Is Marketing really at the heart of your business?

The following is the text to a speech I gave last week at the CIM Wales Marketing Leaders Annual Dinner.  It raised much interesting discussion and debate.  Please do add your comments and ideas below on how we can tackle this thorny issue.

Ladies and Gentlemen, good evening

I am delighted to be with you this evening and to return once again to Cardiff.

My text for this evening ladies and gentlemen is taken – loosely – from Mathew 19, verse 24 ….. ”And I say to you, It is easier for a camel to pass through the eye of a needle that it is for a marketer to get onto the board of a FTSE top 100 company”.

I began my career in sales and marketing with P & G back in 1981. In that environment the inherent value of brands and the commercial importance of marketing was never really questioned. Nor was the appointment of marketing and sales staff to general management posts and maybe the board room.

It wasn’t until I swapped the FMCG bubble for travel and tourism with Scotrail, Stakis Group and latterly Hilton that it became apparent that marketing’s position as a key strategic function wasn’t necessarily the norm.    I became aware of concerns about the marginal influence of marketing and its absence from the board room.  Well that was nearly 15 years ago and to be honest, not much seems to have changed, despite the growing acknowledgement in some quarters of the critical importance of marketing and brands

For example, I’ve read an article in The Times and the marketing press stating that the city wants more information about brand investment and marketing in company reports. It’s common for business leaders and academics to proclaim that brands are among the most important generators of profit in business today.  And an article in Brand Finance states that on average, brands account for around 28% of companies’ total intangible value.  In my former company Hilton, over 32% of revenue was directly attributable to the Hilton brand.

It appears the world and his dog get the importance of brands and marketing and want to see greater marketing representation at senior level.  Everyone it seems, except the CEOs and CFOs who run the companies.  A CIM survey published in 2005 revealed that only 11 FTSE 100 companies had a marketer on the board and according to Brand Strategy Insider, the average tenure of a CMO is just 23 months compared to 4-5 years for a CFO.  It hard to see why CEOs have such limited appreciation of marketing and brands till we see a study that says only 8% of CEOs have a marketing background. It’s just not in their DNA and it appears not enough has been done to bridge the gap.

So the challenges I’ve sought to address over the years are why does it have to be this way and how do we fix it.  Marketing at its best is a core strategic function, the bridge between customer and company and a source of competitive advantage. Yet in some many companies and sectors the function is confined to a limited tactical role.  Reasons are diverse and complex

The historically dominant role of finance, operations and in some cases sales in many organisations has marginalised marketing and created a kind of strategic myopia – a failure to appreciate the strategic and financial value of brand equity and customer affinity and how to manage them.

The preoccupation of senior managers with the day to day minutiae of financial reports, operational efficiencies, health and safety, corporate governance…and building stuff is all consuming.  Board rooms are insulated from the reality of what shapes the day to day purchase behaviour of their customers. Deep pile board room carpets muffle the cries of unhappy customers, sanitising them in sterile customer satisfaction reports.

Over 80% of customers who leave service brands dissatisfied, do so because the experience didn’t deliver what was promised by the brand.  But how often is this issue given meaningful time on the agenda?

And perhaps most profound of all, where Net Promoter Scores and the like do catch the CEO’s attention, do senior teams possess the know how to plan and deliver change that improves performance?  How often is an inspirational rallying call by the CEO at the annual conference followed by 6 months of resistance, review, recrimination and re-launch.

It appears that that in so many cases CEOs, CFOs and COOs simply do not get these critically important issues.  Or worse still they don’t get it… but they think they do!  Brand investment and customer experience are given lip service in the good times and dropped like a stone when things get tough. Their potential as drivers of business performance is just not understood.

As an aside, if you feel your senior colleagues are too removed from the day to day reality of what customers think you might try this. In a couple of my previous companies, I gave each of my co-directors the phone numbers of 10 recent customers and asked them to speak with at least 5 before the next board meeting.  It transformed the discussion.  Of course my colleagues were aware there were issues…but it’s very different to be confronted by the emotion of a customer with something to say.  I heartily recommend it.

Now it’s not all doom and gloom. In my old industry hotels, IHG who operate the Holiday Inn and Intercontinental brands globally took the progressive step several years ago of appointing Andy Coslett, a marketing and brand specialist from Unilever and Cadburys as CEO.  This is by no means an isolated example but in my experience such change is too limited and too slow.

The question is therefore, whose job is it to re-educate the upper echelons of UK business and demand that brand management, customer experience and marketing be given a meaningful place on the agenda?   Well, as Willie John McBride famously suggested to his Lions team before the final test in South Africa back in the 70’s, just take a look around the room at the people sitting next to you.  Surely, the buck stops here and with all senior members of the marketing profession.

For me this as an issue of individual accountability and professional pride. There’s no shortage of evidence suggesting that the reason marketing isn’t represented in the board room, is because we simply haven’t earned the right to be there.

In researching for this evening, I have repeatedly come across terms like ‘disappointing performance by marketing’, lack of accountability, inadequate measurement, lack of commercial, financial and operational skills, inability to coordinate the implementation of marketing plans. It’s not good reading .

In a recent CIM survey of chief marketing officers from a cross section of leading UK brands, less than 50% felt able to satisfactorily demonstrate the commercial impact of their marketing investment and less than half had effectively translated their brand strategy into a well articulated customer experience that could be delivered by their organisation.

On one of the CIM’s many groups on LinkedIn someone posed the question “do you think that marketers have the required financial skills to do their job”?  It prompted a stream of responses, and overwhelming response was no.   The evidence suggests that if we want to be taken seriously as markets we have to up our game.  If our colleagues from other functions believe marketing is all about brochures and promotions, maybe that’s because we’ve allowed them to think that way, happy to stay in the comfort zone we know.

I’ve spent the last 20 years operating at board level in a variety of sectors and businesses. In my experience CEO’s surround themselves with impressive people. People who they believe can contribute to the success of the company.  People who can offer a perspective that adds value and who can express it in terms that make sense financially, operationally and commercially. People who speak the language of business whatever function they happen to represent.

It’s unlikely that CEO’s will suddenly develop a deep appreciation of marketing and demand the function be represented at the board room table.  What’s is likely however, is that impressive, commercially rounded marketers will be invited to participate in key corporate decisions and join the senior team IF they are able to show that they have something to contribute and take the time to acquire essential financial skills and operational knowledge – knowledge taken for granted by marketers operating in FMCG companies.

Surely the most effective route to building respect and understanding for marketing as a function is to earn respect and understanding as individual marketers – by being business people first and marketers second.

There’s so much anecdotal evidence that this is true.  I was in Berlin to chair a conference of around 200 CMOs and Chief Experience Officers a couple of weeks ago. There I met Ingrid Lindberg Customer Experience Officer of Cigna Health.  Ingrid had persuaded her company to move their call centres to 24/7 opening, fulfilling their core brand promise of WE CARE.

Previously it was We Care but only 9-5 Monday through Friday.  This was a massive business decision and she overcame resistance by developing a coherent business case that addressed the critical operational hurdles and demonstrated a credible investment proposition – a business case, not a marketing presentation.

Jasmine Green, chief customer advocate of Nationwide insurance in the USA is credited with having transformed their brand positioning and commercial performance.  She explained that her success is rooted in the amount of time she spends in the business, building relationships with operators at all levels. As she said, they know there’s nothing I don’t know about what they do.  They trust and respect me and we work together.

The commercial & marketing director of a leading UK hotel group said his first port of call in any organisation is the finance director. He is relentless in understanding how the company assesses its financial performance and establishing a robust connection in the CFO’s mind between the work of his department and the key corporate drivers of the company.    He sees this as his key alliance in winning board room support for his proposals.

In each example, these leaders had developed strong business skills and taken time to investigate the operational and financial nuts & bolts of their business.  In this way they were able to construct business propositions that were credible and persuasive.  They won respect for their function by being personally impressive but this didn’t happen overnight.  The other characteristic common to these people is their resilience.  A determination to succeed and a willingness to go where it hurts. Rarely, it seems, does plan A work first time.  Influence is cumulative and persuasion takes time.

Clearly, marketing people and therefore the marketing function CAN command a place at the top table, and I passionately believe that there has never been a more important time for this aspiration to become reality.  I believe that the perspective we can bring to corporate decision making is fundamental to the competitive success of British business, especially in the critically important leisure and tourism industry where I’ve worked for the last 12 years.

Surely, it is the role of marketing to guide our organisations through increasingly volatile and unpredictable markets.  To find new ways to anticipate and respond to rapidly changing customer needs. To nurture brands that really influence purchase behaviour and ensure that every step in the customer experience delivers the brand promise.  To understand and harness the potential of new technology and communications channels including social media.  To help out organisations engage customers in the dialogue we’ve been asking for years, but now seem incapable of handling.  And to inspire and equip our people so that they can play their part in delivering that shared vision for our brand and customer experience.

A recent Hoggett Bowers survey of CEO’s concluded “Businesses that have been able to adapt their business model and address some of the fundamental issues affecting performance have delivered sustained sales growth – strong leadership is key”.

Marketers have a critically important role to play in leading change and inspiring organisations behind a shared brand vision.  Real engagement with the staff who deliver the brand experience is critical and it just can’t be faked.

I read of one guy who was travelling with American Airlines in the US. He saw a notice in the airport proclaiming “I AM THE CUSTOMER EXPERIENCE” beside an image of a smartly dressed member of staff.  I imagine this was part of an effort to engage staff and promote service to customers.   He was curious to find out more so he went and asked a member of staff what it meant.  “I don’t know”, they said – “I think it’s just a promo they’re running”.  Can’t be faked!

So why is this so critically important right now?  Well, thanks to the web, the consequences of failing to deliver can be immediate and far reaching.  As Harris Diamond CEO of BSMG Worldwide put it, “the internet put word of mouth on steroids.  If performance lags everyone will hear about it”

11% of world’s population is on Facebook. 250m tweets are posted on Twitter each day.  More than 80% of buying decisions are checked on line before purchase. There is no hiding place and CMOs have to be in the vanguard of managing the brand and customer experience at every point in the journey.

This was never more vividly illustrated than in the recent case of United Airlines. A Canadian country singer called Dave Carroll was on tour in the US.  He and his band were sitting on the plane when they saw their instruments being thrown around by luggage handlers. A guitar was damaged but when they brought it to the attention of United’s ground crew they were repeatedly given the bum’s rush.  So, Dave Carroll wrote a song and produced a video about what had happened.  He posted it on You Tube. As of Tuesday the video had received 11,444,205 hits and spawned a cottage industry of spin off videos.  The damage to the United brand is probably incalculable.

Let’s bring things bang up to date. Tuesday Jan 24.  LA Fitness, and I quote from the Guardian, “have been shamed into dropping a £360 contract it was enforcing against a heavily pregnant woman who had fallen on hard times when her husband lost his job”.  She wrote to the Guardian who took up the cause.  The story then broke on Twitter and members started cancelling subscriptions. After 6 weeks of pressure LA Fitness gave in but at what cost?

Recent research has shown that customers are using social media differently.  Where they used to check out the product before buying, now they observe how companies respond when something goes wrong and base their purchase decision on the company’s attitude and integrity.  Again, what did protecting one £360 membership cost LA Fitness in damage to their brand reputation and where was marketing that decision process?

Contrast that with Sainsbury’s response to Lily Robinson aged 3½, who wrote asking why tiger bread is called tiger bread and suggesting it should be called giraffe bread.  Customer manager Chris King (aged 27¾) wrote back saying Dear Lily, I think renaming tiger bread to giraffe bread is a great idea and sent her a £3 gift card.  This is also circulating in social media.

So cutting to the chase, if as I’m suggesting, marketers and marketing have a critical role to play in bringing that kind of experience to the table, what can we do to make sure that happens?

Well, it would be arrogant of me to suggest that I have the answers.  But, it probably won’t surprise you that I do have some suggestions I’d like to share with you and perhaps we can discuss them after dinner.

First, what can we as marketing practitioners do?  Well as I said earlier, I passionately believe this is an issue of leadership and individual accountability.     If marketing is to be included in the major corporate decision, I believe we as  marketing leaders – CMOs, Marketing Directors, marketing managers, have to  prove we are worthy of the seat. Specifically, as CMOs we have to look long and hard into the mirror and make sure that:

• We really understand the corporate drivers that are critical to our organisation and that preoccupy the CEO.  That we understand the financial and operational nut and bolts of our business and that we’re comfortable speaking the language of the board room. Business people first – marketers second.
• That we able to relate what we do to the delivery of these corporate goals and that we’re able to measure the financial impact of investment in research, marketing, customer relationship and customer experience.
• That our senior colleagues have at least a rudimentary grasp of marketing and brand management and how it impacts corporate performance
• That we have strong working relationships with the most influential leaders within our organisation. That we understand what they do and how that relates to what we do.  That they trust and respect us
• That we personally have the skills and knowledge to impress and persuade at the most senior level (financial, operational, commercial, interpersonal and intestinal) and that we’re similarly equipping the next generation in our teams. Involving them in the key decisions and honing their business and interpersonal skills as well as marketing ability.
• It’s a long list, but as we’ve seen from others, it can be done.

Second, I believe our universities and academic institutions have a major contribution to make.  Having been in the business of recruiting graduates into marketing and sales for many years, I believe even the brightest candidates start their careers lacking many of the basic skills required for entry level positions.  Presentation and interpersonal skills, the ability to analyse information and prepare a basic report or structure an argument.  The ability to work as part of a team, work to deadlines and to manage simple projects.

And in the case of graduates who have studied marketing, I would expect a practical grasp of adjacent competencies including finance, operations, change management and HR.  In organisations with well developed career programmes and training like the P&Gs of this world, this is perhaps less critical but in so many cases, these youngsters are sorely exposed because they lack may of the practical skills expected of a graduate and struggle in their first assignments.

And finally, I believe our own institute, the CIM has a vital role to play in providing dynamic leadership, breaking down some of the doors and demanding so much more of us as marketing professionals.

I would like to see the more experienced business professionals from leading organisation recruited to the upper echelons of the institute – credible leaders with a track record of success at the most senior level.

I’d like to see the CIM push the demands of CPD and make it harder to achieve and retain chartered status.  I’d like to see them communicating the value of chartered status to business in a much more persuasive and pervasive way.

I’d like to see the CIM’s education programmes change to reflect the needs of modern business, placing much greater emphasis on finance, operations, customer experience, change management and decision making.

And I believe we could benefit from much closer alliances with comparable institutes representing finance, HR, operations and distribution, developing joint education and exchange programmes and combined research.

Ladies and gentlemen, I do appreciate that these are thorny issues that have been with us for quite a while.  I also appreciate that there are no easy answers. But I passionately believe that we have a responsibility to change things for those who follow. To plant a flag in the ground and fight for change no matter how difficult.  To light a few fires and maybe start a stampede.

In one of the most inspiring business presentations I’ve ever seen, a guy called Jurgen Hintz, then divisional president of the coffee division of P&G was describing the apparently insurmountable challenge of taking the Folgers brand to number on in the US.  He concluded his presentation by saying “We know it’s going to be tough, but there’s just no future in saying things can’t be done.  The future goes to those who make it happen”.

Thank you.

What are your views?

– What are the key relationships marketing should develop in an organisation? Any tips and examples of success in this area?

– What’s the best way for marketers to learn about what I call ‘the nuts and bolts’ of an operation and involve themselves in the important business decisions?

– How can our academic bodies help marketers acquire the business skills they need?  Are marketing courses suffiently focused on areas such as finance, operations and managing change?

– What could/should the CIM do to help elevate the influence and capability of marketers?

You may also be interested in a recent Marketing Week article on this subject which you can find here:  http://tinyurl.com/7wtkysn

More details about CIM Wales can be found here:  www.cim.co.uk/wales