How To Improve Marketing's Internal Credibility

TRENDS March 9, 2007 Includes Forrester user interview data, Client Choice topic Three Keys Set The Stage For Reinvention How To Improve Marketing’s Internal Credibility by Peter Kim with Cliff Condon, Cindy Commander, Sarah Glass, and Jennifer Joseph EXECUT I V E S U M MA RY Marketing leaders are starting to take steps to reinvent their organizations in order to drive long-term success. But they are discovering that they lack the internal capital required to lead change. Today’s marketing function lacks authority, follows the lead of other departments, and operates disconnected from peer functions. To build momentum for marketing reinvention, marketers must focus on three key activities: 1) setting executive expectations regarding responsibility and accountability; 2) building bridges with peer functions through communication and collaboration; and 3) extending internal capabilities by balancing skills and resources. TARGET AUDIENCE Marketing leadership professional RESEARCH CATALYST Clients selected this topic for Client Choice research. MARKETING MUST BUILD INTERNAL SUPPORT IN ORDER TO DRIVE CUSTOMER CENTRICITY Today’s marketing leaders seek to reinvent their organizations as customer-centric outfits to drive positive business results.1 Pushing for this kind of change requires that marketing influence company strategy and philosophy across the entire organization. But many marketing teams lack the authority to lead such change. · Most companies withhold C-level authority from marketing. Only 40% of organizations surveyed have a head marketer with the CMO title.2 The leaders of operations, finance, and technology departments typically achieve C-level titles, but the majority of marketing leaders remain outside the executive circle. · Marketers don’t lead the organization, they follow. Seventy-seven percent of the marketing organizations we surveyed have reorganized in the past two years, and we expect that this churn to continue. But marketers most often reorganize their departments to align with an existing corporate structure, not to drive customer-centricity (see Figure 1). Headquarters Forrester Research, Inc., 400 Technology Square, Cambridge, MA 02139 USA Tel: +1 617/613-6000 • Fax: +1 617/613-5000 • www.forrester.com Trends | How To Improve Marketing’s Internal Credibility 2 · Relationships with key enablers are broken. Becoming customer-centric requires culture and process shifts: employees across silos must focus on common customer goals while using technology to build and strengthen customer relationships.3 But marketing lacks productive relationships with human resources and information technology, the two departments best positioned to assist with culture and process shifts. Without their help, marketing cannot achieve customer centricity (see Figure 2). Figure 1 Marketing Organizations Struggle To Retain Focus And Control “At your firm, when was the last time the marketing function was reorganized?” 0 to 2 years ago 77% > 2 years or never 23% The most common reason that marketing executives give for reorganization is to align with existing organizational structure. Base: 102 executive marketers (multiple responses accepted) 41448 Source: Forrester Research, Inc. Figure 2 Marketing Must Improve Relations With HR And IT “How would you characterize the relationship between your marketing organization and:” Somewhat unproductive Highly unproductive Information technology Human resources Finance Customer service Legal Research and development Product Production Operations Sales Strategy 0% 20% 30% 10% Base: 50 to 102 marketing executives who have this function in their company (only unproductive responses shown) 41448 40% Source: Forrester Research, Inc. © 2007, Forrester Research, Inc. Reproduction Prohibited March 9, 2007 Trends | How To Improve Marketing’s Internal Credibility 3 Focus On Three Key Activities To Build Internal Credibility To reach their goal of customer-centricity, marketers must create a stronger internal profile and build influence across the entire company. They need to tailor their efforts to three distinct audiences: 1) senior management; 2) peer functions; and 3) department staff. Marketing must persuade each group to buy into and share marketing’s mission of customer centricity. To build corporate credibility, marketers must do the following: 1. Set executive expectations regarding responsibility and accountability. According to leading executive recruitment firm Spencer Stuart, average CMO tenure is just 23 months, primarily due to misalignment of CEO and CMO expectations. Marketers should buck this trend by establishing a contract with the CEO, in writing, that outlines success metrics and targets for the department that are clearly aligned with corporate business goals. Marketers should reach out and partner with finance to construct the contract and enlist IT to build dashboards for tracking progress towards goals. By building executive credibility, marketing stands to gain additional budget dollars and executive support. A financial services CMO tells us: “Our tests proved that budget was sustained and increased by adding transparency and accurate metrics.” 2. Build bridges with peer functions through communication and collaboration. Current approaches to strategic planning isolate functions and push departments to compete for resources. This leaves departments siloed and optimized for their own internal benefit rather than for the good of the customer. To achieve the higher business goal of customer-centricity, marketers need to incorporate other departments’ perspectives into marketing plans. Doing so means learning the languages of other functions, for example, NPV and EOQ.4 Simultaneously, marketing must demonstrate its capabilities, such as leveraging customer personas and learning from consumer-generated media, to other departments. Building bridges elevates marketing’s importance. A retail CMO tells us that “by conducting small tests for new initiatives and seeing success, we create interest in and a pull for marketing programs.” 3. Extend your organization’s capabilities by balancing skills and resources. Luckily, not every CMO needs to be a perfect balance of left- and right-brain capabilities — but the marketing team should be. Marketers must work with human resources (HR) to build a well-rounded team, utilizing the function as a strategic partner, not a mere order-taker. HR should help to align external and internal messaging and meet regularly with marketing to track progress in areas such as recruiting, skills development, and correlation of customer and employee satisfaction. Marketing will see benefits from reduced turnover and higher productivity. One high-tech CMO tells us: “Due to our capabilities initiative, our retention rate for high performers has been outstanding.” March 9, 2007 © 2007, Forrester Research, Inc. Reproduction Prohibited Trends | How To Improve Marketing’s Internal Credibility 4 Figure 3 Marketing’s Internal Credibility Self-Test “How much do you agree with each statement?” +2 Completely agree +1 Somewhat agree 0 Neither agree nor disagree -1 Somewhat disagree -2 Completely disagree Part 1: Executive expectations and accountability The head of marketing reports to the CEO. Score The head of marketing holds the title of CMO. I know my CEO’s objectives and goals for the business and they are aligned with marketing’s. I know my CEO’s expectations for marketing. I have a clear understanding of my decision-making power. I currently measure marketing effectiveness. I rebalance my budget during the year to optimize spending. I run testing programs to gather data and results on projected ROI. I partner with finance and other key stakeholders to define metrics. I regularly admit my mistakes to my peers. Subtotal Part 2: Bridges to peer functions My peers understand the capabilities of marketing. The organization has a clear picture of our key customer segments. I am conversant in the language, issues, and challenges of each of my peers. I have met with every member of my core peer group outside of marketing within the past month (not including executive meetings). The majority of my direct reports sit on at least one cross-functional team. I involve my peers in the planning stages of marketing initiatives. I use communication methods other than email to connect with peers. I hold “town hall meetings” or other open forums to discuss new products, success stories, or new campaigns with people outside of marketing. I have mechanisms in place to receive input from various levels of the organization regarding marketing plans and initiatives. I spend at least 50% of my conversations listening when speaking with peers and other employees. Score Subtotal 41448 Source: Forrester Research, Inc. March 9, 2007 © 2007, Forrester Research, Inc. Reproduction Prohibited Trends | How To Improve Marketing’s Internal Credibility 5 Figure 3 Marketing’s Internal Credibility Self-Test (Cont.) “How much do you agree with each statement?” +2 Completely agree +1 Somewhat agree 0 Neither agree nor disagree -1 Somewhat disagree -2 Completely disagree Score Part 3: Your department’s capabilities I involve key stakeholders in the recruiting process for hires who will be working with their functional areas. I have other functional representatives, e.g., finance or HR, specifically dedicated to marketing. I have clearly defined career models and paths for marketing team members. We have mentor programs in place. I invest sufficient energy into team development. I retain high performers within the marketing organization. We retain marketing high performers within the company. I am currently satisfied with my recruiting process. My peers view the people in marketing as highly talented. I have a balance between creative and analytical talent on my team. Evaluating your total score Best practice: 50 to 60 Significantly above average: 35 to 49 Moderately above average: 20 to 34 Average: 0 to 19 Moderately below average: -20 to -1 Significantly below average -60 to -21 Subtotal Total 41448 Source: Forrester Research, Inc. March 9, 2007 © 2007, Forrester Research, Inc. Reproduction Prohibited Trends | How To Improve Marketing’s Internal Credibility 6 R E C O M M E N D AT I O N S CONSTRUCT A PLAN TO BUILD MARKETING CREDIBILITY Marketers should start on the path to building internal credibility with a self-assessment of their current organization. Forrester has developed a diagnostic tool to help marketers assess their existing state and identify steps for improving internal credibility (see Figure 3). Based on the results of this self-assessment, marketers should create an action plan to sustain areas of strength and improve areas of weakness, working with other functions to secure required resources and set goals for completion. · Use your overall score as a reflection of your department’s current internal credibility. Taken together, the three sections give you a clear picture of where marketing stands relative to executives, peers, and staff. A negative overall score indicates a critical need to plan and execute a marketing credibility plan now. Ideally, you should target a score in the best practices range, which requires balanced communications execution. · Drill down on section scores to identify tactical fixes. Your score on each section should be greater than zero. Prioritize any sections and/or items that have negative scores. These are areas that need to be level-set while stronger areas are maintained. Remember to sustain areas that are already positive. Building credibility will pull your attention in multiple directions, and you do not want to end up improving one area at the expense of another. · Measure your progress by revisiting the self-test at regular intervals. As you implement a plan to improve marketing credibility, monitor your progress by retaking the self-test at quarterly intervals and gauge progress towards goals. Your first test serves as a baseline. Subsequent tests will show lift to illustrate what’s working and what areas need more dedicated focus. ENDNOTES 1 This document builds on the primary research reported in “The Marketing Of Marketing,” written by Cindy Commander for Forrester’s CMO Group. The CMO Group is part of Forrester’s Leadership Boards, an executive peer network that brings marketing leaders of billion-dollar-plus companies together to share insights into changing consumer behavior and evolving trends. To regain organizational effectiveness, businesses must transition to customer-centric marketing organizations that are aligned with customers, not products or channels. See the July 13, 2006, Forrester Big Idea “Reinventing The Marketing Organization.” 2 In April 2006, Forrester surveyed 104 marketing executives from its ongoing marketing research panel. The panel consists of volunteers who joined on the basis of interest and familiarity with specific marketing topics. For quality assurance, panelists are required to provide contact information and answer basic questions about their firms’ revenue, marketing budgets, and marketing organizations. See the July 13, 2006, Forrester Big Idea “Reinventing The Marketing Organization.” © 2007, Forrester Research, Inc. Reproduction Prohibited March 9, 2007 Trends | How To Improve Marketing’s Internal Credibility 7 3 Interaction management technology enables marketers to apply business rules and real-time analytics to customer profiles made up of historical and contextual data, thereby facilitating better coordination of the customer experience. See the January 9, 2007, Tech Choices “How Technology Enables Inbound Marketing.” NPV and EOQ stand for net present value and economic order quantity, respectively. 4 Forrester Research (Nasdaq: FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice about technology’s impact on business and consumers. For 22 years, Forrester has been a thought leader and trusted advisor, helping global clients lead in their markets through its research, consulting, events, and peer-to-peer executive programs. For more information, visit www.forrester.com. © 2007, Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. Forrester clients may make one attributed copy or slide of each figure contained herein. Additional reproduction is strictly prohibited. For additional reproduction rights and usage information, go to www.forrester.com. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. To purchase reprints of this document, please email resourcecenter@forrester.com. 41448