Do chief marketing officers (CMOs) really add value? That’s the question the Harvard Business Review asked in 2015 after a 2008 study indicated that the presence of a marketing officer in the C-suite had no real effect on company performance.
A follow-up study of 155 publicly traded U.S. companies, however, showed that those with a CMO performed about 15 percent better than those without one. At that point, many considered the question resolved. Now, however, with nearly 80 percent of B2B marketers responsible for driving revenue, yet less than a third able to show credible results, the question is changing again. Are CMOs the best C-suite executives for fueling growth?
Coca-Cola thinks not
After serving as Coca-Cola’s CMO for more than three decades, Marcos de Quinto is retiring. Instead of replacing him, Coca-Cola has announced that the company is creating a new chief growth officer (CGO) role, which will lead both its commercial and consumer teams. Analysts speculate that a drop in revenues of $3.7 billion from 2012 to 2016 may have influenced the new CEO’s decision. Promote on Purpose CEO Terri Maxwell agrees.
“They’re aligning the sales and marketing functions,” says Maxwell. “There’s always been a great divide there, and it’s an issue I noticed very early on in my career when a company I was with made the decision to have marketing report to sales. That move forced me to focus on marketing that supported growth.”
When asked why Coca-Cola didn’t simply hire a new CMO that understood the interplay between sales and marketing, Maxwell explained:
“Most current marketing officers just don’t understand the role marketing plays in growth,” she says. “They think of advertising, but that is only one path to growth. They don’t see themselves as a growth officer; they see themselves as a branding and communication officer. Coke isn’t seeing CMO candidates who understand how marketing plays into growth. With this move they’re signaling they want their marketing to evolve.”
Her insights appear to match up well with the mindset of Coca-Cola’s new CEO, James Quincey, who has said the company is on a “transformational journey” to become “growth-oriented and consumer-centered.”
Coca-Cola isn’t the only one embracing structural change
A recent Accenture survey revealed that more than a third of CEOs say the CMO is the first on the chopping block if growth targets aren’t met. This number lines up well with Forrester research, which predicted that CEOs will exit at least 30 percent of their CMOs in 2017 in an effort to get closer to the customer and to compete in a consumer-led, digital marketplace.
Three ways current CMOs can up their game
No. 1: Rebrand yourself
CMOs who want to stay relevant in their companies need to reinvent themselves.
“The CMO role has to evolve,” says Maxwell. “I would encourage current CMOs to reinvent their personal brand into being a CGO.”
This rebranding will involve managing marketing itself more as a business and less as a department. Executives must fully understand – and be able to demonstrate – the link between their marketing investments and the returns on those investments. If they can do this, they may well save themselves from futility and drive performance more than a typical CGO.
“The CGO role should not just be a sales function,” says Maxwell. “The CGO must understand how to use marketing to support sales and also understand how to position marketing efforts for brand differentiation in the marketplace.”
A rebranded CMO may understand this better than a lifelong CGO.
No. 2: Seek out new skills
Forrester researchers agree: It’s all about bridging that gap between branding strategies and sales. That means tying the right and left sides of the brain together by designing engaging experiences and mastering the technology and analytics necessary to deliver those experiences to customers.
“‘Whole-brained’ CMOs are in the minority – but they will soon be the competency standard for both B2C and B2B companies,” wrote the Forrester researchers in an October 2016 report. Those who don’t exhibit the necessary blended skills will be ousted.
No. 3: Focus on growth and growth metrics
Rebranded CMOs must focus on profitable growth and brand elevation rather than brand awareness, says Maxwell. “Innovate for growth. Develop new products or services you can position to be number one or number two in a niche market.”
They also must understand CGO benchmarks and be able to demonstrate success.
“The metrics used to evaluate the traditional CMO’s success – brand awareness, clicks, calls, etc. – aren’t about the financial health of the company,” says Maxwell. “Those metrics are outdated, just as the traditional CMO role is not serving companies well anymore.”
Revenue growth and increased profit margin are the new keys to measuring effectiveness. “You want to build a more profitable company, not just a larger company,” says Maxwell. “Focusing on profitable growth helps you do that.”