Not everything that can be counted counts, and not everything that counts can be counted. -Albert Einstein
I value the CMO conversations I get to have every single day. They are always teaching me new things and making me think. I find it so interesting to host CMO Club dinners behind closed doors and hear what CMOs really care about versus what many in the industry think is important to CMOs. The bottom line – it’s not what most people think.
Is it all about ROI?
With the obsessive focus on marketing ROI, it’s reasonable to assume that ROI is most CMOs’ number one priority. However, during hundreds of CMO dinners and individual conversations — and also supported by comprehensive research – that’s not their top priority. In fact, A 2014 Korn Ferry study with 215 CMOs found that a mere 27% of marketing executives rank the connection of marketing outcomes to bottom line results as their top priority.
While ROI-type metrics that translate well to the C-suite matter to CMOs, it’s not what keeps them up at night. CMOs understand that the “holy grail” lever that drives the strongest marketing return is customer engagement. In fact in many cases the closer the CMO is with CEO and Board and the higher the trust, the less a CMO has to focus on short term ROI.
In my previous article, On Building Marketing Bridges, I talked about engagement another way: “Grow your relationships first and business will come.” Turns out that is what all of us marketers really want – strong, solid, engaged relationships. Now I’m going to show you some marketing math that proves my statement.
Let’s Do Some Marketing Math
Engaged customers are more loyal customers. They stay longer and they spend more. The lifetime value of an engaged customer over a ten-year time period is often measured at seven to twelve times the value of the unengaged customer.
Not surprisingly, according to Gallup, fully engaged customers represent a 23% premium in revenue and growth for an average company.
For example, in the insurance industry, knowing your customers’ life events and offering them relevant products to help them at each inflection point pays great dividends. This is cross-sell / up-sell based on proactively anticipating a customer need. Customers who buy one product, such as auto insurance, typically stay loyal for 1-3 years. Two products customers stay loyal for 3-5 years. And customers who buy 3-4 products stay loyal for 7-10 years. So, in addition to the value of multi-product revenue from loyal customers, the years of uninterrupted revenue also add up exponentially. There’s the ROI. The loyal customers are happy and the company is happy – it’s a win-win.
How CMOs Really Define Customer Engagement
Customer engagement is a popular term. Here’s how many CMOs define it. Customer engagement isn’t about disconnected touch points; it’s about on-going, meaningful contact and mutually beneficial interaction. An engaged customer builds an emotional affinity to a brand and emerges as a natural advocate for the brand via social, verbal and community channels. Loyalty is one benefit of customer engagement; the other, customers who become vocal advocates of products, services and brand. CMOs think beyond net promoter scores to true advocates of the brand, those that care and have influence.
Engaging Customers – Some Ideas from CMOs
Customer engagement touches so many different functions within an organization. The changing role of CMOs for leading overall customer engagement has resulted in new approaches for CMOs to deliver improved engagement. One effective idea lead by a number of CMOs in the Club is not about owning every customer facing organization, but owning the development of “what’s acceptable and desirable” engagement programs and responses to customers. CMOs care about how all departments engage with customers and the impact on the brand and profitable growth. They care about defining the best engagement programs and responses.
CMOs also care about how to find new Brand advocates and how to make it easy for them to recommend their love for the brand to others.
Here are a few other perspectives I value from a number of friends in The CMO Club. The more detailed story is captured in the links provided. Hope you enjoy their perspectives as much as I do.
CHRISTINE NASHICK, CCO, DHL Express: “As CCO, my role is to enhance the customer experience at every level and every touch point, to re-imagine how our thousands of customers interact with us. In pursuit of this goal we’ve implemented “Insanely Customer-Centric Culture” (ICCC), to ensure every customer interaction delivers exceptional results. The mission is to make the experience so powerful that each customer becomes our advocate, motivated by the great results we have achieved for them, and by what we have achieved together in partnership.” Read more here
WANDA GIERHART, SVP and CMO, Neiman Marcus: “Just like a great sales associate knows the tastes, preferences, and important details about a customer’s life and uses that to deliver world class service, exceptional personalization online though a mix of innovation, people, and technology is working toward doing the same. Two examples of our innovation in online personalization is the introduction of Snap.Find.Shop. and MyNM.” Read more here
JEN COMPTON, VP of MARKETING, BOSTON BRUINS: “The are four pillars which define our foundation of customer engagement that span businesses of all types and sizes: 1. Treat your customers like fans, 2. Are you ready to move to a new arena? 3. It’s more than just a game…what’s your ‘off-the-ice’ story? 4. Are you having fun yet?” Read more here