Hey CMOs, is Your Role Having an Identity Crisis?
I saw a recent Forbes article that talked about an “alarmingly” high rate of CMO turnover observed by Spencer Stuart. The piece floated a couple of ideas as to what may be driving the change – on the one hand, a potentially concerning view that CEOs may be firing CMOs more frequently, paired against a more hopeful outlook that CMOs may be moving onto bigger opportunities and challenges more often. In reality, both likely play a role and will be exacerbated by a rapidly shifting business and consumer landscape in which these CMOs must operate and deliver results. This begs the question – what are CMOs up against in 2019?
Let’s see if we can unpack some of the underlying market trends and understand what their impact is on the role of a CMO of a consumer brand in 2019. For the sake of our discovery exercise, we will begin with two questions about consumer behavior. Based on what we learn investigating them, we can begin to draw conclusions about what consumers expect, and therefore, what CMOs need to deliver to orchestrate success.
Question #1: where are consumers spending their dollars in 2019?
Coming out of the marketing and eCommerce leadership meetings at eTail East in August, a lot of discussions revolved around Amazon – it was on everyone’s mind. Market data explains why. eMarketer data suggests that Amazon is almost 50% of all eCommerce and Morgan Stanley research forecasts Amazon is in sight of a double-digit percentage of ALL retail sales. That’s absolutely staggering market share and growth! No wonder Walmart is investing so heavily to become more like Amazon.
So, based on the growth trajectory and the sheer magnitude of Amazon’s market impact, it’s clear that Amazon is winning in today’s consumer environment. Let’s dig deeper into the components of the consumer experience that are drawing shoppers to Amazon.
Question #2: what factors are causing consumers to spend their dollars on Amazon and facilitate this massive market shift?
Before doing research, I wrote down three guesses as to the biggest components of the Amazon experience that consumers are responding to: personalization, convenience, and price. Luckily enough, Statista and MarketingCharts.com have published some interesting survey results that allowed me to validate these guesses.
Statista’s research from 2017 on a sample size of just over a thousand Amazon shoppers shows the following as the biggest drivers of why consumers choose to purchase from Amazon: price, Prime benefits (including free shipping), convenience, fast shipping, and selection.
More recently, Epsilon’s survey of nearly four thousand Amazon shoppers in 2018 found the following to be the biggest factors: free shipping (a Prime benefit), price, fast shipping, convenience, and selection.
The order changed slightly from 2017 to 2018, but the top five reasons are essentially the same in both samples.
So what conclusions can we draw? Well, clearly, the recipe to compete with Amazon is pretty simple: offer low prices, a broad selection of products, and free and fast shipping, all via an incredibly convenient customer experience. If only it were so easy! Given that Walmart and its monstrous war chest of budget and resources hasn’t been able to beat Amazon, this is obviously easier said than done. And if our eTail conversations are indicative of market sentiment, this is still an elusive vision for many other marketing and eCommerce leaders as well.
I would argue that Amazon is winning in consumer experience because of an underlying framework, largely invisible to consumers, powered by data and experimentation. For example, how does Amazon offer such a large selection of products and give the perception of such low prices? The answer is that the Amazon Marketplace is an incredible venue for data collection and experimentation. Indeed, the scale and success of Amazon gives it a unique opportunity to build in its own path to expansion, growth, and even greater scale based on data.
While building an Amazon Marketplace equivalent R&D farm isn’t necessarily under the purview of most CMOs, the concept does give some valuable ideas for how to grow a business, especially given that today’s CMOs are being tasked with top-line revenue growth goals as much if not more than managing a marketing budget.
So what is a CMO to do? My first recommendation is to put on a (metaphorical) hard hat and surveyor vest and begin identifying all the various repositories that are tracking pieces of the customer journey – both online and off, as well as the data that influences how these journeys transpire. Completing this exercise produces what we call a Data Profile. Each brand and company has a unique one, but to create it, it starts with taking inventory of at least the various:
- advertising & media campaigns and platforms
- the web, mobile & app tracking
- the CRM, sales tracking, POS & fulfillment systems
- the contextual, demographic, and market insights that influences journeys
Next question – does all (or even some) of the Data Profile components get centralized somewhere? If not, there’s clearly some missed opportunity by not having the insights afforded by a single source of truth providing a more complete view of the customer journey, let alone the opportunity to drive automation based on a richer data set.
The good news is that today’s CMO oftentimes gets to wear the Chief Marketing Technologist hat too – that one is definitely a hard hat. Gone are the days of relying on a disinterested or disconnected IT department that takes quarters or even years to develop a substandard solution to yesterday’s business problems. Today, CMOs wearing their CMT hats can make quick decisions and build nimble and agile marketing stacks to collect, unify, and empower their brand’s Data Profile.
And then with the proper marketing stack, the CMO can then move forward with their next guiding principle: follow the math. Intuition, gut, and ideas are still important, but so is data-driven decision making, proper experiment design, and a culture that embraces failing fast to identify the channels, campaigns, targeting, creatives, and offers that grow revenue.
Back to Amazon. We’ve established that Amazon is one of the gold standards for consumer experience and that Amazon’s underlying infrastructure enabling data collection and experimentation is critical in achieving this success.
Who else is embracing these principles as a Marketing leader?
One recent example that stands out to me is Jim Lyski, CMO at used car mega-retailer CarMax. I had the privilege of hearing Jim speak at eTail East in August about the company’s digital transformation, including a focus on personalization, leveraging the power of data, and enabling connectivity. It was a humble discussion about how the firm, already the leading used car retailer in the country, recognized that it needed to disrupt itself. CarMax, based in Richmond, Virginia, even sent its executives and marketing teams on “safaris” to Silicon Valley to experience how startups and tech giants drive such disruption.
Jim has his hard hat on. He’s embracing that a CMO needs to be an explorer – a confident leader who relishes the fact that the future is a jungle that requires a methodical and analytical approach to tame. By doing so – via the right combination of people, technology, partnerships, and vision – there is a chance to engage with consumers in a transformational way.
Is CarMax on track to become the Amazon of used car buying? Time will tell. But kudos to Jim for bringing the right mindset to the table.