Business transformation

When fundamental change is needed at a brand, CMOs are showing they are ideally placed to spot problems and opportunities, and to ensure the customer is placed at the heart of the business.

There comes a time for many businesses where the strategy of growing profits little by little, year after year grinds to a halt, and what is required is fundamental change. It is at moments like these that the chief marketing officer’s (CMO) role stops being one of pursuing incremental growth and becomes one of business transformation.

As the executive who is expected to represent the customer internally, it is often the CMO’s job to spot opportunities, or problems, with products and services. For example, hotels website Hotels.com used to have two brand identities – one in the US and one for elsewhere, as well as two technology platforms operating side by side.

CMO Nigel Pocklington recognised that it was unhelpful to employees and, as the business grew globally, risked becoming an issue for customers. He therefore implemented a brand relaunch to create one cohesive global identity.

“Many of our customers move around the world and we must avoid anything that could dent consumer confidence in our brand,” he says. “Without a CMO at Hotels.com this relaunch would probably not have happened. There are a lot of specialisms at the management table but no-one else is communicating customer insight and explaining how we should be reacting to it as a business.”

It was a similar story at supplements and vitamins retailer Holland & Barrett. Lysa Hardy became the first CMO of parent company NBTY Group in August 2012 and immediately made the board aware of customer-led issues that were holding the business back.

“There was plenty of sales data but no real marketing insight,” she says. “In fact, the marketing campaigns were being aimed at the wrong audience. Holland & Barrett thought its core customer was a 55-year old housewife but I discovered our customers are much younger.”

She adds: “The brand had a strong and high level of awareness but it was not a loved brand. With increasing competition we needed to be front of mind for customers or the business would suffer.”

Hardy persuaded the board to reposition the brand around the single-minded purpose of helping people pursue health and happiness. “The business had grown by knowing what sells without thinking enough about the customer proposition.

We needed Holland & Barrett to be a destination health retailer,” she says. “Category management used to sit with the buying team; now it sits with me.”

In any organisation, marketers should be the first to notice any difficulties with the basic customer proposition because they see on a daily basis how customers interact with the brand across multiple channels. Indeed, in companies where marketing has become a business function capable of pushing through changes, it is often as a result of the CMO demonstrating a deep understanding of customers.

A CMO can come into their own when a business is going through turmoil or a period of radical transformation. When there is a merger or acquisition, for instance, the focus tends to be on financial and operational cost savings, “yet there are two brands and two groups of consumers also being brought together,” says Simon Carter, UK and Ireland marketing director at Fujitsu.

“The CMO is the voice of the customer when these deals are being done and afterwards.” Mark Phibbs, vice-president of marketing EMEA at Adobe, says senior marketers can take the lead on business transformations with confidence in today’s marketplace because of the large amount of data that exists to back up their views on what needs to happen.

“I realised Adobe had too many people selling in the field and at events and that we needed to invest more in social marketing,” says Phibbs. “It meant recruiting new staff and retraining others but it was the right thing to do to increase our customer conversion rate.”

Phibbs, who has a sales and general manager background, also believes that “increasingly, CMOs will become chief commercial officers”.

The fact that so many CMOs are intrinsically involved in business and brand transformations that boost their organisations’ bottom line is refreshing. It can be too easy for them to focus on incremental improvement. Mark Evans, group marketing director at insurer Direct Line Group (DLG), says his transformation agenda has an employee engagement element and includes reminding everyone at the company why insurance exists and the benefits it brings.

“The commoditisation of our sector and the fact that insurance often makes consumers angry means the benefits of insurance have been lost,” he says. “I am trying to transform the organisation to recognise what we do and why, and restore some pride now we are less tied to the Royal Bank of Scotland Group [from which DLG is being spun off].” Evans says that without a CMO in the business the transformation in how employees view Direct Line and the industry would not be happening as there would be less emphasis on customer insight.

“In many companies, the chief executive and the board can be purely focused on the short-term share price, but luckily our CEO Paul Geddes is a marketer, having held senior roles in the GUS and Kingfisher Groups,” says Evans, who himself is a former marketing and managing director at 118118 Media and a brand director at Mars.

“As a CMO you need to look at the short-term and the long-term sustainability of the business through customer understanding. Of course you need to appreciate the finances too because if you just focus on a transformation programme, you can come across as a bit of a moaner.”

The relationship between the CEO and CMO is crucial if strategic decisions backed by customer insight are to be implemented effectively to transform a business or a brand. Philip Rooke was promoted to CEO at online custom T-shirt design company Spreadshirt in 2011, having previously held the post of CMO. He was a director of Tesco.com from 2001 to 2004, when Tim Mason was the CMO, and says CMOs bring joined- up thinking to an organisation’s management team.

However, Rooke did not install a replacement CMO at Spreadshirt when he was promoted. Instead, he made three appointments: director of product and brand, global head of marketing and vice-president of global sales and partnerships. “This was a change but because I have such a strong background in sales and marketing I see my role as being to keep these specific roles working together. We now have four specialist brains applied to the same business problem,” he says.

“With online businesses today the novelty for consumers is not that they can order online, it is the customer experience more than the technology that makes the difference to the bottom line.”

In the business-to-business sector, telecoms company Daisy Group has grown rapidly in 11 years from 180 staff to 1,500 and now has 65,000 corporate clients including Moss Bros, Greggs and Cath Kidston as well as thousands of small companies (SMEs). But it has had the role of group marketing director, currently Kate O’Brien, for only two years. She says founder and CEO Matthew Riley needed convincing of the full commercial benefits of marketing in terms of cultivating the brand. Her job has been to transform how the Daisy brand specifically and telecoms more generally are perceived by business customers.

“For SMEs, telecoms is a necessary evil so I had to show internally how we had to make things easy for customers,” she says. “We invested in a new data insight team, spent time on employee engagement and transformed the business.” She adds: “The board has seen the benefits of building up the brand and the brand experience as well as investing in the types of marketing campaigns it always has done to deliver sales.”

A CMO’s strengths include their ability to communicate any business transformation to specific internal audiences and, even if they were not instrumental in taking the initial decision, to ensure that everyone feels invested in the process.

Torsten Raak, senior vice-president of corporate marketing at Unify (formerly Siemens Enterprise Communications), implemented his company’s rebranding and says the the senior management team looked to him for reassurance, and customer and sales evidence that it would be a success. CMOs are well placed to fulfil these requirements, given that they are expected to take a holistic view of their organisation, have a strong sense of measurement and take a campaign approach to projects. But they often need the confidence to suggest the transformational ideas that will make a positive difference to the bottom line.

Case study

DFDS-Seaways-interior-2013-460

DFDS Seaways

DFDS Seaways runs ferries to France, Holland and Denmark. As part of its senior management team, head of marketing and strategy Pete Akerman is only too aware of the need for ongoing business transformation to improve customer satisfaction, increase sales and cut costs.

“There is the marketing side of the business, which ensures incremental revenue improvement from everything we do, but we must always link the customer insight with the direction the company is moving in and change things that are not working,” he says.

Akerman also argues that important business decisions must be driven by customer research and feedback. “The key is the validation of feedback to ensure that what we are doing day to day is right, or if we need a radical business change.”

He cites the example of on-board restaurants that have been transformed in terms of the type of food that is served and at the price points.

“I can show the rest of the senior management team hard data on the link between customer satisfaction and the impact on parts of the business,” says Akerman. “I can assign a value to increased satisfaction in our restaurants, for instance, because people will come back again, travel with us in future and recommend the experience to others.”

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