A study by Kimberly Whitler, Ryan Krause, and Donald Lehmann explored the role and impact of marketing experience on the board contributes to overall firm performance. They hypothesized that marketing experience for board members would be valuable given that boards are increasing their focus on top-line growth performance, the ability to understand customer preferences, and acumen in generating market insights. The results. Marketing-experienced board members positively impact total shareholder return in general. A board with one marketing-experienced director is associated with a 3-percentage point increase in total shareholder return over a board with no marketing-experienced directors.
And the affect is even stronger when the firm is facing declining market share. When firm market share is declining by 1.5 percentage points, the presence of a marketing-experienced director is associated with an increase of more than 6 percentage points in total shareholder return. Overall, the study suggests that boards of directors could generate better performance with the inclusion of marketers.
Yet, marketing’s presence at the top of firms is nominal. Only 2.6% of board members have marketing experience. And Chief Marketing Officers (CMOs) only report to boards 6% of the time. It would appear that directors’ don’t see a connection between marketing experience and the ability to address firm-level marketing challenges. Even so, boards of directors are coming under increasing pressure to increase their understanding end users/consumers and customer experience. As CMOs assume a larger role as the “voice of the customer” more boards may begin to tap CMOs for this guidance. In fact, Jo Ann Herold declared managing the relationship with the board of directors as one the top seven habits of highly effective CMOs.
Earn Your Place in the Boardroom Presentation Line-Up
This seems rather obvious, yet Mike Hughes, director general of the Incorporated Society of British Advertisers, in an The Guardian article, believes “many marketers fail to appreciate the importance of learning the language of the boardroom and even more fail to take the time to expand their knowledge of other functions in the business.”
Organizations with customer-centric boards need the CMOs view to support short- and long-term decision-making. CMOs can contribute to the broader strategic challenges involving the company’s competition, innovation, and core customers. How does a board savvy CMO make an impact with the board? Rick Lenny, a director on several boards, who served as CEO and Chairman of The Hershey Company reminds CMOs to keep their audience in mind. Every presentation to the board should be built from the board’s perspective. He is looking for the CMO to demonstrate that they “understand what drives superior marketplace and financial performance.” He expects CMOs to frame their presentations in terms of understanding the value drivers across the business. Mary Dillon, CEO of Ulta Beauty, believes CMOs who can answer these questions demonstrate their leadership to the C-Suite and the board “Whom are we trying to serve and how can we do that better than anyone else?” and “How do we need to line up to deliver that across everything we do?” Clearly, successful CMOs wear an enterprise-wide hat and bring a cross-functional perspective.
Looking to receive high marks for your board relationships and presentations? Here are some quick tips from the National Association of Corporate Directors:
- Contribute to the creation of the corporate strategy
- Own the growth agenda
- Represent the voice of the customer
- Own and build the marketing skills and technology needed to demonstrate value, contribution and impact to the business you serve
When facing the opportunity to present to your board, we recommend you be able to answer and report on the following:
- Your marketing plan and implementation effectiveness
- Your key initiatives, your metrics for measuring success and your yield for programs/projects.
- Your financial performance and what percentage of projects meet or exceed financial goals
- What data, analytics, and models you are employing to gain the deepest and richest customer insights
- What metrics are in place for measuring and tracking customer loyalty
- How the company’s metrics compare to those used by the competition
- What the company needs to do to get or stay ahead of the competition
- How you are tracking brand health
- What the company needs to do to get ahead of customer trends
- What you are doing to address marketing talent and skills
All of the CMOs I’ve talked with want a seat at the board table because they know they can add significant value to solving the broader strategic challenges involving the company’s competition, innovation, core customers, and beyond – yet only 6% do. If you’re not among the 6%, the best place to start is to show your CEO that you are ready to competently report on and answer questions related to the 10 items above. Once you have gained the CEO’s confidence, you are ready for the ask to join board meetings. Need Best-in-Class practices on any of these 10 items? Contact us for help.