indy ama luncheon: ibm cmo study

From Stretched to Strengthened

Insights from the

IBM Chief Marketing Officer Study

AMA Indianapolis, IN

September 11, 2012

© 2012 IBM Corporation

IBM CMO Study

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We spoke with more than 1,700 CMOs, 300 in NA, the largest global sample of face-to-face CMO interviews.

16%Communications

36%Distribution24%

Financial Services

21%Industrial

3%Public

44%Growth markets

17%North America

35%Europe

4%Japan

Sectors Regions

The study represents organizations in 64 countries and 19 industries

Growth Markets include Latin America, Central and Eastern Europe, Middle East and Africa and Asia Pacific (excluding Japan); n=1734North America sample size n = 300, Rest of World n = 1333


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Sentiment Analysis was performed on 10,000 quotes

“None of the changes in Marketing today are evolutionary, they are all revolutionary and transformational.”

Insurance SVP of Marketing, USA

“Traditionally, corporate culture and character have been managed by HR, but it can't remain there in a digital environment. The world of separate internal and

external messages is gone, and internal actions, memos and decisions can impact your brand just as much as an advertising campaign.”

Financial Markets EVP, Head of Global Marketing, USA

“I think the biggest marketing challenge will be the analysis and diffusion of data. I firmly believe CMOs and marketers

need to become ‘analytic athletes’ to do their jobs.”

Maureen Schumacher, Southeast Regional Director, Google


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Globalization has brought the world to everyone’s backyard

Everyone is a broadcaster, publisher and a critic: there is nowhere to hide

Transparency is the new price of entry

Do more than ever, inside and outside the organization

Be more accountable for return on investment (ROI)

Use tools and technologies that their children understand better than they do

CMOs: swimming, treading water or drowning?

In this digital era... CMOs have to...

And...CMOs have just three to four years

to make their mark

And...more data, more sources, more devices, less clarity

“The role went from marketing, to marketing and client experience, to marketing and client experience and channel. And now I am also doing technology prioritization and all of our service model structure. It really has turned into a revenue officer role, versus a marketing officer role.”

Banking EVP & CMO USA


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9

13

12

2

4

3

1

7

Key areas of under preparedness are also ones CMOs identify as most critical to enabling the marketing agenda

50

60

70

40

20 40 600

8

6

Financial constraints

Decreasing brand loyalty

Growth market opportunities

ROI accountability

Customer collaboration and influence

Privacy considerations

Global outsourcing

Regulatory considerations

Corporate transparency

5

6

7

8

9

10

11

12

13

Data explosion1

Social media2

Growth of channel and device choices3

Shifting consumer demographics4

Mean

Marketing Priority Matrix

Source: Q7 Which of the following market factors will have the most impact on your marketing organization over the next 3 to 5 years? Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years?

Factors impacting marketingPercent of CMOs selecting as “Top five factors”

Under preparednessPercent of CMOs reporting under preparedness

5

1011


IBM CMO Study

NA CMOs are underprepared for the growth in channel and device choices and emerging market opportunities

50%

North America CMO Under preparednessPercent of CMOs reporting under preparedness

Data explosion

Social media

Growth of channel and device choices

Shifting consumer demographics

Financial constraints

Decreasing brand loyalty

Emerging market opportunities

ROI accountability

Customer collaboration and influence

Privacy considerations

Regulatory considerations

Global outsourcing

Corporate transparency

77%

69%

78%

71%

59%

67%

75%

67%

62%

57%

57%

51%

67%

Delta withGlobal

+13

+10

+21

+11

+20

Source: Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years?


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Academic & Press Reactions

“It’s only the largest and most current of an increasing number of reports and studies that show that marketing management, in too many major

organizations, is sadly ill-prepared to deal with the increasingly complex world in which they operate.”

Don E SchultzProfessor of integrated marketing communicationsNorthwestern University 12.30.11 marketing power

“Marketing must become more adept at managing the magnitude of change now taking place. Otherwise, it will be like going into battle

with a Swiss Army knife.”

Financial Services Vice President, Marketing, USA

Your Opportunity


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Social media: a key engagement channel for CMOs

North AmericaPriorities for managing the shift toward digital technologies

Source: Q12 What are your priorities for managing the shift toward emerging digital technologies? (Select top five)

Use social media as a key engagement channel

Design experiences for tablet/mobile apps

Enhance customer loyalty/advocacy

Monitor the brand via social media

Measure ROI of digital technologies

Use integrated software suites to manage customers

Develop social interaction governance/policies

Monetize social media

Analyze online/offline transaction analysis

Gain comprehensive visibility of supply chain

“Our customers value what others say about us more than what we say about ourselves. We can quantify this shift. It is real and happening today. This is why social media matters.”

CMO, Travel & Transportation


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Many CMOs are still using data for transactions rather than for deepening relationships with the customer

Awareness/education

Interest/desire

Action/buy

Use/enjoy

Bond/advocate

Segmentation/targeting

North AmericaExtensive use of customer data

Percent of CMOs using data captured within customer lifecycle phases

Source: Q21 To what extent does your marketing organization capture, analyze and act on customer data generated during the following customer lifecycle phases?

Transaction focused

Relationship focused

Missedopportunity

“You want to make sure you are keeping the clients and growing them. That is where the higher net income impact is.”

CMO, Banking industry


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Analyst Reaction

“CMOs, Make The Chief Business Technology Officer (née CIO) Your New

Best Friend”

Forrester's CMO practice partnered with the chief business technology officer, formerly known as the chief information

officer (CIO), to publish a report called "CMOs Must Merge Marketing With IT To Win In The Digital Decade

“…...

The conclusion? Only companies with well-aligned marketing and IT departments will see success in what Forrester calls

the age of the customer.


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CMOs need to have significant influence across all four Ps, not just promotion, to deliver marketing ROI

North AmericaPercent of CMOs citing significant influence

Integrated advertising and promotion

Aligned internal and external communications

Innovative social and other emerging media

Source: Q14 How much influence do you and your organization have over the “Four Ps” and their related sub-factors?

Promotion

Deeply researching customer needs

Product service portfolio

Comprehensive research and development cycle

Customer experience involving multiple touch points

Channel selection and management

End-to-end supply chain process

Full competitive pricing assessment

Understanding of total ownership costs/benefits

Integrated, cross-company pricing process

Products

Place

Price


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Leadership abilities

Cross-CxO collaboration

Competitive trends insights

Management capabilities

Understanding products/services value chain

Social media expertise

Finance skills

Demand creation capabilities

Analytics aptitude

Creative thinking

Voice of the customer insights

Technology Savviness

North AmericaCapabilities for personal success over next 3-5 years

Percent of CMOs selecting capabilities

Source: Q17 What capabilities do you need to be personally successful over the next 3 to 5 years?

CMOs can expand their influence by shifting to new capabilities that focus on technology, social media and ROI


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Supporting Press

“Marketing is going through an identity crisis. Brand love and consumer intimacy are both still crucial. Yet today, quantitative

analysis, econometric modeling, real-time message monitoring and adaptation are all elements of the marketer’s tool set.”

From Mark de Swaan Arons Co-founder Effective Brands Marketing Power Fall 2011

Your Opportunity

Expand your horizons by enhancing your personal financial, technical and digital savviness. Personally invest to broaden

your capabilities.


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NA CMOs face a challenge in getting external and internal audiences to grasp their corporate character

Is your corporate character understood in the marketplace?

Source: Q10 Is your corporate character understood in the marketplace? Q11 How much work is needed to have employees embrace and live the corporate character?

Is more work needed to get employees on board?

say understood and (strong) contributor to brand success

say no or limited understanding of corporate character

Strong contributor to the brand’s successNot understood

32% 41%

say no or very limited work needed

say significant or much work needed

No work neededSignificant work needed

41%29%

North America


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Supporting Press

Your Opportunity - Champion your organization’s corporate character

“Transparency is here. Wikileaks is a window to the future of business. Everyone will know about everything you do. Whether it’s your carbon footprint or your

fee structure, there will be no secrets. It’s best to out yourself and engage your community on how to improve your business…..”

From Customers Have the Power by John Winsor

Help the enterprise define and activate the traits that make it unique. Work across the different functions to meld the internal and external faces of the enterprise - for all touch points and experiences.


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NA CMOs will define success by combining financial measures with the ability to manage customer experience

North America Seven most important measures to gauge marketing success

Percent of CMOs selecting success measurements

Source: Q19 What are the 5 most important measurements you (will) use to gauge marketing success by 2015?

Customer experience

Overall sales

Marketing ROI

Marketing-influenced sales

Operating Profit

Conversion rate/new customers

Revenue per customer

Global

63%

58%

45%

48%

42%

Not in top 7

42%

“Ultimately, this is what we need to understand – customer and brand analytics: How will a $1 spend in marketing bring the most results?”

Neal Campbell, SVP & CMO CDW, USA


IBM CMO Study

The changing profession


IBM CMO Study


IBM CMO Study

The timeless responsibilities of our marketing profession

Marketers have always been responsible for knowing the customer.

Marketers have always been responsible for defining what to market, and how to market.

Marketers have always protected the brand promise.


IBM CMO Study

The three imperatives of a new profession

Designing your culture and brand so they are authentically one.

Creating a system of engagement that maximizes value creation at every touch.

Understanding each customer as an individual.


IBM CMO Study

http://www.youtube.com/watch?v=b82Quinl7ac


IBM CMO Study

Demographicdata

Transactiondata

Interactiondata

Behavioraldata

Transactions

Orders

Paymenthistory

Usage history

Email / Chat

Call center notes

Web click-

streamsIn-person dialogs

Opinions

Prefer-ences

Desires

Needs

Character-istics

Demo-graphics

Attributes

Purchasestage

Armed with new analytics, we are able to enter the world of predicting the next best offer, action or need.

Understanding each customer as an individual

The great leap is into all the data that lies outside our enterprise and into the new insights that data offers.


IBM CMO Study






IBM CMO Study

http://www.youtube.com/watch?v=uTOcdjf7X74


IBM CMO Study

Creating a system of engagement that maximizes value creation at every touch

Future portfolio of products, services, knowledge and experiences

Digital analytics Customer segmentation

Attribution modeling

Business intelligence

Customer predictive analytics

Companies that think systemically are able to provide the right offering at the right touchpoint and to motivate greater engagement with a brand.


IBM CMO Study






IBM CMO Study

In the past, when someone had a bad experience with a company, only the individual would experience it.

Now, the world can know instantly.


IBM CMO Study

http://www.youtube.com/watch?v=bz3wb45FZLM


IBM CMO Study

An internal memo is leaked to the

media

An influential blogger has a bad customer

experience

Advocacy groups reveal an unethical practice in the

supply chain

Every day, millions of actions driven by our culture influence what others think of our brand.


Through engagement and social listening, the new profession of marketing closes the gaps between the brand promise and how it’s experienced in reality.


IBM CMO Study






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Visit ibm.com/smartermarketing for more insights


IBM CMO Study

IBM provides a proven and comprehensive set of marketing software and services

IBM Smarter Marketing Solutions

Marketing Strategy and Transformation

Customer Analytics

Social Marketing and Collaboration

Marketing Performance Optimization

Customer Experience and Engagement


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Closing Thoughts…

Be ready for a career of perpetual learning and change – no matter your role in the marketing ecosystem

Pick one of the imperatives to explore for your business:

– Understand each customer as an individual– Create a system of engagement that creates value– Align your brand and corporate character as one


IBM CMO Study

Thank You!