Meet IT's new boss: The CMO...

By Graeme Burton
12 Mar 2014 View Comments
business-fight

In boardrooms across the country, a battle has broken out: not between marketing and sales, or even between finance and everyone else, but between marketing and IT.

On the one hand, more and more purchases are being generated or researched online. On the other, companies have more customer information than ever from multiple sources, both in-house and from third parties, that they need to absorb. As a result, marketing departments are increasingly challenging IT to help them comprehend and make the most of that data so that they can proactively work to turn customers’ research into sales.

Further reading

In some instances, they are making the case for a full-scale takeover in which the CIO will answer, not to the CEO or the finance director, but directly to the chief marketing officer (CMO). And it is not just in the biggest organisations that this tug-of-war is being played out, but in many small and medium-sized enterprises too.

Retail chain Snow + Rock is one such example. Its customer relationship management (CRM) function is “owned” by marketing and its system outsourced to a third party. IT feeds raw customer-related data to the provider and the data is then the responsibility of marketing, not CIO Shiva Kumar.

However, Kumar is keen to start applying more innovative thinking to corporate customer data. For example, by enabling shop-floor staff to offer a more personalised service to customers via wireless tablet computers, as well as taking electronic payments for goods anywhere on the shop floor with the same devices.

“A traditional outsourced CRM model will give the trends, but is unlikely to offer something innovative,” says Kumar. Hence, Kumar is keen to persuade marketing to adopt new models that could, for example, make CRM data available in real-time, and both on the website as well as the shop floor.

The growing competition between CIOs and CMOs over customer data has been noted by analyst firm Forrester Research.

“The ‘age of the customer’ will place harsh and unfamiliar demands on institutions, necessitating changes in how they develop, market, sell, and deliver products and services. CIOs will be called on to support these changes, widening their agendas beyond IT to include... technology, systems and processes to win, serve and retain customers,” says Forrester founder George F Colony.

This focus on the customer, and getting and acting on deeper, more meaningful customer information, is due to three main factors that have shifted power from companies into the hands of customers, says Colony:

1. ubiquitous information about products, services and prices;
2. technologies that can “make customers visible and powerful critics”, via online review web sites, or social media, such as Twitter and Facebook;
3. the ability to purchase from anyone at any time.
(Source: “Technology management in the age of the customer” – Forrester Research)

“We used to ‘own’ the customer,” says Rick Wagoner, the former CEO of US car maker General Motors. “Now we hope and pray that they want to ‘own’ us.”

Living on a prayer?

Hoping and praying, however, isn’t enough.

“It’s about [IT and marketing] jointly understanding what it is that the market requires in terms of insight and taking action. And the marketing departments using IT as a resource and increasingly having the budget themselves, and a much greater understanding of what they require. So there’s very much a convergence taking place,” says Vivian Braun, retail and consumer products industry lead EMEA in IBM’s Information & Analytics Group.

However, she adds, with some exceptions, it is a convergence that is being led by marketing, not IT.

“They are the ones that know they need to improve their engagement with customers. They are the ones that suffer from not having the right tools. So the initiative very often comes from the marketing side – typically driving the requirements that IT help them meet,” she adds.

That belief is mirrored in the way that IBM has shifted its marketing emphasis, in many respects, from CIOs to CMOs, according to Russell Glass, CEO at marketing software company Bizo. “They are ‘forcing’ a partnership, persuading the CMO to start talking to the CIO in order to start solving these [customer relationship] problems,” says Glass.

Before the internet, he adds, companies were able to tightly control “the message” they conveyed to customers, and if potential customers wanted to research a company for any reason, typically their first call would have been to the company.

The internet has changed all that.

Forrester Research, for example, suggests that customers now do 90 per cent of their research before they pick up the phone or walk into the store. “The company has to do a much better job of getting its message in front of prospects. That requires data,” says Glass.

He continues: “Companies have to be able to understand what buyers are thinking, where in the buying process they are – even whether they are a prospect. If they are, there’s a multi-channel requirement to have information available to that buyer at the right time, the right place and with the right message.”

And that requirement is 24-hours-day, seven-days-a-week. As a result, he says, “the CMO has more ability to drive shareholder value than anyone else in the organisation, including the CEO” – and in the corporate world, the ability to make money is power.

At electronics giant Motorola, adds Glass, the CIO now even reports to the CMO – a prospect that ought to send a shiver of fear down the spine of any self-respecting CIO.

Demand-side platforms

This need to know more than ever about the customer, and to proactively cater to their needs, has led to the creation of a range of tools to help companies respond.

“It’s about easy access. Tools that enable business users to gain insight in whatever shape or form, or whatever data source, real-time in many cases, that are necessary for having a strong ‘engagement bond’ with the consumer, depending on the industry,” says Braun. “It’s about being able to understand, analyse and react in real-time.”

And that requires CRM databases capable of tapping a wider range of customer information than ever before, drawn from a variety of sources, both internal and external. It also requires the organisation to be able to automatically respond to that information when it is picked up.

One of the key technologies being used in online marketing today is demand-side platforms. These enable buyers of digital advertising to manage multiple accounts through one interface. This brings the prospect of real-time bidding for display advertising, for example, and managing advertising not in terms of precise websites or magazines, but in terms of the type of audience to whom an advertiser wants to attract.

This completely turns the old model of publishing and advertising on its head, shifting power from publishers to advertisers.

In turn, it has also facilitated the rise of data aggregation companies that can correlate the vast volumes of customer data on individuals that is being collated, not just from content websites, but from across the internet.

Acxiom is one of the best-known of these new marketing companies. “The evolution of marketing and developments in technology has enabled marketers to link the ‘disciplined’ world of offline CRM with the online world,” says Acxiom product manager Abel Negus.

Indeed, not only to link the two worlds, but to effectively integrate them, using pattern matching technology to link disparate records across different databases about the same individual.

“Utilising the knowledge base that sits behind AbiliTec [Acxiom’s data-matching engine] enables customer-relationship managers to increase the likelihood of pinpointing the identity of an individual,” says Negus.

He continues: “This is critical in the on-boarding process [pushing the offline CRM into the online ecosystem], while working with an online publisher who will enable you to locate the users [drop a cookie on them] in the online environment requires you to initially go through a match process between the individuals in the CRM, and the individuals who are customers who login to your environment. 

“You can on-board offline data from a CRM system into a data management platform [DMP]. Acxiom has one called Audience Operating System, where the data is then made available or pushed to a demand-side platform through a process called ‘cookie synchronisation’.

“The benefit of doing this is that, generally, a DMP will enable more sources of data to be connected and made available for the purpose of delivering better targeting and deeper insights through the big data analytics environment. The DMP can also be integrated with a media buying channel, DSPs, email platforms, social media platforms or even other DMP’s,” says Negus.

In other words, the re-orientation of businesses around the customer is, likewise, engineering a shift in IT around the customer as well – and IT can either embrace that change or get swept away.
That, perhaps, is why IT organisations and CIOs in particular need to take a proactive, rather than defensive, role: similar, perhaps, to the way in which Shiva Kumar is engaging marketing at Snow + Rock.

The alternative – for CIOs to be subordinate and to report to the CMO – ought to be grim enough to rouse in the most lackadaisical of IT managers into action.

@GraemeBurton

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