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Today, CEOs face numerous challenges to accelerating growth, creating and differentiating on customer value, and addressing business performance. It is just as important for Marketing to be on the CEO’s radar screen as compliance, inventory management, and engineering, especially given the continued investments many companies are making in business intelligence and customer relationship management. Why? Because we exist in a market where brands can emerge and topple almost overnight. Increased competition, successfully bringing new products-to-market, and a renewed focus on customer engagement are among a few of the challenges that the Marketing organization should be responsible for addressing to support corporate success. Therefore one of the most important areas for CEOs and CMOs to address is alignment.

Create Alignment Between Marketing and the Business

Driving profitable revenue growth, conducting market and customer research, gathering competitive intelligence, defining new products and services, and identifying new market opportunities are the domain of Marketing and primarily the responsibility of the CMO. Study after study, including our own Marketing Performance Management (MPM) research, suggests that many Marketing functions are not in sync with companies’ overall strategy.

The lack of alignment between Marketing and the business has significant impact. Lack of alignment produces a gap between actual revenue growth and investors’ expectations. If the gap persists, the result can be lower margins, loss of market share, slowing growth, and defecting customers. Therefore its no surprise that many CEOs decide to take an active leadership role when it comes to Marketing.

Often however, a CEO may not have the Marketing expertise to guide the function.  And certainly most CEOs have other demands on their time.  However, a  CEO who understands the role and value of Marketing, especially the strategic role,will make a difference. The degree of understanding will determine how the Marketing organization is measured and whether Marketing will be expected to deliver beyond short-term incremental improvements or be relegated to sales or campaign ROI.

CMOs who want to serve as strategic partners need to insure that the Marketing function within the organization has the skills and resources necessary to address the challenges and opportunities of the market in order to produce the desired business results. Most every CEO we’ve worked with would like Marketing to do a better job of aligning the Marketing organization with the business’ agenda, demonstrating how Marketing efforts impact the business and accounting for the money it invests on behalf of the firm.

CMOs and CEOs must be partners in creating alignment between Marketing and the business.

CEOs and CMOs Must be Partners

The type of partnership between the CEO and CMO has implications on the degree of alignment.  From our perspective, while CEOs should delegate strategic implementation and tactical decisions related to customer acquisition, engagement, retention and growth to the CMO, it is the CEO’s job to make sure the Marketing organization’s strategy and plan support the company’s greater strategic goals. With guidance from the CEO, Marketing can closely focus its activities on initiatives that generate profitable long-term customer relationships.

Marketing that isn’t aligned with the business is a recipe for a myriad of business ailments. Marketing needs to be connected to the rest of the business if it is going to take a lead in helping the organization achieve its strategic initiatives. Only by aligning Marketing with the strategies of both the corporate and business unit levels and fostering collaboration between Marketing and the rest of the organization can a business develop a set of metrics that will measure Marketing’s impact. The Marketing plan serves as a perfect vehicle for jump starting the alignment process.

Alignment Impacts How Accountability is Determined

Since 1999 we have written and spoken about the link between alignment and accountability.  Getting Marketing accountability right depends on aligning Marketing to the business – to the business not to the Sales organization.  The SpencerStuart findings from the CMO Shuffle claims one of the primary reasons for the shuffle is, “Poor alignment between the CEO and CMO on the mission (and the timeline) of the marketing organization’s output.” Without aligment, it is difficult for CMOs to select the right metrics. As noted in the Gartner study, “many CMOs still gravitate toward metrics that have little meaning outside the marketing organization.”

CMOs focused on accountability need to get alignment right first.

What does have meaning to the C-Suite? In our work with hundreds of companies, many CEOs tell us they want Marketing to focus on top line growth, enable the organization to respond quickly to market dynamics and changing customer requirements, and stimulate innovation. What they say they see, however, is a Marketing organization more focused on image and identity, tactical execution in terms of Marketing activities supporting events, lead development, etc. We hear CEOs tell us regularly that, rather than focusing tactical issues and reporting on response rates, leads generated, event traffic, and other activities, they would like to understand how Marketing is driving growth and selecting metrics that demonstrate how Marketing is contributing to both the top and bottom lines.

This problem is created when Marketing takes a bottom-up approach to Marketing accountability and metrics.  There are so many things that can be measured, but only a few really matter to your business. It’s easy to think that just because something has a number attached to it, it is a metric. Having metrics is one thing; having the right set is another. Marketing can collect all sorts of Marketing-performance metrics, from customer satisfaction to retention, and from brand awareness to pipeline contribution. To succeed the Marketing organization needs to be aligned with  the business outcomes and have the tools, systems, and skills to do the job.

You May Need to Uplevel Marketing

Being able to keep pace with the rapidly changing market and to capitalize on new growth opportunities requires a new set of Marketing skills, particularly in the area of analytics. When we ask CEOs whether there is a clear contract with the CMO or VP of Marketing regarding expectations and resources committed to improving Marketing’s measurement capabilities and market and customer insights, they often admit this may not be at the top of the agenda. For Marketing to be successful and serve a a strategic partner, the definition of Marketing success must be clear to the Marketing team.

We recommend the CEO and CMO collaborate on the Marketing metrics that truly provide insight into how marketing is supporting the business’ goals. Prior to any plan being created and implemented, the CEO and Marketing team should agree on the performance indicators that will be used to correlate Marketing’s impact on business outcomes. It’s important to decide at the start which metrics and key performance indicators will have the most impact and then to track progress to these. For the metrics to be right, they need to tie back to the business goals and Marketing’s fundamental mission – value creation.

Think of these performance indicators are essentially a contract between Marketing and the executive team. As such they should be based on strategies designed to create a positive experience between your targets/customers and your company/offer that will facilitate customers sticking with your company even in times of competitive pressure or adversity and developing a preference to buy and use your products/services. The performance indicators demonstrate how well Marketing understands the needs of different customer segments, which channels to deploy to customers make buying decisions and help create preference for your company and its products and services. And it may not just be a question of measuring, additional marketing capabilities may be required.

Almost 75 percent of the chief marketers polled at a CMO summit organized by the Marketing Science Institute and McKinsey agreed that the skills they needed were becoming so specialized that their organizations would have to operate quite differently in the future. The dynamic business environment calls for new Marketing capabilities, both in the Marketing organization and within the company.

Answer 10 questions to sharpen Marketing’s alignment to the business.

Use These Questions to Hone in on Marketing and Business Alignment

These 10 questions will start you down the path to ensuring your Marketing organization’s alignment with the business, that it is measuring the right things and that the organization has the right skill sets.

 

  1. How are our customers’ needs evolving and what resources are our customers using to make buying decisions?
  2. Which customer segments offer us the best opportunities and what marketing strategies do you recommend we deploy to take advantage of these opportunities?
  3. Where can we gain a competitive advantage?
  4. What business outcomes will marketing directly impact?
  5. What marketing factors can make the greatest material contribution to our deal and revenue targets?
  6. What metrics and key performance indicators will you present to show this impact?
  7. How do you plan to foster collaboration between your marketing team, the sales organization, product organization, and business units?
  8. What information will you need access to measure your impact?
  9. What systems, tools, processes, analytical and data management skills will you need to add to improve your measurement capabilities?
  10. What investments does the company need to make to improve marketing’s ability to measure its contribution?

Satisfactory answers to these types of questions should help insure there is alignment between the Marketing leadership and the business.   The answers will help establish what metrics best measure Marketing’s impact as well as enable everyone on the leadership team to make better business decisions.  Tap our passion and expertise to help you accelerate your efforts and insure faster results.

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