The CMO's Role in a Customer-Centric Organization

The Head Marketer Is Pivotal to Defining and Implementing Programs About People, Not Products

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Jay Galbraith
Jay Galbraith
Deciding whether to adopt a customer-centric orientation is a significant decision for organizations, not to be made casually. It results in debates defining customer centricity, often with the question, "How customer-centric do we need to be?" Inevitably, it means organizing around the customer and the further proliferation of the types of marketing needed to do so effectively. The many companies that have embraced a customer-centric orientation have experienced some real and often unexpected challenges. At the center of these challenges is the role of the chief marketing officer -- the person who needs to deliver thought leadership, lead the strategy debate and reorganization, and then integrate the various marketing types into a company-wide, customer-centric orientation.

The need for strong thought leadership begins by defining customer centricity. This task is more difficult than simply establishing a company lexicon. The reason is that many product-centric companies think that they are customer-centric -- and when people like me tell them they're not, they push back. These companies, such as Hewlett-Packard's printer business, have followed all of the experts' advice to be customer-focused. They drive their product-development process with customer insights. They use ergonomic and anthropological studies to guide product design. They test the design on focus groups and user groups. They measure customer satisfaction and so on. But at the end of the day, they are still product-centric. Why? Because they are trying to reach as many customers as possible for their product. Their metric is market share and customer retention.

A customer-centric business tries to find as many products and services as possible for the customer. They create solutions and experiences for their customers. The CMO's role? To be the thought leader who defines customer centricity and determines if the company is product-centric or customer-centric.

'How customer-centric should we be?'
The question then becomes one of, "How customer-centric should we be?" The CMO often leads this effort or is certainly a key player. The strategy group and the sales leaders are often allies in the formulation of the strategy, which can vary from a "light" version to a complete customer-centric version. The more complete the solutions or experiences are, the greater the CMO role.

Walmart is a retailer that offers a light version of solutions. Working with their vendors, they introduced the combination of a few products organized around a theme. One was "Moms on the Move," developed with Procter & Gamble, based on the insight that there are a large number of mothers who spend most of their day in their SUV or minivan. The solution was to combine select, useful products for mom's vehicle, such as paper towels, diapers, tissues, hand cream and Mr. Clean Magic Erasers, that were then promoted and accompanied with coupons. The offering was light because it consisted of only a few products, which were loosely coupled. The products were never designed to work together. On the other hand, the combination created a convenience value for mothers. The role of the CMO is one of generating and implementing these cross-category solutions.

Best Buy offers a more complete level of solutions that are designed for its customer segments -- for example, middle-aged, high-income men who like entertainment but have no clue about the operation of modern electronics. The chain creates a home-entertainment center -- a TV, DVR, stereo system and speakers, all in an integrated package -- and delivers it to their homes, where it will be installed by the Geek Squad, Best Buy's service business, which teaches them how to use the center and will return as necessary to maintain it.

Best Buy's solutions are more complete because they consist of many products and services that are integrated to operate seamlessly. These solutions require more customer insight and knowledge in order to create value for the customer segment. In general, the larger the solution -- the more products and services that are combined -- the greater the amount of customer insights and knowledge needed to create that solution.

Leading segmentation
The CMO role is key in leading the segmentation effort. The CMO needs an accepted segmentation methodology. The creation of solutions based on insights falls to the segment organization at Best Buy. But the CMO needs to build and establish a robust insight-development process throughout the company to drive the development of solutions. Finally, the CMO will need to bring the brand architecture framework to bear. The segments may or may not have their own sub-brands.

The company pursuing the customer-centric orientation inevitably organizes around the customer. The structure follows the strategy. Best Buy, IBM and P&G all have added organizational units dedicated to customers or customer segments. But these new units are not automatically welcomed and integrated into the companies' power structure.

The successful implementation of customer segments creates yet another kind of marketing: the customer-marketing specialist. The marketing community consists of specialists at the corporate center, such as customer insights; product marketing in the business units; regional marketing in the regions and now customer marketing in the segments. The CMO needs to have the leadership skills to manage this company-wide community. The CMO typically runs the marketing councils for the company. Because the marketing function operates in a matrix such as finance, the council is the primary means of integration.

These roles of thought leader, transformation leader and matrix manager are probably the biggest challenges for the contemporary CMO. Like many leadership roles today, there is no one individual who can play all of them simultaneously. Instead, the CMO will need to lead a team to execute customer centricity.

ABOUT THE AUTHOR
Jay Galbraith is founder-president of Galbraith Management Consultants, an international consulting firm that specializes in solving strategy and organizational design challenges across corporate, business unit and international levels. He is also the author of three books, the most recent being "Designing Matrix Organizations That Actually Work: How IBM, Procter & Gamble and Others Design for Success" (Jossey-Bass, 2008).
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