Inspired by the Discovery Channel’s television show MythBusters, we continue to tackle commonly held beliefs related to Big Data, analytics, customer engagement and mobile technology, and determine whether the belief can be confirmed, is plausible or is busted (not true).
Today, we’ll address the assertion: marketing matters to the C-suite. Our verdict, confirmed. But not necessarily how you might think. There is a disconnect between what most CMOs are focused on and what the rest of the C-suite thinks is most valuable.
PriceWaterhouseCoopers’s 2013 Global CEO Survey found that 82 percent of CEOs are looking for “new ways to stimulate customer demand and loyalty this year.” A 2012 study by The Economist Intelligence Unit reported similar findings: driving revenue was most frequently cited as the top marketing priority by CEOs and other non-marketing C-suite executives. It ranked above finding new customers and well above creating new products and services.
By contrast, a 2011 global survey of CMOs by Forrester Research and executive search firm Heidrick & Struggles found that 59 percent of respondents said acquiring new customers was their top priority. Less than half that number, 26 percent, pointed to increasing customer satisfaction/advocacy and lifetime value as number one goals. A subsequent survey by Heidrick & Struggles on recently replaced CMOs found that while only 24 percent of the fired executives had experience in customer relationship management, loyalty and retention, 56 percent of their successors did.
This suggests that a shift in CMO focus is taking place—and it’s one that’s long overdue. More than two decades have passed since Harvard Business Reviewpublished the seminal, “Zero Defections: Quality Comes to Services.” That article dropped a bombshell: data that proved a modest 5 percent increase in customer retention rates could send profits soaring by 25 percent to 95 percent.
Since then, evidence has piled up showing that not only do existing customers cost less to service, they also buy more. This holds true, whether business is taking place in a store, at a bank branch or online. And with the rise of social media, existing customers can also create a strong forward draft for your marketing efforts through referral and recommendation influence on others.
So, in our assessment, marketing does matter to the C-Suite. Did we convince you? For more mythbusting, check out our Insights paper titled: Marketing Mythbusting—Six Maxims Get put to the Test (No. 73; log in required).