CMO Talk: What If Everything You Knew About Marketing Changed?

Click to enlarge. The practice of marketing is going through a period of unparalleled change, putting CMOs everywhere to the test. However, you can seize the opportunity to transform your marketing function. The combined insights of the 1,734 senior marketing executives participating in IBM’s Global CMO study point to three strategic imperatives that can strengthen your likelihood of success, as outlined in the graphic above.

Contrary to popular opinion, we don’t all know one another at IBM.

I know, I know, it’s hard to believe, considering there’s only 400,000+ plus of us — you’d think we all knew one another, but we don’t.

But the good news is, we’re always making new acquaintances inside IBM.

That was the case at the Word of Mouth Marketing Association Summit I attended last week in Vegas, where I finally got to meet face-to-face my colleague, Carolyn Heller Baird.

Carolyn is situated in IBM’s Global Business Services organization, and for the better part of two years, Carolyn served as the Global Director for our Chief Marketing Officer study, which was released late last year (and for which I wrote an extensive blog post, which you can find here.)

Carolyn was also in attendance at WOMMA, where she presented the CMO findings in some detail before a sizable audience.

I sat down with Carolyn to talk about the study’s findings in more detail, and to also try and better understand the implications for marketers in general, and social media practitioners in specific.

Before I hand you off to our interview below, I want to highlight the fact that the study results are still available via download here.

As the study concluded, half of all CMOs today feel insufficiently prepared to provide hard numbers for marketing ROI, even as they expect that by 2015, return on marketing investment will be the primary measure of the marketing function’s effectiveness.

There’s a gap to close there, and Carolyn’s comments in the video provide some actionable insights on to how to start to close it!

IBM Retail Online Index: Mobile Up, Social Down

If you’ve been following the mobile and social space, and especially if you own your own smartphone, you know the impact that that increased mobility means in terms of your ability to conduct business –- personal and professional –- while on the go.

Now, IBM has some empirical data that indicates those behavioral changes due to smartphone adoption are occurring on a more massive scale.

The IBM Retail Online Index, a cloud-based analysis of the online retail sector, integrates factual marketplace data from its analytics offerings, including the Benchmark, with insights from the IBM Social Sentiment Index, an advanced analytics and natural language processing tool that analyzes large volumes of social media data to assess public opinions.

The combination of these two offerings provides the most accurate and immediate snap shot on the state of the online retail market.

According to the latest IBM Retail Online report, mobile shopping rose while social media sales fell, providing an indication of where US retailers may invest in order to capture the attention and loyalty of the digital consumer. The IBM Retail Online Index reported that retailers experienced 15 percent growth in sales from mobile devices but saw a 20 percent decline in sales traced to social media based on a much smaller base over this three-month period.

This report follows today’s news from the U.S. Department of Commerce’s Census Bureau which announced its estimates of U.S. retail and food services sales. According to the findings, retail sales fell 0.5 percent in June from May, the third straight month sales have been down from the month before. On a positive note, June 2012 sales were 3.8 percent above the pace of June 2011.

IBM’s Retail Online Index: Mobile Commerce Now 15% Of All Online Purchases

IBM’s Retail Online Index identified several trends of importance to chief marketing officers (CMO), e-commerce leaders and customer service professionals. Over the second quarter consumers continued to embrace mobile devices as a shopping tool, with mobile commerce accounting for 15.1 percent of all online purchases, an increase of more than 14 percent. Despite this momentum retailers are still struggling to sustain substantial success with their social media efforts, evidenced by a more than 20 percent drop in social shopping. 

According to IBM’s State of Marketing 2012 survey, one explanation for social commerce’s failure may be the absence of a CMO and CIO alliance which is critical as marketing and online commerce become increasingly technology-driven. The lack of this alliance hinders the deployment of integrated technologies capable of fueling effective social media efforts.

A second factor is marketing’s inability to form a clear consensus on how to utilize social channels. As a result, the retail online index saw a decline in positive sentiment around social media, which according to the online index dropped from 25.1 percent in Q1 to 18.6 percent in Q2. Leading factors for this shift were the lack of deals being offered by retailers through these channels, which were more prevalent in Q1.

More Shoppers Are Multi-Channel, Mobile And Social

“Shoppers today are shifting from a singular online approach to a multi-channel experience that includes both mobile and social media. As a result, retailers must be prepared to connect with their customers on all fronts, or lose them to the competition,” said Craig Hayman, General Manager, IBM Industry Solutions. “As we enter the home stretch for the 2012 holiday season, we will continue to watch how CMOs and CIOs tackle these challenges and create social media efforts that deliver value to the customer while driving revenue for the business.”

Over the second quarter, while online traffic and sales for Q2 were down 6.7 percent and 2.3 percent from Q1 respectively, there were signs of optimism. Specifically, for completed orders, shoppers bought more items (average items per order grew 2.6 percent) and spent more for each transaction (average order values for each purchase grew by 2.3 percent) over the second quarter.

Part of IBM’s Smarter Commerce initiative, the Retail Online Index draws data and insights from IBM’s big data offerings to provide the industry’s most comprehensive look into the pulse of online retail through traditional and social media channels. The index analysis for second-quarter 2012 reveals the following trends:

Online Retail Sales for Q2 2012 versus Q1 2012:

• Consumer Spending: Total online sales for the quarter were down 2.3 percent over Q1 2012.
• Average Order Value: The average value for each order in Q2 grew by 2.3 percent.
• Items Per Order: The average number of items per order increased by 2.6 percent.
• Page view Per Session: Page views per session dropped by 2 percent to 6.4 pages.
• Mobile Sales: Sales from mobile devices reached 15.1 percent, up from the 13.3 percent in Q1 2012.
• Mobile Devices: While Apple’s iPhone continued to rank one for mobile device retail traffic at 8.2 percent, Android surpassed the iPad which finished at 6.8 percent and 6.7 percent respectively.
• Social Traffic: Shoppers referred from social networks generated 1.3 percent of all online traffic over Q2 2012, a slight increase from the 1.1 percent seen the previous quarter.
• Social Sales: Shoppers referred to retailer sites from social networks generated 1.9 percent of all online sales over Q2 2012, a decrease from the 2.4 percent seen in Q1.

Online Retail Categories for Q2 2012 versus Q1 2012:

• Consumers further intensified their focus on the home with home goods sales growing by 35.3 percent in Q2.
• Department stores continued to catch the attention of consumers with sales growing 3.7 percent
• Jewelry stores maintained its upward track with sales growing by 1.4 percent.

Consumer Sentiment for Department Stores for Q2 2012 versus Q1 2012 based on the IBM Social Sentiment Index:

• Social Media: A potential result of retailers failing to deliver compelling campaigns through these channels, positive sentiment around social media dropped by 6.5 percentage points, from 25.1 percent in Q1 to 18.6 percent in Q2.
• Loyalty and Pricing: Where sales and clearing inventory were priorities in Q1, retailer prices returned to more normal rates in Q2, a shift that fueled negative sentiment around pricing which grew by 2.1 percentage points. These factors also impacted consumer loyalty where negative sentiment grew by 2.1 percentage points.

 

About IBM Smarter Commerce

IBM’s Smarter Commerce initiative delivers software and services to help companies transform their business processes to more quickly respond to shifting customer demands in today’s digitally transformed marketplace. The initiative is driven by the demands from organizations who are increasingly looking for ways to bring new levels of automation to marketing, sales and fulfillment to secure greater customer loyalty. The growth of mobile, social and online commerce are key trends within Smarter Commerce.

You can learn more about IBM’s Smarter Commerce initiative here.

Live @ IBM Smarter Commerce Global Summit Madrid: IBM VP Maria Winans On Smarter Commerce Marketing

Maria Winans, IBM vice president, Industry Solutions Group, has helped champion IBM’s marketing strategy for its “Smarter Commerce” initiative, and has been instrumental in leading IBM’s efforts to reach beyond the traditional IT audience and into the “C-suite,” including most recently, to chief marketing officers.

Scott Laningham and I spoke to a number of IBM execs, partners, and subject matter experts at the IBM Smarter Commerce Global Summit this week, one of whom has been a key driver for IBM’s events catering to business executives.

Maria Winans is a vice president with IBM Software’s Industry Solutions group, and spent countless hours leading a team that prepared for the Madrid Summit, among others.

Maria and her team are laser-focused on helping take IBM software solutions to market by industry, centering their energy on a number of key verticals, including the retail and banking industries, among others.

Maria discussed a number of important issues in our conversation, including the trend towards communicating more with the “line-of-business” customer set, and the requisite changes that that is driving in IBM’s go-to-market efforts.

Live @ IBM Smarter Commerce Global Summit Madrid: OgilvyOne Chairman & CEO Brian Fetherstonhaugh Speaks About The CMO Hotseat

Brian Fetherstonhaugh, as the chairman and CEO of OgilvyOne Worldwide, has a unique vantage point on how brands are built, how corporate cultures are created, and what happens as the world goes digital. In the course of the past 25 years, Brian has worked hands-on with many of the world’s leading brands including, IBM, American Express, Cisco, Coca-Cola, Motorola, Unilever, Nestlé, Kodak, and Yahoo! Today, Brian leads OgilvyOne Worldwide, the interactive marketing and consulting arm of the Ogilvy Group. With more than 4,000 staff in 50 countries, OgilvyOne is at the forefront of the digital revolution. In 2007 and 2009, the Forrester Report ranked Ogilvy as a leading U.S. interactive agency.

OgilvyOne Worldwide Chairman and CEO Brian Fetherstonhaugh started our Q&A today here at the IBM Smarter Commerce Global Summit in Madrid by revealing who his favorite character on the 1960s-era AMC show about advertising, “Mad Men,” was.  Drum roll, please….It’s…JOAN.

Mainly, Brian explained, because Joan “gets things done.”

We then turned our discussion to the vast evolution IBM’s own marketing culture has endured the past two decades, and the opportunities and challenges presented by the changing marketing landscape for CMOs, whose tenures these days last an average 27 months.

Brian also discussed other key issues facing chief marketing officers during this time of great change, including the need for CMOs to focus on new talents and skills development. Before he jetted off to another city somewhere in the world, Brian left the IBM Smarter Commerce Global Summit, and you, with some valuable marketing advice.

And when you watch the video, never mind the Spanish waiter who entered the frame for just a moment: He was simply doing what we wish to see companies everywhere do best, servicing their customers!

IBM’s 2011 Midmarket CMO Study: Sustaining Brand Loyalty With Today’s Social Consumer

IBM is on a roll recently with its market research, and this go ‘round centers on the concerns of chief marketing officers (CMOs) in the midmarket (small-to-medium sized businesses).

CMOs from midsize firms are striking a better balance today between investing in solutions that drive efficiency and those that improve decision making, foster collaboration, and enhance customer relationships.

First, the headline: Building and sustaining brand loyalty is the top concern for midmarket CMOs, yet 72 percent of them are not sure how to effectively build this loyalty.

Additionally, 70 percent of these CMOs are concerned about data explosion, as they are tasked with making sense of highly complex information generated constantly from a variety of sources such as consumer blogs, Tweets, mobile texts, and videos.

Calgon, take me away!

The report also suggests that today’s CMOs need to be better prepared with an empowered consumer that is impacting brands instantly on Twitter, Facebook, and other social channels (Look no further than this week’s challenge that Bank of America faced when its Google+ channel was “brandjacked”!)

Sixty-one percent of midmarket are struggling with how to transform this shift into a business opportunity. Many CMOs are focused on understanding the markets versus understanding the individual consumer in order to shape marketing strategies.

Only 40 percent of midmarket CMOs are taking the time to understand and evaluate the impact of consumer generated reviews, blogs and third party rankings of their brands!

What’s the Problem?

The proliferation of social media and mobile devices is creating a new breed of consumer that is digitally savvy and is able to quickly compare and evaluate which products and services they want to buy.

Mobile commerce is expected to reach $31 billion by 2016, yet 62 percent of midmarket CMOs are not prepared to capture the business opportunity mobile commerce presents. This increase in the mobile shopping trend further increases marketing challenges, complicates data collection and analysis, and threatens both customer service and customer retention.

Like their peers in larger organizations, midmarket CMOs are also being held more financially accountable to their organizations to produce business outcomes at a faster pace.

The study also revealed that while midmarket CMOs believe ROI on marketing dollars spent will be the most important measuring stick for determining success of their business by 2015, the survey noted 72 percent of CMOs are unprepared for the plummeting level of brand loyalty.

Aside from current economic conditions, there’s an even bigger factor impacting brand loyalty.

Innovations in technology and the spread of social networking have provided buyers with new tools for discovering, comparing, evaluating, choosing and experiencing brands.

With the growth of social networks and a need for transparency, trust and personal exchanges between the consumer and the marketplace are now forming the cornerstone of small and midsize marketing efforts.

Everyday consumers are creating 2.5 quintillion bytes of data with 90 percent of the world’s data created in the last two years alone. Savvy marketers are gaining insight from social media and incorporating it into their strategies.

The key is predicting what consumers will want and then adapting marketing strategies to give them the right product when, where, and at what price they want it.

Today, retailers are embracing technologies such as analytics to make sense of massive amounts of data consumers are generating every single second to effectively target the individual consumer and enhance the shopping experience.

IBM Case Study: Lee Jeans Teams Works to Understand the Individual Consumer

Lee Jeans, one of the most recognizable apparel brands in the world faced the challenge of capturing and analyzing the huge volume of information being generated by a variety of sources before any merchandising decisions could be made on its website, Lee.com.

By adopting analytics technology, Lee employees now have the capability to quickly make informed decisions that will improve the consumer’s shopping experience.

Now, all the information that merchandisers need such as how well items sell, what is currently in stock and what consumers are saying through social media channels is organized into simple visuals that are shown over product thumbnail images on the Lee website.

With this visual layout that mirrors Lee.com, the merchandisers can easily move products around based on popularity and availability.

Merchandisers are able to see which products are being viewed most often and most importantly, which ones are being purchased most often. This ultimately allows the Lee team to display the site in a way that provides the best shopping experience for consumers.

Lee is now also able to obtain all product view data, online sales, abandonment rates and conversion rates to give Lee merchandisers a quick snapshot of product performance.  Lee is also capturing consumer sentiment data generated from social media channels such as Facebook and brand rating website Bazaarvoice.

Facebook ‘Likes’and Bazaarvoice ratings are also included in the tool at the product level and these insights are used to help with marketing and merchandising decisions.  Using social media and analytics Lee can now make faster and more informed merchandising decisions targeted at its customers with a simple click of the mouse

Go here for more information on the IBM Mid-Market CMO Study.

You can also register for the IBM Smarter Commerce webcast on Nov. 17 at 10am ET to learn more.