These are challenging times in the business world for business leaders, and CMOs (Chief Marketing Officers) are no exception. According to the latest Gartner CMO Spend Survey, the percentage of revenue allocated to marketing has fallen from 11.0% in 2020 to just 6.4% in 2021, the lowest proportion in the history of the survey.
More Than Spending Cuts — It gets worse. According to survey of 150 CEOs of the largest companies in the U.S. conducted by the marketing agency, Boathouse, 86% of CEOs believed their CMOs have the power to influence key decisions in the C-suite, but less than a third of the CEOs trust their CMOs to grow the business. Over half the CEOs thought their CMOs speak their own language rather than the language of business. Even more alarming, almost 40% believed their CMOs have the wrong skill set to effectively deal with a changing business environment.
It’s no wonder, then, that tenure of CMOs is the lowest it has been since 2009. According to Greg Welch at Spencer Stuart, the average tenure for a CMO has dropped to just over 3 years (compared to 6 ½ years for the average CEO). The revolving door to the marketing suite is spinning faster than ever which means the outlook for marketing leaders to play a leading role in building the business is under duress.
Collateral Damage — When a company fires a CMO, the damage inflected goes well beyond hurting the marketing leader. It hurts the entire company. The marketing team will go leaderless until someone else is named and can get up to speed. The marketing agencies are distracted since the most likely time they’ll be fired is when a new CMO is hired. Marketing programs suffer and the ability of marketing to contribute positively to a business is diminished.
What can be done to improve this dire situation? It has to start with the marketing leader. It’s primarily up to marketing leadership to figure out what is needed and act. Here are three practical ways a CMO and other aspiring marketing leaders can get started addressing these issues by leveraging what I call the Three E’s:
- Empathy: Greater empathy with the CEO and CFO
- Education: Greater education with C-suite leaders (especially the CFO)
- Engagement: Greater engagement in the business (beyond marketing)
Greater Empathy with CEO/CFO — Webster’s defines empathy as “being sensitive to the thoughts, feelings, or experience of another”. Marketers pride themselves on their ability to study and understand various target audiences, but when it comes to understanding and appreciating the world their boss (usually the CEO) lives in, there’s plenty of room for improvement.
Part of this challenge is the difference in the career path of the typical CEO compared to a CMO. It is highly unlikely the CEO has a marketing background (less than 10% do — most CEOs come from finance, sales, engineering, or operations). As the Boathouse survey cited above indicated, there is a significant gap between what a CEO expects from their CMO compared to what the CEO believes their CMO can actually deliver.
A good starting point to begin to close this gap is for the CMO to develop greater empathy for their boss. What are the key metrics their CEO cares the most about? What are the key challenges they are dealing with? Who is in the CEOs “circle of influence” (something that’s critical to know when the CEO evaluates how the CMO is performing)?
In addition to better understanding the CEOs role, the CMO should be familiar with how the CEO and Board work together in developing strategies, setting long-term goals, and approving budgets. The more the CMO understands and appreciates the “big picture” on how the entire business is managed, the greater the likelihood marketing goals and programs will be aligned with what the CEO is expecting. A lack of alignment with the CEO is the number one reason why CMOs are fired, so smart CMOs proactively work on this issue continuously.
Greater Education Among C-Suite Leaders (Especially CFO) — Other than working with the CEO, the most important partnership a CMO should have is with their CFO. In addition to the role a CFO has in monitoring marketing spending, it is critical the CFO has an understanding (and ideally an appreciation) for the unique role marketing has in helping the company reach its financial goals.
Let me give you a personal example. When I was CMO at Taco Bell, I worked with Max, our CFO. Max was pleasant and easy enough to talk to, but after our initial management meetings, it felt to me like the entire marketing budget was continually up for debate. Anytime we were short of hitting an upcoming financial target, the first place Max looked to close the gap was by cutting the marketing budget.
I knew having a public debate with Max during weekly senior leadership meetings was never going to work. As the Brits say, “Praise in public and coach in private.” I decided to approach Max with the following offer: Let’s get together for lunch the next six Fridays (my treat), and we’ll use the time for me to share what we were doing in marketing. In exchange, Max could educate me on the various challenges his finance team was facing. To my relief, Max thought this was a great idea and we got started that week.
I was pleasantly surprised at the impact these Friday lunches had on my working relationship with Max. He quickly got up to speed in understanding the impact marketing budget cuts could have on the business. In addition, I got a deeper appreciation of the constant pressure he was under to hit quarterly financial metrics. Max and I became much more collaborative at our weekly meetings, and ultimately the entire team made better business decisions because of this mutual educational effort.
Greater Engagement in the Business (Beyond Marketing) — “Undercover Boss” is a popular television series in the UK and US in which the CEO of a company changes their appearance and creates an alias so he/she can work undetected as an entry level employee. They do this to better understand the faults in their company and how to improve them.
In my own career, while I’ve never needed to use an alias or wear a disguise, there have been times when I decided I needed to do something totally outside my standard job description to gain a needed insight. Each time, my goal was to get a deeper appreciate for a critical aspect of the business that I felt I was missing. For example:
- Sales — When I was in brand management at P&G, I spent four months on sales training, and was responsible for selling products to over 200 grocery stores in Dayton, Ohio. By the time I went back to my job in brand management, I had a deeper appreciation and understanding of the critical role the sales team had in our company.
- Operations — When I was the head of international marketing at KFC, I would periodically work in in the kitchen of various restaurants as well as a delivery driver. These experiences gave me a greater sensitivity of the importance of menu simplification, customer service and labor scheduling.
- Sales — When I was a vice-president of marketing at eBay, I become a serious seller on the site, selling over 500 items (including a car). Whenever I met with groups of sellers, I became very comfortable “talking shop” with them since I knew what it was like to sell something on eBay.
- Operations — When I was president of H&R Block Retail in the U.S., I took the tax return course we offered and became a certified tax planner. I did a lot of field visits during tax season. Since I’d learned about what it took to be a tax preparer, this gave me a whole new perspective on what our office teams had to perform consistently well with millions of our clients.
Net, you cannot earn “street credibility” with other functions in the company unless you make it a personal priority. This takes a lot of personal time and effort (and puts additional pressure on you to do this while you’re still doing your “day” job). But based on my experience, the rewards of doing this make it worth doing.
There are several ways marketing leaders can get started with greater engagement with non-marketing aspects of their company. Discuss with the other C-suite leaders’ different ways in you could “cross pollenate” high potential employees in different departments (for example, giving a short-term assignment for a marketer to work on the finance team and a finance leader working in marketing department for 90 days). Get creative with your management on ways in which you can get a closer look at the “real world” your clients are dealing with. Then share your learnings with others that are generated by these efforts.
By stepping out of the “marketing silo” and deeply engaging in a non-marketing part of the business, marketing leaders can get a totally new perspective on how everything fits together (and can become more effective marketers in the process).
Time For Marketing Leaders to Act — Marketing professionals today are facing numerous challenges (i.e., smaller budgets, short CMO tenure, lack of alignment with CEO/CFO, etc.). These problems are not going to fix themselves. It is up to the collective efforts of CMOs and aspiring market leaders to recognize they need to be proactive in improving the sorry state of the status quo. Developing greater empathy for the CEO/CFO, educating leaders in the C-suite on the critical role of marketing, and creating new ways to engage in the business are all great way to get started in turning this troubling situation around for the better.