connected customer requires nothing less than a new operating model, supported by advanced capabilities in data, analytics, automation, metrics, organizational structure, and culture.
Serving the Connected Customer
In my conversations with KMPG clients, CMOs acknowledge that operational silos are often the greatest obstacle they face in serving the connected customer. For most marketing leaders, the journey will require dissolving operational silos by creating a connected front office, bringing together of the historically separate functions of marketing, sales, and service to achieve a seamless approach to customer engagement. The need for a connected front office is intuitive as all three functions deal with the same customers and create customer experiences. More importantly, internal organizational boundaries are transparent and irrelevant to the connected customer.
Being a productive member of the connected front office, will require many CMOs and marketing leaders begin by eliminating the silos within their own organizations. Connected customer-centric marketing requires leadership to reconsider organizational structures and functional definitions that no longer apply or that hinder strategic growth opportunities. In its research "Reshaping Global Engagement Operations," the CMO Council reported that 77% of CMOs do not believe they are reaching the full revenue potential of the connected customer largely as a result of limited operational structures rather than incorrect strategies.
To implement this, many marketing organizations may move towards smaller, more empowered teams in order to deliver with agility, relevance, and in compliance with local regulations and culture norms of data use. Teams may move to a combination of internal and external resources whose formal demarcation will become blurred. These groups will likely have responsibility across channels to ensure consistency and relevancy of customer experience. Legacy organizational structures such as dedicated and wholly separate e-commerce teams are likely to be retired.
From a talent recruitment perspective, marketing may have to consider the creation of entirely new roles, such as chief customer data officer, customer data and analytics ethics director and director of eco-systems, and marketing technology chief.
Additional skill development will be needed for incumbent roles, including data, analytics and technology literacy. In particular, marketers will need to greatly enhance their processes and acumen in financial analysis.
Effectively restructuring in support of agility requires marketers to have strong financial management and measurement skills. Marketers will need formalized processes and best practices in marketing spend. This will include enterprise-wide standards in planning, budgeting, sourcing, auditing, management, and measurement of spend and its associated ROI.
To achieve the required level of financial insight and control, CMOs must change their perspectives on financial acumen as a key marketing skill. The August 2018 "CMO Survey" from Duke University reported 50% of CMOs rank-ordered financial acumen as the least important marketing skill. Advanced financial acumen will be critical to avoid poor investment decisions and to effectively prove marketing ROI and its impact on company financial performance.
Few CMOs will have either the organizational resources or know-how to do it alone. They’ll need an external ecosystem of technology and creative enablers, whose management will be an important organizational asset. The best marketers will excel as the master orchestrators on behalf of the front office, ensuring the internal and external parties required are in place and operating effectively. Effective orchestration requires marketing assess the cultural and operating model fit of potential partners. Marketing will need to ensure the processes and tools to organize and manage the ecosystem, define the strategy, and measure the impact are in place.
Sorting Out Metrics
A new operating model will require that marketing calibrate the right mix of indicators that will tie short-term metrics — for sales volume or revenue — to long-term value creation, as measured in market share, share of wallet, and brand strength. Some traditional metrics — based on purely-internal or function-specific priorities — will need to be retired. New marketing measures and measurement processes will emerge that embed customer-centric priorities, such as developing and maintaining customer trust, effective partnership management, and innovation agility.
Creating new metrics is not a matter of discarding well-regarded frameworks such as Balanced Scorecard, but a matter of updating them.
Dealing With Data
Marketers must simultaneously address data and technology requirements. Data is the fuel of the new marketing organization. The ability to follow the customer across channels and craft personalized experiences in real time rests on accurate, consistent, and current data. As the foundational level, businesses must succeed at creating a single view of the customer, aggregating and integrating not only their transactional data, but, also, multiple third-party external data streams.
As they proceed, marketers will have to address the ethical dimensions of data ownership. Increasingly, data ownership is rapidly moving to the customer. Organizations that put a premium on customer trust will have transparent policies about the collection, maintenance, use, and responsible sharing of customer data that transcend brands, products, geographies, and channels.
Following the customer and creating personalized experiences across channels will require a new, refined, flexible, and integrated technical infrastructure. To keep pace with technology changes and optimize martech spend, marketers will need to develop new methods for validating, measuring, and managing the efficacy of new tools.
If building digitally integrated connected operating models were easy, CMOs would have long since completed the exercise. Instead, it’s a balancing act — managing risk and opportunity in a fluid environment. We believe, as the connected customer continues to evolve, the future will belong to marketers who boldly and quickly adapt their organizations.
Jason Galloway is a Managing Director in the KPMG’s Customer Solutions Advisory Practice and serves as the Marketing Transformation and Technology offering lead. He has over 15 years of global experience across a wide variety of industries helping marketing leaders build capabilities critical to thriving in highly disruptive environments.