Why Next-Generation CMOs Must Master Customer Intelligence

How to Be One of the 15% of Firms That Get It Right

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Dave Frankland
Dave Frankland
As has been discussed in these pages, there has never been greater demand for marketing accountability. Consumers have never been so technologically and socially empowered, and we have never had the level of consumer data that we have today. The implications and challenges for understanding customers and marketing to them are enormous. Transforming customer data into actionable intelligence and measuring the business impact of marketing will be key success imperatives for tomorrow's CMO.

But while some claim that the age of the left-brain marketer has arrived, too often we see customer data buried in the direct-marketing department, manipulated and modeled by propeller-heads to create a campaign file. And yet, in a small number of firms, we find customer intelligence elevated into a strategic command center for the business. In these firms, customer knowledge drives decisions across the enterprise -- from marketing planning and strategy to product development, and from risk analysis and staffing to business operations and corporate strategy. And most of these firms point to a broad range of benefits, including improvements in customer acquisition, retention and satisfaction to increased revenue, profitability and customer lifetime value.

What defines these leading firms? They treat customer data as a strategic asset, put the customer at the center of all decision making and use data-driven insight to tailor all customer communications. It sounds simple, but can you name five companies that do it? Our research shows that fewer than 15% of firms have a strategic customer-intelligence operation. These firms leverage customer intelligence broadly throughout the organization, they value customer knowledge as a corporate asset and they frequently have an evangelist in the C-suite. They continually demonstrate that customer intelligence drives overall business growth.

So how do you become one of these firms? Start by looking at your corporate culture. Almost every company we speak with claims that they are focused on their customers and many even describe themselves as customer-centric. But very few follow through on that philosophy with any meaningful results. To do so, you need to break down organizational silos, align compensation structures, establish customer-listening programs and implement an enterprise-wide customer-contact strategy. This last element -- the contact strategy -- is a road map that ensures customers receive the most relevant message at the right time and in their preferred mode. Consider Disney, which uses what it learns from every customer interaction to stay one step ahead of customers at every turn. Disney's success is enabled by its information-driven and highly dynamic marketing practices, but it all starts with a corporate culture designed around the mantra "know me and be relevant."

After understanding the cultural changes that are needed, CMOs must hire the right people with the right skill sets. You need critical thinkers who can challenge the status quo and translate business problems into questions that can be answered with deep customer knowledge. In our research, we found that a high-performing customer-intelligence organization needs a centralized team comprised of people from four disciplines: 1. customer strategists 2. marketing technologists 3. marketing scientists and 4. marketing practitioners. These four archetypes each play very different but invaluable roles in the organization. While every firm has someone in the practitioner role, most firms are missing the customer strategist.

Not all customers are created equal, and by some accounts, your bottom 20% of clients may be draining 80% of your profits. Do you know who they are? Does your executive team? Do you have a strategy for changing that equation? Customer value isn't just a marketing metric, it should be a key performance indicator for the business. As CMO, you will have to help reconcile customer value with line of business and brand managers that are tasked with growing revenue for their corner of the world and make enterprise customer value a high-level metric for the organization. Some firms, such as Farmer's Insurance, take this further and use customer knowledge to predict the lifetime value of prospective customers and target high-potential value prospects accordingly.

Once you have figured out the cultural element and addressed the people component, you can start to think about technology. Customer intelligence relies heavily on technology. It requires a data-management and analytics framework that centralizes customer data, listens across channels, automates processes, and enables intelligent "push" and "pull" interactions with customers. But all the technology in the world will be wasted unless it is being pointed in the right direction -- on facilitating the organization's ability to put the customer at the center of everything they do -- and not just talking about it.

CMOs have always cared deeply about their brands and the emotional connection that they create with their customers. They absolutely must continue to do so, but that kind of connection will be nearly impossible to create with increasingly empowered, connected customers who have limited tolerance for marketing. To succeed, the next-generation CMO must help their organizations to truly understand their customers; they must act as the customer advocate within the organization; and they must focus on building customer value at every interaction.

Dave Frankland is a principal analyst at Forrester.
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