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!

New IBM Study: The Business of Social Business

IBM’s recent study on “The Business of Social Business” revealed three major areas where organizations can most effectively apply their social business investments. The study surveyed more than 1,100 businesses worldwide, and included extensive interviews with more than two dozen widely recognized leaders in social business. You can find a link to a downloadable version of the study later in this blog post.

If you’ve been looking for a study that will help you better understand how organizations around the globe are viewing the opportunity social business presents as a fundamental way by which to rethink and overhaul how they conduct their business operations in the social age, IBM has something for you.

Earlier today, we released the new IBM Institute for Business Value study entitled “The Business of Social Business.”

This was a survey conducted of more than 1,110 businesses around the world, and with extensive interviews with more than two dozen recognized global leaders in social business. Many of those executives explained to IBM that, in fact, social business is gaining traction in their organizations.

Top line, 46 percent of the companies surveyed increased their investments in social business in 2012, and 62 percent indicated they were going to increase their expenditures in the next three years.

As the executive summary of the report stated, “The question surrounding social media today is not whether you are doing but, but whether you are doing enough.

Getting your 100,000th “Like” on Facebook, or having your latest pearl of wisdom retweeted 200 times an hour is all well and good, but are these activities driving revenue, attracting talent, and bridging the collaboration gaps in your organization?”

Is your use of social media allowing your organization to engage with the right customers, improve their online experience, and tap into their latest insights and ideas?

And does your social approach provide your customer-facing representatives with the ability to search the globe for expertise or apply learnings?

For far too many organizations, the answer are, “not yet.”

What IS Social Business?

IBM defines social business as embedding tools, media, and practices into the ongoing activities of an organization. It enables individuals to connect and share information and insights more effectively with others, both inside and outside the organization.

Social business tools facilitate engagement in extensive discussions with employees, customers, business partners, and other stakeholders and allow sharing of resources, skills and knowledge to drive business outcomes.

And what’s the upside? Top-line growth for social business users can improve between 3 and 11 percent, according to a recent study from the McKinsey Global Institute, and productivity can be enhanced by between 2 and 12 percent.

I’ll hand you off to a link of the full study later, but to net out the findings, IBM’s survey and interviews revealed three major areas where organizations apply social business investments (see graphic above):

• Create valued customer experiences
• Drive workforce productivity and effectiveness
• Acclerate innovation

Shifting Towards Sales And Service

For those who have been involved in the social media realm to date, it’s important to note that social business is about moving beyond basic promotional activities to encompass the entire customer lifecycle, including lead generation, sales, and post-sales service.

The IBM study had a sub-sample of clients with some social business experience which revealed that while the percentage of companies expecting to use social business for promotional activities will rise slightly, from 71 percent today to 83 percent in the next two years, the number of companies expecting to use social approaches to generate sales leads and revenue will increase dramatically.

How companies are using social business capabilities is evolving rapidly. As you can see in the graphic, it is moving beyond basic promotional activities to encompass the entire customer lifecycle, including lead generation, sales, and even post-sales service.

Today, 51 percent use social approaches for leads and revenue, while 74 percent plan to get on board in the next two years.  Post-sales support is also expected to increase, from 46 today to 69 percent over the next two years (see graphic entitled “Users of Social Business”).

Getting Started With Social Business

Regardless of where your organization is in its own social business journey, the use of social business practices is a transformation that leads toward new ways of working.

IBM’s research revealed three essential actions to be taken across the enterprise, from the CEO’s office to the farthest corner of the organization.

1. Develop social methods and tools to create consistent and valued customer experiences.
2. Embed social capabilities to drive workforce productivity and effectiveness.
3. Use social approaches to accelerate innovation.

If you’re interested in reading the full study, you can register to download it here.

As IBM’s vice president for social business, Sandy Carter, explained in the video interview below during our recent interview at the IBM Interconnect in Singapore, “culture eats strategy for lunch.” Sandy offered up some great advice on world-class social business practices, as well as how companies and individuals can better establish their brands in an increasingly crowded social marketplace.

Live From Pulse 2012: IBM Study — Cloud Computing to Rewrite Corporate Business Models

The number of enterprises turning to cloud computing to revamp outdated business models will more than double in the next three years, as business leaders move to capitalize on the rapid availability of data and the growing popularity of social media, according to a new study released today by IBM.

Organizations clearly intend for cloud to improve their business capabilities, in addition to enhancing internal efficiencies.

Businesses that embrace the transformative power of cloud will have a significant advantage in the race to introduce new products and services and capture new markets.

To better understand the shift in how organizations use cloud today and how they plan to employ it in the future IBM, in conjunction with the Economist Intelligence Unit, surveyed more than 500 business and technology executives worldwide. The findings were compiled in a new study, titled “The Power of Cloud: Driving business model innovation.”

“Companies are starting to understand — cloud isn’t just about gaining efficiencies and cost savings; it’s about driving the kind of fundamental innovation that provides lasting marketplace advantage,” said Saul Berman, IBM global strategy consulting leader and co-author of the study.

Changing Motivations for Cloud Adoption

According to the study, as they strive to better meet customers’ needs and drive future growth, business leaders will increasingly tap cloud to develop new business models that can exploit the capabilities resulting from these digital trends.

While 16 percent of the executives surveyed indicate they are already using cloud capabilities for sweeping innovation, such as entering new lines of business or reshaping an existing industry, by 2015 35 percent intend to use it to transform their business models. 

While a little more than half of the respondents indicated “improving organizational efficiency” as a top business challenge today, only 31 percent anticipate it will be a top challenge in three years. Instead the study indicates that their focus is shifting to growth and competitive initiatives in the future. The objectives cited by survey respondents for adopting cloud are in line with these business goals, indicating that business needs will soon rival IT motivations for cloud adoption:

• 62  percent of survey respondents said increased collaboration with external partners is a key objective for adopting cloud;
• 57  percent cited competitive cost advantages through vertical integration as a major motivation and;

• 56 percent pointed to opening new delivery channels and markets as an important objective.

Examples cited in the report showcasing how cloud is being tapped to drive new revenue streams and enhance business models include an online marketplace for handmade goods that has taken advantage of cloud’s cost flexibility to gain access to more powerful analytics online.

The company is able to cost-effectively analyze data from the approximately one billion monthly views of its Web site and use the information to create product recommendations, providing it with access to tools and computing power that might typically only be affordable for larger retailers.

The study also cites an online health information network that enables the exchange of health information and transactions among healthcare providers, employers, payers, practitioners, third-party administrators and patients in India.

By connecting more than 1,100 hospitals and 10,000 doctors, cloud computing’s capabilities are facilitating better collaboration and information sharing — helping the network to pursue a more collaborative business model and deliver improved care at a low cost.

Masking Complexity, Enabling Consumer Needs

The study’s authors point to cloud’s capabilities to mask complexity and enable user-defined experiences, as well as its overall scalability and cost flexibility as key reasons companies are planning to move it into front office operations in the near future.

“Cloud has the power to open doors to more efficient, responsive and innovative ways of doing business, and we believe the companies that will come out on top will be the ones that find ways to leverage it as a key point of differentiation in driving business value,” Berman said. “Whether they choose to tap cloud to optimize, innovate or even disrupt their business models, they need to start working on it now.”
 
Visit here to download and learn more about the study.

IBM Global Chief Marketing Officer Study: From Prime Time To Real Time

As a marketer for IBM who specializes in the digital realm, I was excited to hear about the pending IBM 2011 Global Chief Marketing Officer study, a study of more than 1,700 chief marketing officers from 64 countries and 19 industries, and couldn’t wait to see the results.

The wait is over.

Today, IBM released the results of this important study, one that reveals that the majority of the world’s top marketing executives recognize there’s a critical and permanent shift occurring in the way they engage with their customers, but who also question whether their marketing organizations are prepared to manage the change.

Click to enlarge. The vast majority of CMOs surveyed in the IBM 2011 CMO Study indicated that they are underprepared to manage the impact of key changes in the marketing arena.

Some other initial headlines: The study reveals that the measures used to evaluate marketing are changing. Nearly two-thirds of CMOs think return on marketing investment will be the primary measure of the marketing function’s effectiveness by 2015.

But even among the most successful enterprises, half of all CMOs feel insufficiently prepared to provide hard numbers.

Most of these executives — responsible for the integrated marketing of their organization’s products, services and brand reputations –- say they lack significant influence in key areas such as product development, pricing and selection of sales channels.

The IBM study found that only 26 percent of CMOs are tracking blogs, 42 percent are tracking third party reviews and 48 percent are tracking consumer reviews to help shape their marketing strategies.

“The inflection point created by social media represents a permanent change in the nature of customer relationships,” said Carolyn Heller Baird, CRM research lead for the IBM Institute for Business Value and the global director of the study.  “Approximately 90 percent of all the real-time information being created today is unstructured data. CMO’s who successfully harness this new source of insight will be in  a strong position to increase revenues, reinvent their customer relationships and build new brand value.”

An Ever-Changing Marketing Landscape, An Empowered Consumer

Customers are sharing their experiences widely online, giving them more control and influence over brands.

This shift in the balance of power from organizations to their customers requires new marketing approaches, tools and skills in order to stay competitive.  CMOs are aware of this changing landscape, but are struggling to respond.  Four out of five CMOs expect that they will have to make fundamental changes to traditional methods of brand and product marketing.

Baird likened marketers who underestimate the impact of social media to those who were slow to view the Internet as a new and powerful platform for commerce.

Like the rise of e-business more than a decade ago, the radical embrace of social media by all customer demographic categories represents an opportunity for marketers to drive increased revenue, brand value and to reinvent the nature of the relationship between enterprises and the buyers of their offerings.  Marketers who establish a culture receptive to deriving insight from social media will be far better prepared to anticipate future shifts in markets and technology.

As someone who has been intimately involved in helping IBM make a successful transition into providing enhanced social intelligence for marketers here inside Big Blue, this is music to my ears.

While CMOs identify customer intimacy as a top priority, and recognize the impact of real-time data supplementing traditional methods of channel marketing and gathering market feedback, most CMOs say they remain mired in 20th century approaches.

Eighty-percent or more of the CMOs surveyed are still focusing primarily on traditional sources of information such as market research and competitive benchmarking, and 68 percent rely on sales campaign analysis to make strategic decisions.

Click to enlarge. CMOs surveyed in the study indicated they are overwhelmingly underprepared for the data explosion and recognize need to invest in and integrate technology and analytics.

Managing the Four Challenges

Collectively, the study findings point to four key challenges that CMOs everywhere are confronting. The explosion of data, social media, channel and device choices and shifting demographics will be pervasive, universal game changers for their marketing organizations over the next three to five years.  But a large majority of CMOs feel unprepared to manage their impact.

• Data explosion:  Every day we create 2.5 quintillion bytes of data – so much that 90 percent of the world’s data today has been created in the last two years alone.  The increasing volume, variety and velocity of data available from new digital sources like social networks, in addition to traditional sources such as sales data and market research, tops the list of CMO challenges.  The difficulty is how to analyze these vast quantities of data to extract the meaningful insights, and use them effectively to improve products, services and the customer experience.
• Social platforms:  Social media enables anyone to become a publisher, broadcaster and critic.  Facebook has more than 750 million active users, with the average user posting 90 pieces of content a month.  Twitter users send about 140 million tweets a day.  And YouTube’s 490 million users upload more video content in a 60-day period than the three major U.S. television networks created in 60 years.  Marketers are using social platforms to communicate – with 56 percent of CMOs viewing social media as a key engagement channel – but they still struggle with capturing valuable customer insight from the unstructured data that customers and potential customers produce.
• Channel and device choices:  The growing number of new marketing channels and devices, from smart phones to tablets, is quickly becoming a priority for CMOs.  Mobile commerce is expected to reach $31 billion by 2016, representing a compound annual growth rate of 39 percent from 2011 to 2016.  Meanwhile, the tablet market is expected to reach nearly 70 million units worldwide by the end of this year, growing to 294 million units by 2015.
• Shifting demographics:  New global markets and the influx of younger generations with different patterns of information access and consumption are changing the face of the marketplace.  In India, as one example, the middle class is expected to soar from roughly 5 percent of the population to more than 40 percent in the next two decades.  Marketers who have historically focused on affluent Indian consumers must adapt their strategies to market to this emerging middle class.  In the United States, marketing executives must respond to the aging baby boomer generation and growing Hispanic population.

Lack of Influence

Today’s CMOs have to cover more ground than ever before.  They have to manage more data from disparate sources, understand and engage with more empowered customers, adopt and adapt to more sophisticated tools and technologies – while being more financially accountable to their organizations.

Click to enlarge. CMOs surveyed believe that they can expand their personal influence by shifting to new capabilities that focus on technology, social media and ROI.

In fact, 63 percent of CMOs believe return on investment (ROI) on marketing spend will be the most important measure of their success by 2015.  However, only 44 percent feel fully prepared to be held accountable for marketing ROI.

Most CMOs have not traditionally been expected to provide hard financial evidence of their ROI.

But given the current economic volatility and pressure to be profitable, organizations can no longer afford to write a blank check for their marketing initiatives. CMOs recognize they now need to quantify the value they bring to the business, be it from investing in advertising, new technologies or any other activity.

This increasing emphasis on ROI also reflects the scrutiny the marketing function is currently attracting, itself a reflection of the function’s growing prominence.  Today’s CMOs are in much the same position as chief financial officers (CFOs) were a decade ago, when their role was evolving from guardian of the purse strings to strategic business adviser.

If CMOs are to be held responsible for the marketing returns they deliver, they must also have significant influence over all “Four Ps”: promotion, products, place and price.  The study found that this is often not the case.

CMOs say they exert a strong influence over promotional activities such as advertising, external communications and social media initiatives.  But, in general, they play a smaller role in shaping the other three Ps.  Less than half of the CMOs surveyed have much sway over key parts of the pricing process, and less than half have much impact on new product development or channel selection.

To meet these new challenges, CMOs must boost their own digital, technological and financial proficiency –- but many seem surprisingly reticent in this respect.  When asked which attributes they will need to be personally successful over the next three to five years, only 28 percent said technological competence, 25 percent said social media expertise and 16 percent said financial acumen.

About the Global CMO Study

The 2011 IBM Global Chief Marketing Officer Study is IBM’s first study of CMOs — and the fifteenth in the ongoing series of C-suite Studies developed by the IBM Institute for Business Value.

Between February and June 2011, IBM met face to face with 1,734 CMOs in 19 industries and 64 countries to better understand their goals and the challenges they confront.  The respondents came from a wide variety of organizations, ranging from 48 of the top 100 brands listed in the 2010 Interbrand rankings to enterprises with a primarily local profile.

Click here to register and receive your copy of the IBM 2011 Global Chief Marketing Officer study.

Weathering The Storm With Business Intelligence

Top-performing companies are 15 times more likely to apply analytics to strategic decisions than their underperforming peers.

This from a new IBM study on the role information-based decision making is playing in successful business strategies during these tough economic times.

Top performers were also 22 times more prepared to challenge the status quo in their organizations, rethink their current strategies and business processes, and aggressively apply and act on new insights derived from analytics.

The study also found that top performers were six times more likely to entrust a broader base of employees with greater authority to make decisions and act on insights.

Entitled “Breaking Away With Business Analytics and Optimization,” the study was based on a blind survey of nearly 400 business executives globally, who rated their businesses versus their peers.

It was published by the IBM Institute for Business Value and is available here.

As part of the analysis, IBM consultants determined that top-performing organizations are able to more fully exploit business analytics for competitive advantage.

The study also revealed that having superior data governance — assuring that data definitions were clear, relevant and accepted — is critical to success for the top performers.

In fact, by a factor of three to one, the study found that top performers were much more sophisticated in their approach to governing organizational information relative to lower performing companies (42 percent versus 14 percent).

IBM itself is actually one of the leading users of analytics in the industry.

Our own Blue Insight initiative is a cloud computing environment that will soon be gathering information from nearly 100 different information warehouses and data stores, providing analytics on more than a petabyte and helping IBM sales and marketing teams to better predict which products and services will deliver the most value to our clients.

Today, at 3 PM EST, check in with the IBM New Intelligence Video studio to learn more about this study and about how IBM’s Business Analytics and Optimization Global Business Services organization may be able to help your company improve its decision making with actionable insight.