By Phil Klaus
According to our most recent research, CX Management, for better or worse, is firmly allocated in the firm’s marketing function. This association, however, triggers multiple challenges for CX managers, or, to be more precise, CMOs worldwide. The most prevalent challenge is the CEOs’ and boardroom members’ unfavorable perception of both marketing-led strategies and CMOs.(2) For decades, marketers have been trying to be more accountable and elevate marketing from a purely functional and tactical to a strategic level. Yet marketing, once the darling of executives’ strategic efforts, remains heavily criticized for its inability to present compelling evidence of the effectiveness of the huge sums it directs to promotion and brand building. This perceived lack of accountability is reducing marketing’s influence on strategic decision-making, and is a cause of other functions.
In addition, CX is often used in the same sentence with other marketing-driven strategic initiatives, such as CRM, which managers do not see as an investment delivering the value it promised. Paradoxically, despite the increase of CX and the voice-of-the-customer programs, marketing’s strategic role is in decline. Our global study highlights that CEOs do not believe that marketers, and their CX initiatives, can be an integral part of strategy development for three main reasons:
- the lack of financial accountability,
- marketers’ fascination with and focus on new technologies, tools, and frameworks without establishing that they generate consumer demand for the firm’s offerings in a quantifiable way, and
- the resulting lack of trust towards marketers’ capabilities and towards marketing in general.
These themes cannot be viewed in isolation. They reflect the heterogeneous nature of the current status of, or lack of, marketing in the firm’s strategy planning and execution. I could make the point that CEOs and/or the firms’ boards are as responsible for the fall of the CMO and marketing from the strategic agenda as marketers themselves. This discussion, however, will not add any value. CMO/CXOs work for the CEOs, not the other way around. My contribution is to acknowledge and learn from these developments in order to put marketing and CX management back on the CEO’s strategic agenda.(3)
If marketing is disconnected from the firm’s strategy, then the firm’s strategy would be expected to become less adapted to market needs. Taken to its logical conclusion, this should result in eroding profits and vulnerability to competition. Therefore, there is an overriding need for marketing, and, in particular CX, to become a key component of the firm’s strategy. (When we refer to “marketing” we mean what company management recognizes as such, and not what scholars and businesses put forward as part of marketing.)
As a result, in today’s business environment, marketing is relinquishing ground to other functions rather than expanding its role. If CX or VOC are (partially or completely) not under marketing, the CEO and board will never consider it to be marketing. Moreover, the business units that take over these marketing tasks consider them to be part of “their” function (e.g., operations, information systems, etc.) and not part of marketing. Therefore, for marketing to succeed in these efforts, CMOs must garner support from all stakeholders: in particular the CEO and the firm’s board. This can be achieved by converting existing main challenges into opportunities, such as:
- Augmenting traditional sales indicators presented to senior management (e.g., conversions, revenue, etc.) with clear defined customer demand-related indicators, developing tangible links. For example, by delivering evidence for the positive relationships between abstract constructs such as customer experience5 and word-of-mouth on customers’ buying behaviors, CMOs will have a significantly better chance of demonstrating the strategic impact of their actions. Another way to achieve that is by using mid-range metrics, such as real-time tracking linked to revenue generation, to demonstrate accountability. For example, CMOs can introduce segment level reporting that includes P&Ls by brand, market, product, distribution channels, and end customers.(1)
- Take ownership of a variety of activities within and outside of what is considered their core functional area, such as marketing related IT and IS initiatives. This would allow CMOs to demonstrate, for example, the possible impact of new media as a supportive tool (with an emphasis on “supportive”) in crafting winning strategies (and by winning we mean generating quantifiable customer demand).
Thus, the job description of a CMO becomes closer to that of a CEO. In a literal sense, CMOs must see themselves as the Marketing CEO. This means running CX, and all marketing activities in a manner that parallels that of the CEO in the running the firm. This requires that CMOs shift their perspective to that of a holistic business leader from simply being a manager of the marketing function. As such, it requires a CEO’s mindset of seeking to maximize value in a tangible way that can garner the support of the board of directors and shareholders.(4)
The following Figure summarizes the main steps that we believe are necessary to put CX on the CEO’s strategic agenda by using actions to convert challenges into results that will be appreciated by the CEO and other board members.(1)
In this series we now discussed which CX strategies are most profitable, explored how these strategies are converted into a successful multichannel strategy, outlined the crucial role customer-facing (direct and indirect) employees play in managing the CX, and elaborated on how executives can gain support from the boardroom in order to compete successfully on the new competitive battleground – the customer experience. I hope these series delivers useful insights into how to manage and measure the most profitable customer experiences, and am looking forward to your CX questions that I will answer during the Center for Services Leadership podcast.
Dr Phil Klaus is Professor of Customer Experience and Marketing Strategy and holds multiple visiting professorships around the globe. His multiple award-winning research has appeared in a wide range of academic and managerial journals. Phil is a frequent keynote speaker at public and in-company seminars and conferences around the world. He has an active, international portfolio of Blue-Chip clients, for whom he advises on customer experience strategy and profit enhancement.
- Klaus, Ph. (2014), Measuring Customer Experience – How to Develop and Execute the Most Profitable Customer Experience Strategies, Palgrave-Macmillan.
- Klaus, Ph., Keiningham, T., Edvardsson, B., and Gruber, T. (2014), “Getting in with the “In” crowd: how to put marketing back on the CEO’s agenda,” Journal of Service Management, Vol. 25, No. 2, pp. 195-212.
- Klaus, Ph. and Edvardsson, B. (2014), “The road back to relevance – how to put marketing (and marketing scholars) back on the Top Managements’ agendas,” Journal of Service Management, Vol. 25, No. 2, pp. 166-170.
- Klaus, Ph., Gorgoglione, M., Pannelio, U., Buonamassa, D. and Nguyen, B. (2013), “Are you providing the ‘right’ experiences? The case of Banca Popolare di Bari,” International Journal of Bank Marketing, Vol. 31, No. 7, pp. 506-28.
- Klaus, Ph. and Maklan, S. (2013), “Towards a better measure of customer experience,” International Journal of Market Research, Vol. 55, No. 2, pp. 227-46.