CMO in a Box
Donald R. Libey
Libey Incorporated
Advisors and Intermediaries for the Direct Marketing
Industry
Published by
MeritDirect
Higher Ground
A prior article, “CEO in a Box,” produced the largest number of positive responses we have ever received. Therefore, in a continuation of the topic, we look at the Chief Marketing Officer. What does the CMO of a multi-channel direct marketing organization do every day? Here is a CMOs benchmark protocol that provides a start to answering that question. While many other responsibilities and functions exist for the contemporary CMO, if just these few, essential, foundation basics were covered we would have an industry filled with leadership and marketing rainmakers. Here, then, is my protocol for evaluating a CMO ‘out of the box.’
First: Product, Markets, Circulation, Online Channel, Creative, or Finance? And the answer is . . .
Circulation
In the traditional catalog past, it was simple to define a senior marketing executive: catalog and circulation expertise, whatever that meant. Today, it is a hard decision to come up with the primary skill that a CMO possesses, so get ready for direct marketing heresy and some radical thinking that quite possibly will challenge your bedrock beliefs about marketing and marketing executives.
Marketers and merchants are very different people. Somewhere over the past five years or so, the divergence of marketing and product has occurred. Traditionally, marketers have always had product responsibility, but that has changed. Product is increasingly less a marketing responsibility and more a merchandising responsibility. Catalog and multi-channel direct marketers have begun to import true merchandisers from the retail world, and the results are positive. The merchandisers have become their own senior executive discipline and product is their bailiwick. So, henceforth I will reserve the primary product responsibility for the Chief Merchandising Officer in my pantheon of multi-channel gods. Perhaps the lead article in the next edition will be “Chief Merchant in a Box.”
The Chief Marketing Officer’s primary responsibility, in this new multi-channel milieu of direct marketing, is circulation. However, before going any further, understand that the term ‘circulation’ has an entirely new definition from that of our traditional cataloging antecedents. Circulation is no longer about lists only. The new definition of circulation defines the role of the CMO and is, I believe, as follows:
The primary responsibility of the Chief Marketing Officer is the profitable management of new customer acquisition and existing customer retention and reactivation in all channels via all media.
In short, the Chief Marketing Officer has responsibility for applying multiple types of circulation to attract and keep customers, and those circulation types and media include:
| 1. Response lists |
2. Co-Op lists |
| 3. Compiled lists |
4. Co-Op databases |
| 5. Proprietary databases |
6. Subscriber lists |
| 7. Association lists |
8. Public/Governmental lists |
| 9. E-mail lists |
10. Affiliate programs |
| 11. Partnership programs |
12. Pay per click |
| 13. Pay per sale |
14. Organic search |
| 15. Paid search |
16. Blogging |
| 17. Chatroom |
18. Insert programs |
| 19. Print advertising |
20. DRTV advertising |
| 21. Broadcast TV |
22. Cable TV |
| 23. Radio |
24. Podcasting |
| 25. Retail/In-store |
26. Public relations |
| 27. Word-of-mouth |
28. Text messaging |
| 29. Webinars |
30. Telemarketing |
| 31. Event marketing |
32. Tradeshows |
| 33. Outdoor |
Of course, this list of media and circulation types is not complete and it will be out-of-date within several hours, but suffice it to say the CMOs role has extended well past pure list work. What is even more daunting is the recognition that, in the last five years, many of these are entirely new media and all of them have multiple sub-disciplines. As an example, print advertising has the sub-specialties of magazine, newspaper, one-offs, freestanding inserts, and ride-alongs. In its completeness, and with all of the sub-disciplines delineated, the ultimate multi-channel direct marketing circulation and media amalgam is huge and has become a diverse and complex specialty demanding much broader experience and a far-wider knowledge of marketing applications than simply those pertaining to traditional lists.
If, indeed, the CMOs of today are spending most of their time finding, keeping and reactivating customers profitably, they are, by necessity, seeking the Higher Ground of channel intelligence and utility from their closest Trusted Advisors. Inherent in that relationship is the expanding mutual definition of circulation as outlined above. In 2005, the circulation plan is a many-layered thing, and the interconnectedness and complexity of the media and the contact strategy are producing plans that are truly elegant in their innovation and structure, almost architectural in nature. The point: Smart CMOs are working ever closer with smart Circulation Professionals. The importance, value and contribution made by your Broker have increased five-fold in the last five years.
When the channels expanded almost exponentially with the advent of e-commerce, the role of the CMO contracted from ‘Jack-of-All-Trades,’ as it had always been, to that of the corporate channel and media czar. The reality, however, is that the CMO role had to contract and the responsibility for product had to devolve because there is simply too much to be done in the channel and media realms in order to profitably find and keep customers. In effect, the CMO role has become pure.
Markets
The next primary responsibility of the CMO is markets. After circulation and customer development, the CMO has responsibility for defining markets, specifically the next market to be conquered. Every multi-channel direct marketer is always in the market expansion phase; if not, the business is dead. If the current target market is not being nurtured and maintained—indeed—grown, the business is in trouble. But, if the next market has not been identified, researched and the multi-channel circulation planning developed, the business is going to stagnate. It is the province of the Chief Marketing Officer to identify and prepare new, profitable markets.
Market development entails research. The CMO establishes the research objectives, criteria, deliverables and the timing and budget and either commissions the research on a consulting basis or directs the research internally. At any given time, no fewer than three new markets should be under research if the business is to have an adequate new market flow to produce minimally fifteen to twenty percent new growth annually, new growth being that in addition to incremental existing market growth, which should run in the ten to fifteen percent range. These are high benchmarks and point to the importance of a concentrated focus by the CMO on multi-channel circulation and new market development.
Markets are the fuel for the new product machines operated by the product managers and Chief Merchandisers. Without new markets, they soon run out of products. The world, after all, is not a clockwork organization. There are only a certain number of products that can be profitably sold to an existing market, especially if that market is a relatively small niche. If one looks at the world history, all of the wars between nations have been about markets, with the exception of those about religion. Nations have not fought over individual products or even product groups; they have battled for control of markets. There must be markets in order for products to be successful. Therefore, the hierarchy of importance in multi-channel marketing is markets. And because markets consist of customers, CMOs have the primary responsibility of drilling for customers in profit-producing markets. It is no different from oil exploration. Oil companies drill for oil (customers) in areas of known oil deposits (markets). The point: Markets and customers are inextricably linked. Products are secondary to the markets and the customers. There. That should clear up that argument for the Ages.
Market Managers are experts in one or more markets. There may be five Market Managers managing twelve different markets. But, the Chief Marketing Manager has the knowledge, experience, talent, understanding and wisdom to be able to manage all twelve individual markets and all five Marketing Managers collectively. And that is the all-important difference between a person who is a great market manager and one who is a great Chief Marketing Officer.
Channels
The third responsibility of the Chief Marketing Officer is channel management. If you think of everything you have to know about catalogs to manage the catalog channel alone—from paper buying to ink density; from layout to copy; from square-inch analysis to RFM; from list testing to list resting; from pagination to title-slugging; from . . . and on and on—you can begin to understand the enormity of amassing the same level of detailed experience and skill for all of the complex channels required by today’s competitive, multi-channel environment.
The CMO is first and foremost a Catalog Master. Running a close second and gaining, however, is the Online Master. In fact, let’s just go ahead and broadcast heresy: The online channel is equally important to the catalog channel and the CMO must be a Master of both and more.
Take everything you know about catalogs and double it for web-based marketing. Increase the speed by a factor of twelve. Rethink everything you ever knew about contact strategy and circulation. Recognize that there are anywhere from two to twelve middle-contractors for every click, sale, eyeball, relationship, affiliate, or opportunity and they all get a piece of the action. Understand that the analytics have just become fifteen times as complex and detailed and that the terminology hasn’t even been agreed upon and there are precious few proven benchmarks. And that will just barely get you into the CMOs responsibility in web-based marketing.
Some of you are opening retail stores as fast as you possibly can. That’s a fairly new skill for most of our traditional Vice Presidents of Marketing. Some of you are building partnership models to incorporate other multi-channel or retail marketers to extend your reach into the broad marketplace or to enter new markets. Some of you are signing up online affiliates and attempting to force your businesses to the top of the search engine organic and paid food chain. Some of you are doing short-form and long-form infomercials and are toying with cable advertising. Some of you are buying billboard space.
The point: Today’s CMO is a Master of Channels, not a Catalog Master. The Catalog Master who has not absorbed numerous channel masteries has simply and quietly become a Catalog Manager.
Finance
Oh boy, this is gonna leave a mark. Maybe CMOs should be CPAs. As critical as the numbers are to almost everything we do, my experience is that CPAs who are slightly off-kilter and who actually get moist when they are around marketers make pretty interesting CMOs. Look again at the definition of the CMOs responsibilities:
The primary responsibility of the Chief Marketing Officer is the profitable management of new customer acquisition and existing customer retention and reactivation in all channels via all media.
Now, let’s be honest. The active word here is ‘profitable.’ Understanding the nuances of profitability and financial forecasting is a talented skill that CMOs who have an accounting background are able to bring to the party. Multi-channel marketing, just like catalog marketing, is a formulaic business. It is numbers-driven. Numbers-driven businesses call for numbers-driven people.
Regardless of the education, my fourth qualification for a top-notch Chief Marketing Officer after multi-channel circulation, markets and channels is financial ability. In my estimation, there may be no more valuable member of a multi-channel direct marketing organization than a CMO who has a strong financial background, either as a CPA, or an MBA-Finance with a specialty in direct marketing. These people’s pores exude analyses; they know how to read financial statements; they ‘get’ RFM; they can calculate the ROI of ten different kinds of click-throughs. The point: Financial acumen is essential in today’s multi-channel performance environment. Deal with it.
Creative
The fifth responsibility for the Chief Marketing Officer is creative. As with other responsibilities in recent years with multi-channel expansion, creative has broadened to include the creative knowledge and skills specific to the different channels employed by the company. Catalog creative is a given. The same breadth and depth of creative knowledge and skill used in producing catalogs is now expanded to each unique channel and its requirements. Creative understanding and oversight of the online channel encompasses total understanding of web-site creation, hosting and integration. Similarly, if DRTV is used, creative skills of the CMO must include the intricacies of infomercial development. Or, if the company has retail stores, the CMO must have understanding of retail creative elements, perhaps including visual marketing and point of sale elements.
A number of creative nuances occur as the channels expand. Catalog copy, for instance, is different in many ways than web site copy. Pagination flow in catalogs and on web sites is very different. Layouts and product size relationships vary among channels. The point: CMOs must master the unique creative skills within all channels used by the company. There is no longer a ‘One Creative Fits All” philosophy.
As well as mastering channel creative, the CMO must be accountable for market creativity. Each new market that the company embraces may require a completely different creative approach, whether it is layout, copy, language complexity, color palette, styling, typography, pricing display, or any of dozens of other mini-components of the creative protocols. Someone has to understand the subtleties of the overall creative process and their application to the customers, markets, channels, products and offers. That central point of responsibility is the CMO who carries the added burden of profit and loss responsibility for each customer, market, and channel.
Among the creative sub-disciplines that the CMO is responsible for are the following:
- Creative technology. The CMO must keep the company on the leading edge of creative technology from creative software to web platforms. The catalog and web integration with operating systems alone is a major undertaking and requires constant updating and awareness of essential technology versus return on investment.
- Photography. As a sub-discipline, photography is an essential skill for the CMO. The interface of photography with pre-press digitized processes demands advanced knowledge of this aspect of the creative process, particularly for balancing quality and cost. The awareness of catalog photography versus web site photography and where they overlap and where they differ is essential to managing the creative productivity and performance.
- Copy. Every channel has different copy needs. Long form direct mail versus postcards prescribes totally different copy approaches. Long form DRTV versus short form DRTV calls for a totally different copy ‘story.’ Landing page versus home page copy differs. Where the CMO of yesterday was adept at writing copy, the CMO of today must be adept at writing copy in several channels. The point: Each channel has its own ‘language.’ CMOs must be responsible for speaking, understanding and writing each channel language while managing all languages of all channels.
- Production. The multi-channel CMO is responsible for advertising production in all channels. In the catalog channel it involves catalog printing, pre-press, paper selection, and a thousand other specifically ‘catalog’ knowledges. For the web site it involves web page building, HTML, rich text, video, live help, web servers and hosting, link administration, and a thousand other specifically ‘web’ knowledges. And the same degree of complexity exists in every other channel, whether retail, or DRTV or telemarketing. The point: Whatever channels are used, the CMO is responsible and accountable for the production contracting, productivity, accuracy, timeliness, and budgets.
Media Distribution
After the creation of the media, the sixth responsibility area of the CMO is media distribution. For catalogs, this is the mailing and postal component of the print distribution. If we examine this from a traditional catalog vantage, there are hundreds of details that make up the postal and distribution component of the catalog channel beginning with list selects, key codes, route sortations, and ending up with monitoring and seed tracking. In between are dozens of checks and counter checks to assure each vendor and each step of the mailing process is accurate and timely. Simply manipulating the segments, mailing quantities, mail dates, in-home dates and other variables to arrive at the lowest possible postage cost requires wizardry of the Harry Potter kind. And that is the catalog mail channel only.
The integration of the online channel with the catalog channel to produce a catalog-assisted online channel performance is double the effort and double the concentration. To build in A, B, C, D test splits in both channels and to time them to coincide with much more rapid E, F, G, H, I, J, K, and L test segments across the online channels in order to obtain readings prior to the next catalog mailing date is, stated at the minimum, Herculean. Yet, it is being done every day and the complexity doubles about every six on-line months.
For those in DRTV, cable, broadcast or radio, the scheduling, negotiating and buying of media time is an art form not for the weak hearted. If you are a CMO with this responsibility and you have no prior experience in this arena, you will quickly come face to face with the lions. And the lions will win.
E-mail campaigns, whether customer-based or prospect, are a distribution art form that cannot be learned in a day. Increasingly effective, e-mail has great potential in business-to-business, but the channel is a unique channel like any other with its own protocols, foibles, intricacies and quirks. If the truth were known, there are probably less than a dozen true experts in e-mail marketing walking the Earth (excepting, of course, the 300,000 Nigerian oil ministers who want to put $11 million in your bank account if you’ll just send them the account number). If this is a primary channel for your company, the CMO should have a successful background in this form of marketing access.
Telemarketing is media distribution, albeit a giant segment. Telemarketing is as big as the catalog channel. Each are soon to be $1 trillion dollars. The CMO who has a large telemarketing component, either inbound or outbound, or both, has to have primary telemarketing knowledge and skills in order to integrate this media effectively into the overall marketing plan. Quiz most CMOs on routine telemarketing benchmarks and you will quickly find out they have minimal knowledge in this very old, primary marketing sub-discipline.
If we conceive of search engine marketing as, essentially, media distribution, then the CMO has a sizeable responsibility for all things ‘search.’ Search engine marketing is to 2005 what database marketing was to 1987. It is the direct marketing of the immediate future. I will not labor the point here; rather, simply refer you to what I said about it in the July 2004 (only a year ago) newsletter. You can quickly read it on my web site: www.libey.com . Go to the section “The Library,” click on newsletters, and then on June 2004 and go to “page 3.” The whole article is there and all of it has come true in the last year. Not only does the CMO have the ‘all things search’ province, but the experience better be good and better be proven, given the dominant search environment in 2005.
Coupled with all of the external media services, the media distribution of a major multi-channel company is a very significant undertaking and one that the CMO must have full responsibility and accountability for managing. Because of its interface aspects, media distribution is a business threatening area if it is improperly managed. After all, it is the actual execution of the all of the multi-channel marketing plans and is, therefore, the bulk of the expenses.
Analytics
It may be that analytics belongs with the finance department. Over the years, I have reversed my original position that marketers should be the analytic mavens. I now believe that marketers should be accountable through the analytics and that analytics are best accomplished by numbers people who have financial responsibilities. Marketers who prove or disprove their own strategies through their own analyses are a little too much like the chickens, hen house, and fox thing.
To be fair, however, marketers and the CMO must have the ability to do their own analyses to gauge the performance and to make decisions. Those analyses should be either verified or independently accomplished by the financial arm of the company, as well. Perhaps the ideal situation is co-analysis with interpretation the purview of finance.
The analytics are today arrayed by channel. Catalog analytics include classic square-inch analysis, RFM, product profitability, and numerous others. Web analytics include hit rates, cost per click, cost per sale, SEO cost and position performance, among many others. The point: Each channel has its own analytics and the CMO, as well as the CFO, must speak those differing analytic languages and reach performance and profitability evaluations by channel with ultimate financial oversight.
Relational Marketing: Relationships, Partnerships and Affiliations
Increasingly, in the multi-channel evolution of direct marketing, outside relationships, partnerships and affiliates are becoming more critical to acquiring new customers. As these external relations emerge, they become closer to wholesale or commission relations than direct or retail relations, but the very real customers that result render the definition academic. This whole area of ‘relational marketing’ is a vast new customer machine and, in some instances, can be the fastest method to creating very large organizations quickly, particularly through affiliate web-based businesses and referrals. Amazon is the perfect example of what can be done with relational marketing.
As classic direct marketers seek to expand channels, some turn to wholesaling and distributor relationships. Others turn to mass merchandisers, such as OfficeDepot, Target, or Home Depot. Still others prefer to develop resellers, or web-based referrers. The mix varies, but the objective is clear: Sell more stuff to more people any way you can.
Because relationship marketing is a large and constantly growing channel today, the Chief Marketing Officer should have background and experience in forging and maintaining these external relationships. Of course, this requires considerable skills in negotiating, pricing programs, promotional packages and seasonal and supply chain logistics. These are complex programs to run and to manage, and the tracking and financial elements are critical to control, especially as the margin gets thinner.
In the years since 1985 when direct marketing was essentially catalog, the concept of ‘walking several sides of the street’ was anathema. If you sold by catalog, you could never sell to dealers, or to wholesalers, or to distributors. It was unheard of. Today, you can sell to anybody, anyhow, anytime, and you’re a hero. Today’s CMO has to have that understanding and the skills and talent to work successfully on a variety of distribution levels.
People Skills
Of course, having all the technical and experiential skills is wonderful, but if you can’t promote teamwork or leadership, it’s all for naught. The CMO—perhaps more than anyone else on the senior management staff—has to be a people person. The fit has to be there and the caring about teaching and mentoring has to be present. Marketers are by nature outgoing. Beware a CMO without a personality. In my experience, CMOs tend to smile and laugh a lot. They don’t take themselves too seriously. But, they do believe their own B.S., and that ain’t all bad.
Conclusion
Well, there it is. The CMO in a Box. There are so many other things that are not included in this article, but I hope you’ll agree these are the bones of a good Chief Marketing Officer. I also hope it helps clarify some things as you expand and as you constantly seek new talent for your businesses. One of the questions that always comes up is what is a top CMO paid? You know the answer: It varies. Today, the range is anywhere from $120,000 to $225,000 with 30 percent to 100 percent in bonus, 401-K, plus a full executive package of insurances and car allowance. You would expect to see this pay range in a multi-channel company in the $50 million to $100 million plus size.
Copyright © 2005 by Donald R. Libey. All rights reserved. May not be reproduced by any means without permission of the author. Contact Libey Incorporated; www.libey.com or call 877-903-9448.
