When CMOs Learn to Love Data, They'll Be VIPs in the C-Suite

And If They Don't, They'll Be Relegated to Overseeing Promotions While Someone Else Takes Chief Customer Officer Role

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Data was once the domain of tech geeks and direct-marketing gurus, while chief marketing officers focused on loftier things like shaping brand perception. But those days are over. A study from tech-research firm Gartner projects that by 2017 the CMO will spend more money on information technology than the chief information officer.

Macy's CMO Martine Reardon
Macy's CMO Martine Reardon

Thanks to an explosion of data from social-media platforms, call centers, transactions, loyalty programs, registries and more, CMOs who want a seat at the table will have to harness customer data and leverage it -- or risk being relegated to chief promotions officer.

"With economics and innovation, things that weren't possible years ago are now possible, and that 's causing brands to stop and rethink the role of data and how it powers the enterprise," said Tim Suther, CMO at Acxiom, a technology and marketing-services company.

Take Macy's , for example. The retailer is mining customer data in partnership with customer-insights specialist Dunnhumby to better understand shopping preferences and behavior. That enables Macy's to make informed marketing decisions by looking at the day or even the time consumers prefer to shop. It can also offer solutions; for example, a black handbag to complement the black shoes just purchased.

"Those are the kinds of things we've started to do with customer data so we're not polluting her mailbox, so we're not guiding her through a 98-page [catalog] when the first 50 pages aren't relevant," said Macy's CMO Martine Reardon. "This fell to marketing, because we are the team of people that really have the customer on our minds 100% of the time."

The challenge for CMOs, said Dave Frankland, an analyst with Forrester, is to integrate that data and mine insights to "distinguish signal from noise." The payoff for marketers who accept that challenge will be data and insights that give them "credibility and validity to go alongside their hunch and expertise," he said. "The best CMOs inherently understand customers at a macro level. This allows them to get in the customer's head at a micro level."

At business-communications company Avaya, CMO Dan Murphy is responsible for shepherding customer data, which he uses to identify sales trends and revenue opportunities. "I'm able to identify through the data we get where particular customers are in that sales life cycle, and I can target my marketing specifically to where they are," said Mr. Murphy. "It's very different from where marketing used to be, where you threw the net far and hoped you could capture some customers. Now, we have a laser focus."

Companies that are already established in gathering and analyzing customer data include credit-card companies, as well as other direct marketers such as Geico and Dell , said David Williams, chairman-CEO of CRM agency Merkle. Retailers, consumer-packaged-goods and health-care companies are trailing. But there are few companies that won't be headed down that road in the next three to five years, predicted Mr. Frankland. Forrester, for its part, has dubbed 2010 and beyond the "age of the customer."

"The only sustainable competitive advantage is knowledge of and engagement with customers," wrote Forrester analyst Josh Bernoff. "Brand, manufacturing, distribution and IT are all table stakes. The only source of competitive advantage is the one that can survive technology-fueled disruption, an obsession with understanding, delighting, connecting with and serving customers. In this age, companies that thrive ... are those that tilt their budgets toward customer knowledge and relationships."

In fact, industry watchers say today's CMO must become the de-facto chief customer officer -- or lose out. "CMOs have historically been the brand steward. This is an opportunity to be a customer steward," Mr. Frankland said. "If they don't do it, someone else will."

The unanswered question is whether that person will be the CMO, the CIO or a newly elevated chief customer officer. Mr. Williams believes the ideal scenario would be a partnership between the CMO and CIO.

"Things that have historically been separate are fusing: Mad Men and math men, offline and online," said Mr. Suther. "It's a great time to be a CMO, if you want it to be. ... The CMO, as the traditional voice of the customer, has an opportunity to redefine [his or her role] in a more robust way and earn a seat at the big table."

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