How Leaders Should Ground Business Strategy in Customer Success

Why is customer centricity such a challenge? Theories abound ranging from customer ownership delegated to someone other than the CEO; a culture that does not appreciate the link between employee engagement and customer success; lack of in-depth customer understanding; processes that don’t consistently deliver a valued lifetime experience; or a perspective that customer engagement belongs to marketing, to name a few. From my experience working with Fortune 100 to 5000 companies across a wide range of industries, these ‘theories’ are at play but they are not the root cause of the challenge. That lies in their business strategy. Setting business strategy is as critical to an organization’s success as having delighted customers. The first sets direction and focus. Done correctly it enables employees and partners to align their efforts, resources and plans to achieve the measurable and time-bound objectives of the organization. The second, delighted customers, is the path to market share growth. Yet many business plans lack specific goals or objectives for customer success. The two are one; not separate. The role of the annual business plan is to get everyone in the organization to have a shared vision of the future and agree on what needs to be done, when, by whom and with what resources to achieve target end state. Only through planning can we confirm that everyone sees the same thing and has worked through the issues to reach that point of acceptance. Not only does everyone in an organization need to sing the same verse from the same hymn from the same book, they need to also sing it with the same level of gusto. It sounds trite but it can be hard to achieve. Most organizations have no problem setting goals. Goals are broad statements of the company’s aspirations for the future, stated in external business environment terms, are generally enduring and often not measurable. Rarely do companies struggle with setting goals around revenue/profitability, mindshare, reputation, market share, product mix, thought leadership, organizational agility, culture or customer success. A typical customer success goal is worded along the lines of: “To maintain solid, sustainable customer relationships with the highest level of loyalty and sustained satisfaction.” The challenge comes in defining objectives. Objectives are internally focused and defined in financial, statistical or numerical terms. Performance against measurable objectives is the prime indicator of whether the related goal is being achieved. While goals are stated in multi-year terms, objectives are time bound and stated in quarterly, monthly and/or annual terms. Planning teams inevitably get stuck on setting objectives for the ‘customer success’ goal. They get stuck because the company often views customer delight / loyalty / satisfaction (pick your favorite label) as a separate set activities loosely related to other goals. Nothing could be further from the truth. Customer success is interdependent as well as part of all other goals. Miss any goal’s objective and it will have a direct impact on achieving customer success. Two things typically happen at this point. An epiphany occurs on the depth of the interdependency between the rest of the business plan and customer success. Or management focuses on putting customer success in a box. Most companies opt for the latter because addressing the interdependency is seen as “opening Pandora’s box”. Their focus, incorrectly, is on finishing the plan instead of planning a path to assured success. The missed opportunity is on the road less traveled. Companies that invest the time to understand their current and future target customer groups’ lifetime ‘value’ expectations and match them to the organization’s strengths, weaknesses, market opportunities, threats and resources consistently develop more achievable strategic plans in good times as well as bad. Best-in-class companies do this matching across a number of internal and external scenarios to identify where the ‘rubber meets the road’ in achieving true customer and company success. Not only are their plans more consistently achieved, their companies also have significantly greater internal alignment, are more agile and innovative. The most common push-back to this approach that I hear is “it takes too long”, “we know our customers”, “our business strategy is not dictated by customers”, and/or “we don’t have time to overhaul our strategy”. None of these are really true; they are just excuses for not getting outside of one’s comfort zone and seeing the many shades of future reality. Leaders looking to ground their business strategy in customer success can start by: 1. Journey map the lifecycle of their highest value current and target customer groups. 2. Map interactions, their associated emotional and value states. 3. Conduct a detailed SWOT, emerging trends and competitive chessboard analysis. 4. Co-create with highest value customer groups a higher value-producing, distinctive customer lifecycle experience. 5. Evaluate current 12 to 36-month macro-strategy against #3 and #4, identifying areas of change. 6. Define the target end-state and timeframe for change area. These six steps will give you a solid start down the path of customer-centric business strategy. The key is to not boil the ocean, be too attached to sacred cows, and limit future opportunities by screening them based on today’s resources and market states. The holistic focus enables employees to understand the key interaction/process activities, emotion/culture intersections, and internal/external variables that drive preference, engagement and market share growth. Embracing the interdependency of customer success turns the platitude of customer delight into a tangible, achievable reality.

How Ethical CEOs Lead Unethical Companies

We all know or heard of someone who did something they shouldn’t have. A long time ago I worked with someone who was responsible for setting up international sales events. She would book the venue on her credit card, get reimbursed and then cancel it, pocketing the cash. There is little disagreement that this is unethical behavior. But it took a while before the company acknowledge the behavior and addressed it despite her actions being common knowledge. What about questionable behavior that an organization seems to accept as OK? Actions like making decisions that impact your bonus without really looking at the facts, pressuring a prospect to buy more product than they really need, writing marketing copy that stretches the facts beyond truth, or positioning yourself as an objective intermediary where you have a financial interest in the outcome. If an organization’s culture implicitly condones questionable practices does that make unethical behavior ethical? Multiply the implicit acceptance of questionable behavior to a grand scale and you get situations like Turing Pharmaceuticals, Enron, Uber, the financial meltdown, and the list goes on. These are not anomalies but routine events to which we all exclaim shock at not having foreseen the impending crisis. If leaders are generally ethical and want to do the right thing, how can so much go so wrong? I asked Margaret Heffernan, best-selling author of Willful Blindness and her response was not what I expected. Instead of being told about the corruption of society, tyrannical bosses, and the fallacies of hyper-capitalism, Margaret responded that it’s a function of human nature to “turn a blind eye.” By only seeing the error in retrospective, we engage in willful blindness. “This is not a function of intelligence,” said Margaret during a recent interview in San Francisco. “All through history these situations happen, it’s just much more prevalent today.” Her book is full of stories about leaders ranging from ship captains to Wall Street traders who inadvertently stepped astray of ethics believing they were playing by the company’s rules. Speed and complexity play major roles in explaining why unethical corporate behavior is on the rise. “Speed is very fashionable,” explains Margaret. “We believe that in order to be competitive you need to be the fastest which accelerates business cycles and our proclivity for working 7 x 24.” Leaders, managers and employees feel they need to run faster to keep their job or move ahead. “The problem with speed is that the faster you go, the less you see and the even less you feel,” shares Margaret. Speed is particularly dangerous for CEOs. Pattern detection becomes blurred because you pick up less data and good decisions are rooted in knowing and having the right data. Complexity is our other love affair. In the quest for agility we have achieved the opposite. Complex markets, distribution channels, product families, and staffing models has resulted in organizations that are too complex to manage. CEOs and management teams long ago lost the line of sight from problem to solution. Sales and Marketing struggle to connect and have a meaningful relationship with their customers. We’re unable to manage these complex global organizations as we’ve seen in the retrospective analysis of troubled financial institutions, automotive manufacturers, technology companies and economies. The inability of the governments to stimulate their economies and other countries to resolve the spreading immigration crisis are proof points. So what is a CEO to do? Margaret’s advice is to change how they manage. She points to three truths discovered while researching her book. 1. Employees almost universally believe their bosses don’t want to hear any bad news or information that challenges commonly held beliefs. 2. Business leaders understand that they don’t know what they need to know and rely on their employees to tell them what is happening in the business. 3. Every organization has fundamental orthodoxies about things that cannot be talked about. Her advice to CEOs is to consciously slow down. Companies like Eileen Fisher, an apparel and design company which also happens to be a winner of the Great Places to Work award, slowed down their production and design cycles along with their decision making. The result was a dramatic increase in their profitability and competitive stance. In the fast paced world of fashion, this seems counter intuitive and is a good example of why we need to un-complicate our lives. Next, CEOs need to change how they communicate. By slowing down, CEOs and their teams can have more meaningful conversations about the business, data patterns, and thoughtfully evaluate different courses of action. Conversations should:

  • Take longer,
  • Draw in a wider range of stakeholders and audiences,
  • Allow for more organizational dissent, and
  • Gain wider buy-in and consensus on key decisions.
What about social media and its promise to cut through the clutter of complexity? Transparency, trust-based, relationship-driven, and viral word of mouth, social media should turn the tide on unethical behavior. “Possibly,” shared Margaret, “but the jury is still out on that. While social media may get companies closer to the buyer, it is still in a nascent stage.” Some companies are starting to figure out that the social media’s real power is to tear down internal silos and blind spots, giving everyone a clear line of sight of business problems and their solutions. But it will take time. In her work with CEOs around the world, Margaret’s found that leaders who slowed down and stimulated meaningful discussion and dissent around appropriate, meaningful topics did remove blind spots and the pressure to cut corners. That realization, in turn, drove a cultural movement to question the beliefs the organization held as truths. The perceived boundaries that everyone naturally constructs as a way to deal with speed and complexity were torn down along with that associated behavior patterns and opportunities to engage in questionable behavior. She’s found that CEOs that take this bold move “see” more opportunity, clearer and more often. “Leaders that are no longer blinded become very energized as their companies feel brand new,” said Margaret. Take the time to think, unpack and slow down, it’ll make you more profitable, successful and ethical. First published in CustomerTHINK

To Prove Marketing’s Value, a CMO Must Learn to Speak Like a CFO

As Rod sat outside the conference room waiting to be called in to present Marketing’s quarterly results to the board of directors of his Fortune 50 public company he reflected on how marketing is changing. What a long strange trip it’s been from the Grateful Dead song “Truckin’” keeps popping into his head. Rightly so, Marketing has become overly complicated and just a bit weird. Not just because of the myriad of technologies that CMOs like Rod have been buying in an attempt to understand and manage holistic customer lifecycle relationships. But despite the plethora of channels, content and ways to attract-engage-convert customers, ROMI (Return on Marketing Investment) is only slightly more predictable than it was five year ago. “I have lots of analytics and detailed metrics on conversion and performance but consistently accurate predictability of marketing generated revenue? We’re not there yet,” thinks Rod. That lack of predictability is a problem on many levels, not the least of which is that Boards expect it. Rod is one Chief Marketing Officers (CMO) that participated in a qualitative study on emerging marketing trends funded by Marketo. The marketing leaders interviewed were with B2B or B2B2C companies ranging in size from the Fortune10 to early stage start-ups across financial services, manufacturing, high technology and SaaS industries. Marketers have abandoned educating the rest of their organizations on the importance of marketing specific metrics and have dropped using terms such as TOFU, MOFU, MQL, etc. in conversations with Sales, Finance or other parts of the organization. By talking about marketing programs and investments in financial terms, CMOs have seen an unprecedented level of alignment occur across the organization. With Sales the conversation is not about leads but pipeline, customer engagement, conversion and close rates. In an ideal world CMOs would like to have more strategic conversations with their CEOs and Boards about the value of activities and the impact of investments that are not directly tied to revenue. Reputation, awareness, customer experience, tracking cohort customer groups, pipeline by channel, influence of communities/digital properties, and how to drive growth are a few of the topics CMO would like to talk about. But having been burned in the past, CMOs keep the conversation strictly on revenue. Rod knows his CEO and board expects him to routinely report out revenue forecasts based on current and alternative marketing spend scenarios as part of evaluating business strategies that management is considering. He needs a data science team, help from the CIO and strategic MarTech vendors to build a predictable model that includes all the channels, programs, conversion rates, target industries and customer segments. Having spoken with a handful of progressive CMOs that have built credible market models, Rod knows it’ll enable his team to focus on where the strong and weak points are in the marketing stack, understand why and whether it’s an execution issue or a customer/market shift. The team would be able to spot market shifts – buyer, industry, competition, economic – and respond faster by changing attraction, retention and product programs. Rod’s longer term vision is to do historical benchmarking as well as against competitors. Being able to model, in detail, LTV of customer lifecycles would enable his team to un-complicate marketing and increase their precision in forecasting revenue by defining and aligning touchpoints, content and offers to customer journeys. Marketing has the real, hard data to prove its contribution to the topline – as long the language the CMO speaks is financial. The rising sophistication and transparency of marketing ROI is enabling every CMO to have a credible seat at the board table. The real power of the market model lies in its ability to link metrics and programs to what the Board and his CEO cares about – leads, pipeline, wins and market share. As the CEO comes out of the conference room to call him in to present, Rod stands up confident his conversation with the board can go to a new level and that he can demonstrate, tangibly, the importance of what marketing is and can do. First published in CustomerThink

What B2B CMOs Will Face Tomorrow — 5 Emerging Trends

In June 2015, Marketo commissioned a study to identify the emerging trends CMOs felt will significantly impacted their future. B2B and B2B2C Chief Marketing Officers (CMOs) were qualitatively interviewed from companies ranging in size from the Fortune 10 to early stage start-ups. As CMOs look forward, five emerging trends are shaping their marketing strategy and teams:

Customer Co-Created Marketing

It can be said that the ‘age of the customer’ is maturing. An increasing number of CMOs have surrendered to the fact that the buyer is in full control of vendor relationships, not just of the purchase cycle. The result is the rise of customer-dictated marketing. Customers will not just dictate how vendor digital properties should function but also their expectations of content, products, marketing programs, sales methodology and customer-facing processes. Brands that listen and open their four walls will see customers even influence their cultures. One can see the seeds of this trend today in the rise of storytelling and how customers engage, or not, with brands. This trend is a core driver of other emerging trends and has far reaching implications beyond just marketers. Companies must learn how to surrender yet capitalize on their customers’ desires if they expect to survive. Surrendering to customers and adopting a co-creation approach to marketing that intimately involves the customer is a path forward. It enables marketers an effective approach to understanding how, when and with what to build enduring customers relationships. Supported by deep data analysis, modeling, and hyper-personalization brands will be able to build credibility and trust by treating each customer as an individual, on their terms, at scale.

Darwinism of Marketing Organizations

In this environment of volatility and velocity, traditional marketing organization structures are too rigid and stifling to support the internal and external expectations of the function. CMOs are finding they and their teams lack key new competencies especially in areas where technology what thought to be an effective compensator. The accelerated adoption of social and digital engagement, criticality to revenue of consistent value-based customer experience, shift to visual story-messaging, hyper-personalized user generated content, real-time data-driven pattern recognition, and heightened revenue accountability demands a change in how marketing works. A significant portion of CMOs are in-sourcing new and traditional competencies ranging from data scientists and behaviorists to videographers, media relations and recruiting. Three drivers fueling this turnaround after decades of out-sourcing are: Need for super-agility, deep in-house customer understanding, and the inability of agencies to be true sources of innovation at competitive prices. To gain more agility CMOs are organizing their teams less along functional reporting lines and more around the competencies of their employees. They are achieving this by merging groups, deepening digital demand generation and branding, analytics/modeling, content management, and marketing technology. There is also a rise of Marketing Centers of Excellence (“COE”), especially digital demand centers and content, as a way to build critical mass in competencies and bring together related disciplines.

The Recruiting/Retention Crisis

CMOs looking to hire find the climate challenging. While the pool of candidates is large, finding the right candidate for the role who is interested in joining the company is difficult. In attracting candidates larger, established or traditional companies, face the obstacle of not being considered ‘hot’ enough. That reduces the pool of candidates substantially for key positions in analytics, data science, modeling and digital marketing. Mostly comprised of Millennials, candidates feel their creativity, mobility, opportunities and need for flexibility would be restricted by joining large or mature companies. To be competitive CMOs of established companies are evolving their culture and structures as much as possible to meet the expectations of candidates. Even with these changes CMOs find they have to invest a lot of time in selling the vision of the company, their marketing strategy and the position. CMOs of companies with brand cache have the reverse problem. Retention is a persistent problem. Their employees are constantly being recruited away with lucrative offers creating, in one case, 20 percent turnover. This is fueling a debilitating cycle where ‘hot’ companies are constantly recruiting from each other. Tactics CMOs use to retain top talent include constantly moving people between roles and managing them differently by increasingly offering more latitude, responsibility and opportunities to do new things.

Speaking Finance

The rising sophistication and transparency of metrics to report on conversion and marketing ROI is enabling every CMO’s desire to have a credible seat at the management table. Marketing has real, hard data to prove its contribution to the pipeline and topline – as long the language the CMO speaks is financial. The metrics Boards expect from CMOs are revenue pipeline and predictability. While Marketing may present dashboards on the conversion rates of campaign-to-close funnels, win rates, and customer segment metrics, the only thing that boards and CEOs care about is pipeline. By talking about marketing programs, investments and initiatives in financial terms, CMOs have seen an unprecedented level of alignment occur across the organization especially with Sales. The Sales conversation is not about leads but pipeline, customer engagement, conversion and close rates. In an ideal world CMOs would like to have more strategic conversations with their CEOs and boards about the value of activities and impact of investments that are not directly tied to revenue. Reputation, awareness, customer experience, the performance of cohort customer groups, pipeline by channel, influence of communities/digital properties, and how marketing plans to drive growth are a few topics on the CMO wish list. But having been burned in the past, CMOs keep the conversation strictly on revenue.

Lonesome Leaders

For any executive staying on top of their “game” is hard. While the expectation is that CMOs are ‘out in front’ of their field, reality is quite different. Just as customers are overwhelmed and fatigued by the constant bombardment of information, so too is the CMO. Sorting through a constantly overflowing inbox of emails, scanning multiple feeds and publications for relevant articles, staying current on thought leaders and culling all that down to daily reading list is unrealistic. CMOs don’t do it, not from lack of interest or motivation, but from a lack of time. Their days are spent on managing relationship with key internal and external constituents, customers, as well as revenue related metrics. CMOs let relevant content come to them. There are a handful of publications, print and digital, that CMOs regularly scan including Fast Company, Harvard Business Review, Forbes and McKinsey reports. There is no set list topics that interests each CMO, it varies based on the issues facing them and the company. So how do CMOs stay on top of their game? Most rely on their teams to keep them informed on best practices, news and relevant developments. Their reliance on teams to stay current ups the ante on the hiring process; it’s career-critical that the best qualified and cultural fit candidate be brought into the organization. Sadly, the number of CMOs that have trusted relationship with their CEOs is in the minority, which leaves CMOs on their own to navigate their careers and companies. CMOs are increasingly turning to independent professional coaches and small networks of trusted former leaders for business and career advice. The bottom-line is that this is a lonely role for the top marketer who is responsible for navigating the white waters of turbulent times.

From Customer Interactions to Emotional Engagement: 5 Trends Shaping Marketing

Our world is nothing like our “father’s Oldsmobile.” Change is a constant yet those four words do not adequately capture what is going on. We are in the midst of a world shift that will forever change our and the lives of our grandchildren. The shift is not about a faster more fluid global world or the rise of new technology, it is more profound than that. We, individuals and organizations, are losing our separateness and becoming a collective. The catalyst as well as what binds us together is technology. Call it the Internet of Things (IoT) or the connected economy, the bottom-line is that technology binds us – individuals, communities, economies – together and is reshaping how we value and define relationships. What affects one, affects us all. For marketers this is an exciting and terrifying time. We understand the customer in ways that was unimaginable in the past. We’re moving beyond customer interactions to emotional engagement. With new depths of data and analytics marketers can guide every corner of their entire organization on how, when and with what to create meaningful emotional connections with B2B and B2C customers. We continue to automate repetitive process and data intensive tasks and empower machines to make routine decisions so we can get out of the weeds. Our time is better spent on things like long-term strategy, social responsibility, and consciously with intent defining how we want our world to be in 2020 and beyond. Technology coupled with the rise of customer has set an irreversible course forward that is redefining marketing and what it means – to customers, marketers and the C-Suite. To understand where we are in this transformation we need to understand how we got to this point. I had the pleasure of interviewing a number of B2B CMOs from Fortune 10 down to Fortune 2000 companies at the request of Marketo who funded this research. The interview focused on the most significant trends that shaped marketing today as well as those on the horizon that CMOs are closely watching. These five trends that shaped the state of marketing today:

1. Social media mainstreams

Social media is pervasive and has been embraced by B2B and B2C buyers as a key mechanism for taking full control of their brand relationships. The ease with which buyers can reach their peers has forever changed the influencer landscape. Brands and sales teams are increasing losing their role as trusted sources of knowledge. Both are increasingly viewed as a commodity. What drives a customer to purchase from a brand is not price, product or brand cache but their reputation within the buyer’s social graph, past experience and their ability to build value-based human-to-human relationship. Buyers give more credibility and weight to the opinions and advice of their peers than they do to brand content, media relations or campaigns. That reliance on peers, easy access to customers and digital sites like G2 Crowd has all but obsoleted traditional industry analysts and media relations. The effect has been a complete redefinition of how trust is built and who communicates brand messages. Increasingly it is not the brand but customers, peers, communities and thought leaders that define positioning, messaging and the company’s reputation. Savvy marketers have embraced these trends by shifting their marketing culture, skill sets, programs and investments to be customer-aligned.

2. Death of outbound marketing

There has been over the past two years the steady decline in the effectiveness of outbound marketing. CMOs are finding that over 50 percent of their leads come from inbound marketing activities and they are shifting spend accordingly. Inbound marketing is more effective in pulling buyers to the brand and through their journeys though all would agree the practice remains nascent. A significant portion of the early stages of the buyer’s journey is driven by buyer self-discovery – from understanding the problem, alternative solution approaches, outcomes their peers have realized and best practices. Brands have realized that the awareness-attraction-engagement cycle needs to be redefined to educate-enable-engage. The result of this trend has dramatically reshaped marketing team competencies.

3. Marketing’s street cred, finally

Marketing has struggled for decades to be seen as a value-adding member at the board table. Being seen as a cost center, the “colors” or “party team”, or the blamer for when things go wrong gets old real fast. Gaining street cred with peers and boards has been a major focus for CMOs. Technology has not only improved marketing execution but data driven decision outcomes as well. Marketing automation, ERM, CRM and predictive analytics technology are enabling CMOs and their marketing teams to significantly improve their ability to credibly and transparently measure and report on marketing-attributable revenue and ROI. The ability to measure and predict how various marketing activities will perform and be able to adjust on the fly based on detailed insight into how buyers are reacting to marketing campaigns is the baseline to success. A number of CMOs have invested heavily in building very detailed market models that predict the yield from spend in various categories. Being able to confidently (and accurately) forecast pipeline and booked revenue from B2B marketing spend is changing the perception of marketing. Challenges remain in achieving full customer lifecycle visibility and using data science to advance customer engagement.

4. The link between employee and customer satisfaction

Organization theorists have long touted the importance of employee satisfaction. Yet CMOs have only recently recognized the strength of the linkage between employee engagement and customer satisfaction and loyalty. To that end, programs have been implemented, often in partnership with Human Resources, to keep employees up-to-date on company developments, news and product information. That information comes in many forms ranging from product announcements, knowledge bases, technical information, and financial news to real-time customer feedback. CMOs are realizing that employee engagement and satisfaction doesn’t come from free lunches, Friday beers and fussball but from making sure that employees have meaning, mattering and belonging. The data shows there is a direct correlation between how happy, informed and trusted an employee is and the satisfaction of the customer they interact with. It doesn’t matter whether it’s the contact center, field maintenance, sales, marketing or finance – the linkage is real. This trend has focused organizations on equipping employees with the information and insights they need to better understand and respond to customer needs and expectations.

5. Only talk about revenue

Some things haven’t changed, namely B2B Boards of Directors and CEOs continue to only be interested in revenue pipeline metrics. While CMOs have made great strides forward in accounting for the revenue impact from marketing spend, Boards and CEOs have little interest in understanding the softer attributes that impact revenue such as reputation, reach and customer experience. The frustration for CMOs is that the conversation has so narrowed that neither understand the power of marketing or how the discipline’s dramatic changes impacts how companies spot and respond to opportunities. Having been burnt in the past by pushing non-financial issues, CMOs are sticking to the script. There were a number of surprises from these interviews. One was that the sophistication of an organization’s marketing was not defined by company size, budget or CMO’s vision but by their customers. Regardless of company size, progressive CMOs are constrained by how comfortable their customers and Boards of Directors are with new methods of engagement. These past trends have dramatically reshaped what marketing means today and what it will look like in the future. Everything from competencies, organization structure, reporting metrics to how CMOs keep their organizations agile and healthy is being rethought. The future of marketing is exciting as well as challenging. CMOs are faced with the duality of managing breakneck pace of change within their customer segments and marketing practices while educating their peers and boards on the new role of marketing, revenue impact of customer alignment and the value marketing brings to the table.