Three years after his first appearance here, IBM’s Bill Payne has somehow survived appearing on such a disreputable media platform to talk to us about his refining vision for the future marketing function and, perhaps most importantly, how today’s businesses need to manage their most precious assets in the face of such fundamental change – their customers.
We managed to convince him to take time away from his prized vegetables to talk to use more about this vision for the CCO… The Chief Customer Officer…
Phil Fersht (HfS Research): Good morning, Bill. You recently wrote an article where you spoke about the road to customer centricity and how the world’s leading organizations are putting the customer first. In your experience, how has this been working and what is your vision for the future of the customer centric enterprise?
Bill Payne (IBM Global Services): Companies have always said that they put the customer first, and I think they genuinely believe they do. When the business world was made of just bricks and mortar, and on the primitive edge of the digital age, putting the customer first meant that you had to monitor the customer simply when they walked in the store or if they touched you digitally. The world is way more complex now, and what we have found is in large organizations, there is often no integrated customer or even consumer strategy driven by the board. In an omni-channel world, there isn’t necessarily anyone at the board level who owns all customer driven channels.
According to IBM’s latest Global CEO study, nearly 90% of 1700 CEO’s said knowing the customer is top of their agenda, yet how many of those companies have a chief customer officer who owns all of the customer driven channels?
Let’s take a look at the CXO picture around 20 years ago. Why did people invent the chief information officer? They invented the CIO because information technology was changing the need to globalize, the need to integrate, and the need to rollout standard technology applications across the organization.
Then, you had the dawn of the chief procurement officer, and the theory is exactly the same, why did companies appoint CPO’s? To standardize, centralize, harmonize, and integrate procurement across their enterprise, Similarly, the CFO, allows a degree of centralization across finance. Then you had the Chief Marketing Officer, for the same purpose. To have a complete view of the enterprise and driving the brand value for the consumer, yet hardly anyone has a chief customer officer.
I would contend now that as the world develops, we as customers own the power. Any enterprise that thinks they own the power is kidding themselves. The time is now for savvy organizations to put in place a chief customer officer. The role of that chief customer officer is then to build out the presence and the brand across multiple channels, understand the concept of consumer market data, and bring all of that together with insight.
I would also contest that, that chief customer officer could potentially be the new career model for the chief marketing officer. The CMO is the face of the brand, and therefore could be the person to drive that brand value and take on the role as the chief customer officer. There is absolutely a need in many enterprises that I work with to have someone who understands the changes in the market and be able to bring all of that strategic value together to help the board and the enterprise drive the changes that they need to engage the customer.
Phil Fersht: Something I would like you to challenge here is: Do CEO’s today realize the importance or the complexity of really great marketing anymore? 20 to 30 years ago, marketing was the subject to study at business school. It was all about satisfying customers needs and wants profitably, and aligning a product or a service with the core strategy of the business. Something has seemed to have gotten lost in the last 20 years with how marketing is perceived and managed within the organization. A), Would you agree with this, and B), What do you think has gotten lost, and what do you think we can do to start to fix that?
Bill Payne: I think the brand actually can be the last vestige of loyalty that companies can leverage. I think historically, many of us have been a lot more loyal than we currently are. We tend now to be relatively open to disloyalty ‘Many of us have a mobile app on our smartphones that allows us to scan barcodes in a store, and immediately be offered lower prices for the same goods. The world is rapidly becoming mobile, so this drives an added degree of transparency, which enables us to find cheaper prices. Now, if brands are less vestiged, and I want to buy a brand, then I will go to the lowest point where I can get that brand for the highest level of service.
I think what’s gotten lost in the last 10 years is that companies have not really thought through their consumer and customer strategy and placed the value on the brand that they need to. What we have seen through many of our CEO study’s and certainly CMO studies is that the brand is still extremely important, but many CMO’s have not gotten their energy and efforts fully focused on how they monitor and drive that brand in the new world of mobile, social media and mobile apps. I think that is a big area that needs improving. The brand value is still hugely important and under leveraged by many organizations.
Phil Fersht: We had a very good discussion recently about elements of businesses that are being outsourced today, and one of the hard realities is: do CEOs wake up in a sweat in the middle of the night worrying about their procure to pay process? Probably not, but do they care about their brand and the way they are perceived in the market? You bet they do! So, in terms of developing realistic – and useful – metrics that should be used to define, measure and manage real marketing outcomes in an organization, do you have some views on what would be more effective these days, and how companies could change their approach?
Bill Payne: I think we have to step back a little first. We see vast differences between organizations in how they manage their marketing spend and understand the ROI,
I think the first phase here, in the world of transparency, is you have to get on top of where you are marketing. One of our clients has a totally integrated global brand management system through all of their web portals. They have a 24/7 update of all of their websites around the world so they can rapidly launch new products, test response to them, and work with their customers based on what they see from their digital presence. With this system, it takes about eight hours to completely launch a brand new product or service around the world. One of their main competitors takes eight days to do the same thing. This competitor has individual country based websites and many of those websites are not easily viewed on a mobile device and do not have an integrated update system. Interestingly, between those two companies in the electronics space, one is doing well, and the other is doing badly. (guess which) That is just an example of the need to start integrating your marketing spend.
I think there are two elements in marketing spend, transactional and creative. Those that are being successful are integrating around the creativity and the transactional piece, such that they are understanding the value of campaigns and understanding the value of the customer. They are able to rapidly respond across global , regional or local markets, and find value in creativity and how they deploy that creativity. So, they are effectively starting to manage the ROI of marketing campaigns and marketing spend against their brand value on a global basis.
Phil Fersht: You have talked a lot about this Chief Customer officer, and you feel that this individual should report to the CEO and not the CMO. Can you explain your thinking here and why you feel customer management should be separated from marketing?
Bill Payne: I think that the CCO should report to the CEO, and the CCO should be the CEO’s best buddy. I think it actually is a fantastic role for CMO’s to broaden into as the mentor/owner/driver of both the brand and customer in an enterprise. They could grab it with both hands and drive the change
The task list for the CCO in the next 10 years is going to be the world’s biggest job. The reason being is that everything I see, and with every customer I talk to and company I visit, the whole customer dynamic is moving into a new arena of transparency and service and technical innovation.
So that CCO, has got a huge job to get back to thinking about the single view of the customer, using customer data, using market data, collecting all that data, using analytics to drive insight,adapting to fast changing techologies and then driving (not just cost out,) but revenue up. So the role of that CCO I think is sitting on the right hand shoulder of the CEO, almost as the conscience of the CEO to drive customer revenue.
As we see in our CEO studies, their top concern is their customers. Someone is needed along side the CEO that understands the total changes in technology that are changing customer behavior. I will give you a couple of examples of this: we are in a meeting in Singapore this year with a COO of a major retail organization, and we are developing their digital presence and commerce strategy and website. 30 minutes into the meeting, I say, why are you doing this? To which there was silence. And then I said, surely, we are not talking about ecommerce, but mcommerce, and more likely scommerce (social commerce)? I put it to them: the world in the next 10 years will be 6”x4” or by 8”x10”. There is no point to build a site for a desktop web base, because the world is becoming mobile. So you should be designing all of your commerce structure around what will fit on a smart phone or on a pad. To me, you have to ditch the old thinking. It is not about ecommerce or internet commerce, it is totally about mobile commerce and social commerce going forward.
Stay tuned for Part II where we discuss shifting the corporate mindset, analytics and (heaven forbid) a little bit about IBM…
Bill Payne (pictured above) is VP for Global CRM and Industries at IBM Global Services. He is a 25-year industry veteran where he has held wide ranging responsibilities in the Consulting, Business Services and Outsourcing sectors across Europe, US and Asia. He is well-known on the European speaking circuit and is also an Honorary Professor at Lancaster University Management School.