Chief marketing officer (CMO) tenures, already on average much shorter than those of other CxOs, has dropped from 23.6 months to 23.2 months according to an article in Brandweek (“Length of CMO Tenure Continues to Decline”. By comparison:
· CEOs average 44.4 months (91% longer),
· CFOs last 39.4 months (70% longer),
· CIOs lasted 36.4 months (57% longer).
Furthermore, this study was focused on the top 100 consumer-branded companies and does not analyze B2B marketing, which is a less-established discipline than B2C marketing and therefore has faster higher CMO turnover rate.
What truly amazes me is that a CIO can expect to stay on the job 57% longer than a CMO.
At META Group (acquired by Gartner Group last year) we developed a whole suite of services and programs targeted at the poor CIO, whose turnover rate is too high. Well, clearly some of those lessons need to be applied here.
Background
I founded BluePrint Marketing to help B2B companies improve their performance by fixing inefficiencies in their revenue engines caused by sales, marketing, and solutions groups misfiring during account pursuits. When I started my firm in 2001, I looked for a variety of best practices for B2B marketing. They were few and far between. So, we had to create our own research. Here are a few of our findings:
· In 2003, 75% of enterprise B2B companies replaced their CMO’s;
· As much as 60% of the marketing budget is wasted;
· The quote “I know we are wasting 50% of our marketing budget, I just don’t know what 50%” best characterizes a CFO’s opinion of marketing;
· Although marketing should be about driving revenue, most CMOs refer to sales support as “too downstream” for their responsibility, and most invest less than 20% of their budgets supporting deals.
We found that the majority of marketers in B2B companies were applying principles from B2C best practices.
Figure 1: The different positions of B2C and B2B
Figure 1 is meant to help classify different sales and marketing models based on the characteristics of each business. The top 100 branded companies are represented in this chart by “1”. These firms must compete with a strong brand because the buying cycle of their customers is so condensed that they are literally competing for mindshare. However, the B2B sales we focus on is labeled as “2” in the chart and is more complex than B2C transactions. So to make sure we provide the right guidance I always like to frame our expertise into the right category. (If you would like more information on the differences between B2B and B2C models, follow the link to “The Sales and Marketing Divide” article I wrote about this subject).
Why is CMO turnover so high?
Simply put, CMOs fail to articulate the tangible value they bring to the table. Fluffy measures such as “brand value”, “awareness”, or “exposure” are no more meaningful to a CEO than the metrics a CIO uses to communicate (“Mean time to resolution” , “Available bandwidth” , or “SLA obtainment”) what IT does.
Everyone tells CMOs they need to create a clear understanding for what marketing can do for the company, but that is easier said than done. Everybody is an expert on what good marketing is because they have strong opinions on what ads they think are or are not effective.
So, when I work with a CMO, first we have a conversation about how marketing’s value is determined. Unfortunately, this is a complex problem. In any organization, a CMO must work with or provide services to many different groups. A CMO commonly works with:
· The CFO on budgets and spending. He values marketing based on its ability to contribute to the financial performance of the company.
· The CEO on corporate strategy, internal communications, branding, and public relations. CFOs often over-service a CEO, thinking he or she is the most important constituent.
· The VP of sales on creating leads, developing collateral, presenting offerings, or other activities to help drive sales. He forms opinions based on the real contribution of marketing to sales.
· The VP of products / solutions on packaging, market research, product launches, and other offering specific means. Generally speaking, his opinions of marketing are formed more through subjective means that those of other groups and are biased to the degree the marketing team understands their product or service.
To make matters more difficult, each of these constituents has their own idea of what “good marketing” is. Some want to see advertising (and have specific ideas about what it should look like), others want to improve the website, while still others believe that doing more events is the answer. Without a shared view of marketing’s value contribution to the business, each constituent executive will foster their own expectations for what should be done, and when their individual visions fail to materialize, they begin to voice their dissatisfaction. There is no company on the planet whose marketing budget is big enough to fully meet all these disparate visions, and this rests at the heart of the reason to the ever-shrinking CMO tenure.
How to fix it?
Obviously, this is the heart of the problem and the focus of our entire company, so we are not going to be able to completely answer this question in one article. We can, however, discuss the most important first step: taking inventory of our value perception problem. This starts by extracting all the perceptions of marketing’s value and framing them so we can figure out how to attack the problem.
Step 1: Discover your “Value Box”
Figure 2: Clarify marketing’s value contribution by measuring the area of the “value box”.
Figure 2 is a simple matrix I use with my clients to help determine marketing’s perceived value contribution inside a company. Simply put, the perceived value of marketing inside your organization equates to the area of the “Value Box” – width X length. (We can get into the volume by adding depth for firms with multiple businesses later, but I’d prefer to get the basic concepts down first).
You can determine the value box by plotting each constituent’s perceptions of marketing’s value contribution across each axis and aggregating the results. Credibility is a measure of how well the marketing department is perceived and helps determine how much improvement needs to be made in performance. Perceived value helps us understand the gaps we have helping others envision ways that marketing can improve their performance that may be outside their current thinking.
The Marketing Value Perception Matrix
Step 2: Find your Base Line
In Figure 3 we have labeled each quadrant in our Marketing Value Perception Matrix to assist our clients to interpret their “value box” inventory results.
Reallocate Budget: When the credibility of the marketing team and the perceived value of the function are low, the front office will slash marketing budgets and headcount. These losses cripple a sitting CMO and create more pressure to meet the unchanged and disparate expectations of the company as a whole. We estimate that 40%-50% of B2B marketing groups are in this quadrant.
Replace Leadership. When the credibility of the marketing organization is low and the perceived value of marketing increases, CMO’s are replaced. Considering that the typical new CMO has a honeymoon and learning period of between 6-9 months and that that on average he will be on the job for less than two years, the CMO must start showing dramatic progress on the value box within the first year to survive. Between 30% and 40% of B2B marketing groups are entering this zone, which explains the high turnover rate.
Dedicated Sales Support. Many B2B marketing organizations are really just the support arm of sales. They hold a subordinate role to the sales organization and their credibility derives from the sales organization. However, their role and purpose is narrowly defined inside the company. Marketing leadership is not involved in strategic planning or corporate direction. Marketing organizations in this category are able to retain their barebones budget, and turnover is relatively low. However, their impact is limited. Relatively few (less than 20%) B2B marketing organizations find themselves in this quadrant because it requires tight alignment with sales teams, something that has been very elusive for marketers.
Competitive Advantage. CMOs whose marketing groups are highly credible and operate in organizations where the contribution of marketing is well understood and valued as indispensable have a ‘seat at the executive table’ and help produce sustainable competitive advantage to the organization. Less than 10% of CMO’s find themselves in this position and, in Geoffrey Moore speak, the majority of these work for “gorilla” companies that dominate their markets.
Step 3. Set the Course – Transforming While Performing
Figure 4: Plot a course to transform marketing’s value position through a series of iterative steps.
Most B2B marketing organizations we encounter are exerting tremendous energy constantly trying to execute various tasks to meet the expectations of many different stakeholders. Marketing organizations that are gripped in this frenetic, firefighting rat-race have a value proposition we characterize as “publish or perish”. CMO’s believe (either consciously or subconsciously) that they must demonstrate their value through the volume of their accomplishments. While a tactic that certainly must be used when the value of marketing is questioned, it is only a tactic and not a strategy toward sustainable value. Problems with this approach include:
· High volume output without a centralized content and process foundation is not sustainable because it is too reliant on individual or contractor contributions. The former is risky because people burn out and move on. The latter is excessively expensive and susceptible to budget cuts.
· With an avalanche of deliverables to choose from, people do not invest the time to learn how to use tools, have limited bandwidth to examine all the materials, or cannot locate the output. As a result, your internal clients hear you claim that you produce a lot, but it’s hard for them to really understand what you are accomplishing.
· CMOs who oversee a “publish or perish” organization are in constant firefighting mode, obsessed with deadlines. This distracts them from working strategically with their peers. For example, a VP of sales may want to devise a strategic accounts program to gain more wallet share from the company’s top 50 accounts. However, a CMO who believes he is evaluated by volume will only offer volume-based suggestions to support that initiative. These cookie-cutter approaches further the opinion of the VP of sales that marketing is disconnected from market realities.
Moving from “publish or perish” to strategic value contributor is neither easy, nor can it be accomplished by waving a magic wand. It requires as transformation plan. The first step is to throw the conventional wisdom about marketing out the window and think as a problem solver. You should ask the question, “How can we apply the capabilities of our department to solving specific problems of our key constituents?”
Once you determine how marketing can help each constituent, you need to look across all of them to find leverage points so services can be performed at minimal costs. From there you should develop a charter the resembles a corporate mission statement. Define the scope of what will be valuable to the organization and get buy-in for it. That is your stake in the ground and will provide you with:
- A basis for defending your budget and creating a measurement program;
- A pretext for responsibilities and accountabilities in areas of overlapping responsibility (such as sales enablement or product marketing);
- A context for discussing your key programs that keeps the value of marketing at the center of attention.
A War on Three Fronts
Figure 5: Marketing’s fight for resources is waged on three fronts. To win the war, a CMO must iteratively expand marketing’s “value box” by winning tactical victories in each front, securing those gains, and then tackling a different issue.
“I don’t have time to do strategic planning; we have got too many things on our plate.”
That is the thinking of many CMO’s, and it is a major mistake.
As they find new ways to produce more deliverables, the barbarians are at the gate, looking for their budgets:
· Business unit and product-area groups want increased control over product marketing and programs, arguing they have numbers to hit, and they want control over their own destiny. This is “The Eastern Front”.
· Sales organizations want more money so they can hire more feet on the street, arguing that the best way to create growth is to have more people carrying quota. This is “The Western Front”, and is currently the most hotly contested.
· Executive leadership wants your budget so they can convert expense to margin. As a CFO once told me “I know that we waste 50% of our marketing budget, but I just don’t know which half is wasted. I don’t have support from the CEO to cut it that much, but I can impose 10% budget reductions, and I can force them to go through procurement, where we can scrutinize every dollar spent until I find the waste.” This “Northern Front” battle is waged through diplomacy and requires the requisite finesse.
In a subsequent piece, we are going to examine some strategies for CMO’s to win the value war while fighting on three fronts.
Bottom line: Marketing leadership should consider their increasingly fast job turnover as a major indicator that something is seriously wrong with the profession. CMOs must shed the prevailing wisdom of classic marketing ideas and determine how they can add value to their internal constituents. Leveraging structured frameworks to organize feedback, marketers should get a measure for the perceived value contribution they offer in their company and use that as a base for a transformation program.
For more information visit www.blueprintmarketing.com
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