Why Marketing Matters
Chief marketing officers need to be responsible for or engaged with anything that connects markets to customers in a profitable and sustainable manner
The roles of a CFO, Director- HR, or Director- sales are well understood across companies. The same cannot be said for chief marketing officers ( CMOs). CMOs are defined differently across industries and companies. For FMCG, consumer durables and most companies selling directly to retail consumers, CMOs have significant empowerment, attract great talent, and often are the path to CEO positions. In these companies, the role aligns brands to customer segments, supports sales, and manages advertising and digital marketing. The CMO role is much more ambiguous in businesses that sell directly to other businesses. In a world that has become more dynamic, weak CMOs are a death sentence for companies. BCG research shows that the average five-year corporate mortality rate of 35,000 US- listed companies is 32 per cent. This is an astounding figure – one-third of the companies that manage to list do not survive in five years. The world today has become more dynamic. The pace of change in customer preferences, competitor actions, and technology standards, has increased dramatically over the past few decades. Given the impact of these external forces on the survival and growth of firms, a strong marketing function is now a strategic necessity.
In business- to- business (B2B) companies, where companies transact with other businesses rather than individual consumers, CMOs are often less influential internally. The position is poorly defined and not well empowered. Often CMOs step in to take care of whatever needs to be addressed, ranging from basic sales support to strategy or customer deals. B2B sales transactions are
more complex. Whether selling IT enterprise solutions to a bank, plant equipment to a power generation company, or medical equipment to a hospital, B2B companies require an understanding of their customers’ customers and more complex ecosystems/projects. Products and services tend to be more complex, sales people tend to be more technically qualified, consumers and buying decisions tend to require more time and people involvement. Within this context of complexity, it is surprising that B2B CMOs and marketing teams are not well defined, are weakly empowered and, often times, not strong leaders.
In B2B industries, this complexity requires strategic people, with strong advocacy skills, and the ability to structure and leverage ecosystem partnerships to benefit the company in their ability to sell today and in the future. Although selling for today is somewhat easier, selling for the future in B2B requires the ability and effort to “create” markets – for example, working with governments to build complex industries and commercial sectors like increasing commercial airspace to grow the aviation sector ( to ultimately sell to airline companies or airplane manufacturers) or driving Internet bandwidth to the last mile to enable IT sales in small towns and villages.
Unfortunately, CMOs in these companies often behave as chief sales support officers – they play the role of a support function rather than a lead function. Some of the better CMOs develop a strong market understanding and ability to explain market trends and “see around corners”, manage key accounts, and provide customers with a wider and deeper understanding of the company’s products and services. But this does not capture all of what marketing can be; part of the reason for this is that marketing is highly underutilised in many corporate environments.
Successful CMOs are rare for multiple reasons. Firstly, the role requires art, science and force of personality to ensure an outside-in perspective and voice. Secondly, CEOs and organisations need to understand and communicate the value of the CMO internally, resource marketing leadership roles with strong talent, and empower their CMOs to effectively advocate for market needs and create effective change
In B2B, successful CMOs often are either working for a visionary CEO who understands the need for the right leader and empowers the person, or have inherent passion for advocating internally for the market and creating opportunities that would not exist without their initiative. The CMOs of today can no longer sit back and play a basic role – they need to be the functional leaders that provide the outside- in perspective; they need to advocate for markets; and they need to disrupt and pivot their companies to keep them relevant.
In the complex and competitive world of today, good CMOs must be able to separate signals from noise, build consensus, disrupt collaboratively, have voracious curiosity, and high levels of empathy ( or the ability to step into someone else’s shoes). GE has done a great job of detecting external signals and driving internal disruption to transform itself into a digital company that can provide real customer value. Satya Nadella’s vision for Microsoft is focused on connecting to the market effectively by ensuring great internal consensus- building and disruptive collaboration. These companies require and have strong marketing skills. But these are the result of strong leaders who stayed manically focused on empowering these skills. Other companies fail on their lack of ability to either understand the market well or organise themselves to deliver to that market understanding.
Given the complexity of markets today, marketing needs to work across strategy, business development, partnerships, ecosystem development, and customer understanding/experience. The more you can solve for a customer, the more your product/ service becomes attractive at a premium price. Depending on the company, marketing may be combined with strategy or sales support, and then the alignment is even more successful. CMOs need to be responsible for or engaged with anything that connects markets to customers in a profitable and sustainable manner.
To improve the state of B2B marketing, these companies need to review their marketing function and ask – do they really understand what they want from the function? Is the CMO strong enough to deliver? Have they resourced the function with strong talent? If not, these companies may be managed efficiently but to a weak and limited set of market needs. Do they fall into the 32 per cent that will not be around in five years? ~