Mesh for Success
Once upon a time, retail marketers handled advertising and promotions while IT was responsible for enterprise apps and new systems. Since the digital media revolution, though, marketers are looking for ways to be more relevant to consumers. They’re tasked with creating communications tailored to social, mobile and tablet users. But they’re buried in a deluge of data and struggling to make sense of it all.
CIOs, equally swept up in the digital milieu, are trying to come to terms with the mountains of data this revolution has spawned, the flurry of new marketing apps that have emerged as line items on their budget and a shift in the role they play — from cost cutting and process improvement to revenue generation.
In a growing number of retail companies, including Saks Incorporated, Build-A-Bear Workshop, Macy’s and Burberry, CMO/CIO collaboration and cooperation are now part of the culture. Each tells a story that revolves around transforming practices and processes to create comprehensive new data strategies aimed at driving revenue growth and unlocking benefits.
Yet for many companies, a successful collaboration is going to take time. Though quick to admit that better cooperation between IT and marketing is imperative, there are plenty of instances where the relationship could best be described as lukewarm.
“They should be best friends but they’re not quite there yet,” says Nikki Baird, managing partner at Retail Systems Research (RSR). “Both are trying to claw their way in a product-centric organization that is slowly shifting to customer-centric strategies. They’re petitioning for the C-suite to reallocate more resources in their direction, but it is a slow go.”
Kelly Gilmore, senior vice president for NRF’s Retail Advertising & Marketing Association (RAMA) division, agrees. “CMOs and CIOs know that they need to support each other when it comes to improving marketing performance and delivering campaigns that yield higher ROIs,” she says. “They know that 1 + 1 can equal 3 if they collaborate, but until recently marketing and IT were very different disciplines.”
Reality far from ideal
Research published last month by RSR finds that the intent to embrace customer centricity continues as strong as ever — but the reality remains far from the ideal. In many retail companies, the top marketing executive still does not have a seat at the CEO’s table. More than half of the 131 respondents said their chief marketer had achieved only the level of internal vice president.
“If retail companies are going to transform themselves into customer-centric organizations capable of engaging with the customer in more meaningful ways, they need to elevate marketing to the role of a chief executive and give the CMO ownership and accountability for the customer experience,” Baird says. “Retailers need to be aiming for something faster than evolution and not quite as disruptive as revolution.”
Other key findings of the study, “Marketing in Retail: Making the Case for the CMO,” drive home the intent to move ahead, noting the challenges that need to be overcome along the way. The percentage of retailers agreeing that their company is proficient at cross-channel targeted marketing has increased significantly from a year ago, yet the number of retailers who say they know who their best shoppers are has stalled.
What’s more, retailers say they’re planning to invest in technology — customer purchase analytics, CRM and marketing operations top the list — yet the single biggest inhibitor identified by respondents is that merchandising hasn’t bought into focusing more on the customer than the product.
IBM’s 2012 “State of Marketing” survey found that 60 percent of marketers point to their lack of alignment with IT as the biggest obstacle to reaching today’s consumers. Paul Papas, global leader in smarter commerce with IBM global business services, insists that CMOs and CIOs must join forces in order to connect with today’s consumer and put the business in a better position to succeed.
“Within the next 12 months, 34 percent of marketers plan to extend their mobile efforts beyond websites and apps to deliver advertising that reaches customers on their smartphones and tablets,” Papas says. “That speaks to the seismic shift we’re witnessing in retail. The ability to create marketing that is relevant, personal and adds value to every customer interaction is key, and marketing must be tied to technology to deliver this personalized experience.”
Papas says that for retailers to remain competitive, they must engage on a more personal level with individual customers and clients, understand how to discover hidden patterns in data and close any gaps between brand and culture.
“CMOs and CIOs must work together to transform how their companies interact with customers, inform those interactions using powerful analytics, integrate end-to-end business processes and continuously innovate,” Papas says, what he refers to as the “four I’s of customer experience.”
“That’s an enormous shift in the way retailers engage with customers, and that’s why these two disciplines need to come together.”
Jeff Roster, research vice president at market researcher Gartner, uses the word “transformational” to describe how social, mobile, big data and cloud computing are changing retail and hastening the need for the CMO and CIO to interact.
“The person in charge of marketing has had to shift from managing structured communication to interacting with the consumer in real time,” he says. “As they have taken on increasing responsibility for mining information in the social and mobile space, they have become more important inside the organization — and the need to sync up with the CIO is more apparent.”
Gartner predicts that by 2017 the marketing arm of businesses would control more of the IT spend than IT organizations at those companies. Roster feels that the number of stores companies operate could sway that a bit for the retail sector, but the percentage of tech spending designated for analytics in 2013 suggests that the landscape is changing.
“CIOs need to accept that their role is changing, along with that of the CMO,” Roster says. “They’re accustomed to living in a world where tech spending decisions were multi-year projects. Until recently they looked at requests from the marketing team and thought ‘This isn’t mission critical, it can wait.’ While in some instances that was true, it’s not anymore. Today if you over-think investments in some aspects of social or mobile, you’ll be too late.”
Roster says it boils down to the mainstreaming of technology. “Consumers are all over mobile and social,” he says. “They come into stores with a mobile device in hand and they’re willing to start a conversation. It’s at that point that a retailer can really drive the one-to-one, real-time marketing we’ve all been talking about for years.
“It’s a huge step and very few companies are there now, but that’s where it’s headed — and truth be told, it’s not that far off,” he says.
There’s no doubt it’s going to take collaboration between the CMO and CIO to reach the retail nirvana many envision. But experts also have raised questions about whether current CMOs have the skill set to go deep into analytics and be comfortable in what Roster calls “the messiness” of social media.
“Brands are now open — like it or not — and that has changed the dynamic of engagement,” he says. “A CMO needs to have significant social media and mobile expertise. They need to be comfortable with ambiguity and risk. Sometimes you can manage the message, but more often than not you can’t — you’re performing without a net. That takes a special skill.”