Marketing like many other disciplines went through a year of duress in 2020. COVID-19 had a major impact on businesses everywhere: brand loyalty, marketing strategies, budgets, brand messaging, striking the right tone. Everything was up-ended, not to mention the move to remote work and job losses for marketing teams. And on top of that, simply worrying about the health and well-being of family, friends and co-workers.
There's hope, though. Global vaccinations are in effect. And marketers are showing signs of optimism, according to findings in the 26th annual CMO Survey, run by Christine Moorman, Austin Finch, senior professor of Business Administration at Duke University and a CMSWire contributor.
Marketers’ overall optimism about the US economy has rebounded beyond mid-pandemic and even pre-pandemic levels. Specifically, optimism hit 66.3 (out of 100), up dramatically from the 50.9 value reported in June 2020 in which optimism plummeted nearly to Great Recession levels (47.7). Current optimism levels appear to continue the upward pre-pandemic trend from February 2020 at 62.7. This upward trajectory also aligns with widespread vaccination efforts, the anticipated reopening of education activities and retail sectors and the certainty that follows presidential elections.
Moorman discussed these findings and others with CMSWire's Rich Hein and Dom Nicastro for the latest CX Decoded podcast.
Note: This transcript has been edited for space and clarity.
Dom: Rich and I know your story, but our listeners don't. So tell us how you got into the arena of marketing, what your current role is, and then some insights, into the evolution of the very popular CMO Survey now in its 26th, edition and 13th year.
Christine: Well, thanks Dom. So I am on the faculty at the Fuqua School of Business here at Duke University. And I've been here since 1999, and 10 years before that at the University of Wisconsin. And as I progressed through my career, one of the things that I sort of continuously heard was a lot of hand wringing among marketers about, you know, we don't get any respect, we want a seat at the table.
And as I thought about my own role and position, I thought, well, what can I do? And one of the things that I decided I could do was to regularly collect information from top marketers and get that out to media, but also get it out to other marketers, so that they could use whatever data we were collecting as benchmarks for their own behavior.
We just needed better information about the marketing profession. So we were really the first and I think the longest standing and I would argue, probably the most objective source of information about the marketing profession that's out there. So we did just finish the 26th edition, as you mentioned, and this was based on a survey of 356 top marketers from for-profit US companies. And the important thing here is that these are marketing leaders. These aren't, you know, brand managers or social media managers; 94.5% of them were VP or higher.
We go across the whole spectrum of different types of companies, B2B product, B2C service, etc. And I know some of your listeners are going to be interested in data about their own sector. And so we'll probably talk in general about the results. But if people are interested in more sector specific results, they can look at cmosurvey.org and find their sector whether it's healthcare, or education or consumer services. They can look for detailed reports. Everything is broken out by sector on the website.
Rich: So before we jump into some of the findings, Christine, could you just share a little bit about what the CMO Survey is all about? Like what is the scope of the overall survey?
Christine: We tend to cover 10 topics or so in each survey ranging from marketing leadership challenges, marketing jobs, looking at the overall economy, marketing spending performance, and then we tend to also be opportunistic. So if something is really big, and it's going on, for example, a lot of the social and political activities that have occurred in the last year, we'll focus on those issues as kind of a special aspect of the survey. But the strength of the survey really is in these long-term trends that we're able to observe.
Rich: As you covered in your article for CMSWire, "How COVID-19 Changed Marketing," what did your research tell you about marketer optimism throughout the pandemic?
Christine: Well, what we see in terms of the numbers is that marketers' optimism really for the overall economy rebounded beyond where it was mid-pandemic, which was actually really low. But then it's gone actually beyond even pre-pandemic levels. So what we do is we measure this on a 100-point scale, where 100 is most optimistic and zero, of course, is least optimistic. We saw that the number in June was about 50.9 and that rose up to the current level, which is 66.3. And just to put that 50.9 in perspective: when we measured this during the Great Recession, the number was about 47-48. We see this rebound in play absolutely. And it's interesting, because the number is even higher than we saw in February of 2020, which was pre-pandemic. So marketers are very optimistic.
Dom: So, the only lower result for marketers' optimism was the Great Recession of February 2009, according to your article.
Christine: Well, I think the only thing that happened is that you had the presidential election back there in February 2020, where it was just still looming, even though we weren't going to get there until November. But there was a lot of uncertainty about how things were going to shake out and a lot of upheaval, of course, and that got worse over the summer with everything related to George Floyd. But people were, you know, just devastated. So this is a real sign that marketers see things moving forward.
Rich: My wife and I are planning our first Christmas trip to see family that we haven't seen since before the pandemic. There is definitely some normalcy getting back into the world. And, you know, we're seeing a lot of businesses head back into the workplace. And I think from what we hear anecdotally and see in the content that we produce on CMSWire is that, you know, there's another shift happening in customer behavior. And I was just curious to know how you think that marketing leadership should be adjusting their strategies now, as workers slowly head back to the office?
Christine: Well, I think the one thing for marketers to appreciate is that the pandemic in a sense was good to them, because it forced companies to engage rapidly in a digital transformation. As consumers shifted their behavior in that direction, companies had to respond, and they did so relatively rapidly. And so that really did increase the importance of marketing in most companies.
Just one figure I can share from the survey, which is that 72% of marketers reported that marketing was more important for their companies. And that was in February of 2021. Even in June, right in the middle of the pandemic, marketers were saying 62% of them or 63%, were saying that marketing had increased in importance. So marketing did benefit from this, the focus was put on marketing and marketing was given the leadership role in a lot of companies to respond to those changes in consumer behavior.
Rich: But has that resulted in tangible benefits, like more staffing, things along those lines?
Christine: I think we'll have to see how that shakes out over time. What we see in terms of the staffing is that essentially, there were a lot of jobs lost. But there were also a lot of jobs added in many companies; some companies only lost jobs and other companies only gained jobs. But overall, we see a net job change of about point 9%. So overall, the number of marketers and companies didn't change. I think marketers will stay in this position. But frankly, it's up to them to take the opportunity and really lean into that leadership role.
Rich: I think that this would have to equate to some increase in budget for marketing as well, martech and all that.
Christine: Absolutely. What I can tell you is that even though marketing spending decreased by about 3.9% over the last year, it's expected to grow by 10.1% in the next year. I think that points a little bit in the direction of the fact that we're not going back. And the other thing is to go to the martech question, even though we lost 3.9% of budgets, all budgets were cut last year, right? So marketers lost their share, but they did witness an 11% or 11.5% increase in digital marketing spending during that last year. So the shift happened during the year. And marketers also expect that the digital budgets to continue to increase they expect it to grow by 10%, even in the next year.
Dom: Christine, in terms of customer behavior, you know, and what marketers expect customers to prioritize your findings indicate that marketers expect significant gains in product quality expectations, but a decrease in a trusting relationship. That's super interesting to us because Rich, if you remember, we had a podcast with Shep Hyken, about the importance of customer trust. That was a huge part of that topic.
Rich: Yeah, Dom, you're absolutely right. And you know, the pandemic was a factor there. How much do you trust these organizations to keep you safe to get your things delivered to you? I would love to hear Christine's take on that.
Christine: Part of it is maybe the way that questions are asked. I asked about trusting relationships in the context of a number of priorities, we asked about product quality, about customer experience. Trust is definitely important. The question is how important it is relative to other things. And it may be that during the pandemic, you know, it just became kind of table stakes; people needed to trust the safety of products and services. And I do think that customers need to trust the companies that they work with; they want to trust the companies that they work with. And we can talk maybe a little bit about, about transparency, which I think is a big element in creating that trusting relationship.
But really the key result that emerged from our survey in terms of priorities is that customer experience was rated as the number one experience. And maybe part of that is because of the emphasis on digital and customers were trying to figure out a way to translate what they were doing with companies into this digital experience that marketers were trying to create. So about a third of marketers rated it as most important, above the others: above trust, and above product quality and a bunch of other things. Price also increased a little bit during the pandemic, but I expected that will again find its place back to more at the bottom of the list of priorities. It's just that during the pandemic, everybody's budgets were stretched.
But let me go to a little bit on this issue of trust, because we did ask the question of marketers, how much do customers actually trust your brand? And what we see is that on a 10-point scale, where one is significantly below the industry average and 10 is significantly above, most marketers rate their brands is very trustworthy, so a 7.9. So what's important to realize about that number is that it's probably inflated.
Dom: Says the marketer ...
Christine: Some of your listeners might know about the Garrison Keillor's Prairie Home Companion show, which was very popular for many years. There's something that he calls the Lake Wobegon effect, which is that most people tend to think that they're above average. And I don't know if you remember the quote, but he says, where all the women are strong, all the men are good looking, and all the children are above average.
My worry is that that number that we see in the data suggests that marketers actually believe their brands are more trustworthy than they are. So what I would suggest is that they really to dig in there and try to get a better read on on that level of trust. What we see is that during the pandemic companies did not invest in customer research. Only 27% of companies reported using customer research during the pandemic, which just really surprised me, because there was so much uncertainty about what customers were going to do, when they were going to do it, why they were going to do it. And I would have thought that would have been my first strategy to learn as much as I could. And so I would say there's still an opportunity to do that.
Dom: Rich, is there a customer trust score out there? You know, customer effort score, customer satisfaction? I wonder if there's a CX metric with trust as we're talking through this. Do you trust this brand to fulfill its marketing promises? I wonder if that standard that metric exists?
Rich: Yeah, I'm not sure. But I think to Christine's point that that makes a little bit more sense. When you talk about prioritizing all CX challenges, it would seem to me that customer experience would be a more holistic bucket then customer trust. I mean, customer trust is a part of the overall customer experience.
Christine: Right and there is something called the Edelman Trust Barometer, where they look at trust in business, trust in government. So I don't think they ask your specific question Dom, but there is something out there if people are interested. But maybe we should ask this question regularly to see how it shifts.
Dom: Christine, you know, our own digital customer experience research at CMSWire finds a year on year rise in the proportion of organizations relying on the customer acquisition rate metric. So it went from 23% to 28%, year over year. Christine, what are your findings telling you about customer acquisition strategies?
Christine: I think what we found is that during the pandemic, most of the focus was on what I wrote there, which was building brand value and retaining customers.
Dom: Yeah, instead of acquisition.
Christine: Hanging by your fingertips, so to speak, right? And then it's only now really in the February survey that we see the shift towards acquisition and ROI.
Rich: Right. And that's kind of what I was gonna say is that we saw anecdotally, and both through the State of Digital Customer Experience report, that there was that shift to more of a customer acquisition. And to your point, that I think is maybe why there was less customer research being done because of that shift.
Christine: So what we find when we ask marketers to report on their strategic priorities, the focus that we observed in the middle of the pandemic was really on building brand value and retaining customers. They were really just trying to hang on for dear life, so to speak. Things were so uncertain, things were so difficult. But what's interesting is by the February survey, you know, six months later, what we see is that marketers are shifting now to put a little bit more emphasis on customer acquisition, some customer acquisition grew by 50%, in terms of the rate change from June 2020 to February 2021. And they also tried to make money, which was improving ROI — it grew by 100%. So much less than survival mode, which we saw back in June, and much more into let's get back to our business and finding to get new customers here in February.
Rich: Was there a decrease in customer retention efforts as a result of the increase in new acquisition and improving marketing ROI?
Christine: Just a little bit. I think any smart company will always put their shoulder behind customer retention, frankly, that's where they make most of their money from recurring purchases. But, strategies did shift in the direction of customer acquisition. But retention remained important as well.
Rich: Yeah, I mean, we, we always hear that it's always less expensive to retain a customer than to find a new one.
Christine: That's right. And long-term customers. If you think about things like customer lifetime value, that's where companies are making most of their profits over the long-term.
Rich: So with the market changing, again, as we talked about some normalcy happening, what are the key opportunities for marketers right now?
Christine: Well, I think we have to go back to the idea of building digital interfaces, and for many companies really transforming their go-to market business models in the direction of that digital world. And so the data that I have from the CMO Survey looks like this, which is that marketers have really shifted their resources during the pandemic in the direction of those two activities.
So what we see is that building digital interfaces was most important back in June, and transforming the go-to market business model was important in June; those grew, again, in terms of putting even more emphasis. So marketers definitely stepped up on making that happen.
Rich: Let's shift gears and talk a little bit about you know, overall marketing spending and performance here. Christine, what are you seeing in terms of, you know, marketing spend performance? We already talked a little bit about spending being bogged down in 2020. And looking up now, what are you actually seeing in your survey results?
Christine: Let me go to marketing performance, which was pretty bleak for most companies during the pandemic year. I mean, some sectors really hit the jackpot, like healthcare, for example. But most sectors were really struggling.
What we see is that marketers report about an 18% loss in sales revenue during the early months of the pandemic. And a year in to the pandemic, marketers are reporting a gain of .3%. So basically flat for the year, which of course, is better than losing money, and profits, again, a loss there in June of about 15%. But then, up to a gain of 2.6% for the year here in February.
Dom: You know, our own digital customer experience research at CMSWire found digital customer experience teams are scaling up digital engagement across a variety of channels and formats, including online events, social media and content. You know, some are launching new digital products, services and platforms this year. This seems to fall in line with your optimism and spending findings Christine.
Christine: It does Dom, and just going back to that transformation of the business model that we were talking about earlier, what we saw in in the survey was that in June 2020, only about 25% of marketers had shifted resources toward a really important part of that digital transformation, which was data integration for being able to track their customers end-to-end.
But that number has almost doubled by the February 2021 survey to 43% of marketers investing in these kinds of technologies. And this is a really encouraging sign because if we're able to, you know, really understand what's happening on that journey, then we can manage much more directly to reach customers, basically, as they progress and also attract them to different steps in the process that would be beneficial to do so.
Rich: You talked a little bit about transparency, does that play in here?
Christine: So the issue of transparency is really important. I think part of the reason marketers have been hesitant to go all in on these kinds of tracking investments is the concerns about privacy. And so this is looming large for marketers. They're trying to figure out how to serve their customers, but at the same time, protect their privacy. And then on top of that, like, as you said, the transparency is really important to customers, especially millennials.
So what we did was we asked marketers to rate the extent to which they believe their company is transparent with customers on a set of different topics. They're highest for those things that are pretty straightforward around data collection, and data usage, and then they drop. But even the data usage and collection, those, as we said, are very tricky for marketers. This is what customers want, but how do they really, you know, walk that fine line and the way that they manage their business.
Rich: So where did that data privacy fall in the list of challenges for CMO?
Christine: Well, we didn't ask about that topic specifically, we just asked about the transparency that they have with their customers around data collection, data usage. I have asked in the past about concerns with privacy and managing, and they've been really kind of middle of the road. So on a 7 point scale, most marketers are falling in that three to four range where they don't really have as many concerns.
Rich: Yeah, that's definitely top of mind for audiences, as we shift more and more towards first party data. One thing we noticed from your CMO Survey, Christine, is that marketers spend the bulk of their digital marketing activities on website optimization. That was interesting to us, because you hear analyst firms like Gartner and Forrester pushing digital experiences beyond websites, but many marketers still see the website is paramount. Also, our own state of the digital customer experience survey reported top digital customer experience investment priorities include analytics insights and dashboarding, customer journey analysis and optimization, digital Web CMS platforms, persona targeting and social listening engagement. Just interesting. What do you think about that?
Christine: There is a whole lot more to managing than customer experience than just getting the website. Right. But maybe that is the table stakes, you've got to get that right. And then you can start worrying about getting the rest of the journey optimized.
Dom: You and I talked about that in an article for CMSWire. You told me, you know, back then it was this, listen this is the door in for many brands, right? The website, as much as you want to say, well, it's beyond that now, it's wearables, it's kiosks, it's Apple watches. It's everything else, it's social. Well, you know what, the website is still important, according to your survey findings. So we were curious back then, I don't think your data drills down here, but I wonder if you have any just educated guesses on what, you know, what they want to optimize in those websites? You know, is it better customer acquisition like newsletter, signups, that kind of thing or better SEO? I wonder what the marketers are focused on when they do go in to their websites and start to optimize?
Rich: I would also like to add just to the importance of the website, that Google Search is still a monster out there, and the rise of voice search is also happening. And those items typically don't push you into an app, they typically push you to the website.
Christine: That's right. So I think there's a lot of things that keep pointing marketers back there, but I think they just need to think about their strategy. How are they making money? If they're making more money off of the advertising on their website than they are from the products and services that they're selling? You know, that that suggests maybe one set of actions so it always comes back to strategy. You need to think about who is your customer? How do we serve them effectively? What is it going to take to out-compete others? So you're trying to serve them, but I do think you have to get the core of the website right. And I've had this experience myself as a customer where I just, I mean, I leave immediately because it's such an unpleasant experience. And other times where you take, you take the time to explore it, because it really draws you in, in a way that it's clear they understand what you're motivated by and what customers like you are interested in.
Dom: Christine, we saw marketers had a hard time last year demonstrating the impact of marketing spend using tools last year in our own research. Practitioners are underwhelmed by the effectiveness of digital customer experience tools with only 11% of them declaring them working. Well, that's low.
Rich: That's a pretty low number.
Dom: It would be great to see what they want out of them and what they're not getting. And they follow it up with incomplete and siloed tool sets. So maybe this is like a processes thing more than the actual tools themselves, as well as low maturity and practices such as personalization and measurement. So maybe they're not equipped to get the most out of these tools, even though the tools do allow that. So those are some of the contributing factors. What does your research tell you, Christine, is this getting better according to your findings, in terms of, you know, using these tools?
Christine: Well, it's really important topic for marketing. Because you know, getting that seat at the table, which I talked about at the very beginning, requires that they demonstrate in some way, the value of the work that they're doing. And there's a lot of ways to do that. But we've been tracking this really since 2009 and what we see uniformly over time is that this is an area that marketers find very challenging.
In this most recent survey, about half of marketers report that they're able to demonstrate the impact of marketing spend on their business using quantitative tools, which is going to be the strongest way to do that. Now, that sounds like a low number, it's lower than we would like it to be. But the good news is that it reflects a big increase even over the February 2020 level. So it has grown over time, it continues to grow and marketers are definitely improving on this.
They're using things like experiments, for example, to get baselines so that they can see what that lift is. They're using more sophisticated econometric tools to figure out what's going on with the return on their marketing spend. And some sectors are much stronger on this front; for example, a B2C product company, which tend to be more at the vanguard of a lot of marketing activities.
Rich: I know why practitioners are underwhelmed Dom, and we talked about it in the last episode of CX Decoded, the average marketer was using some crazy number like 150 tools to accomplish their their mission.
Dom: Yeah, swiping credit cards. And those findings were found in the Anita Brearton podcast that we aired on June 1, you can check that out on CX Decoded on CMSWire.com.
Christine: Yeah, let me just jump in on that guys, because what I've seen in a lot of companies is that they just decide on a metric that everybody can use across all aspects of marketing and, and other aspects of the firm. In one of the books that I wrote, we profiled Philips, which is a company that covers a lot of different sectors: healthcare, consumer goods, etc. and what they decided on was to use something like a Net Promoter Score. They fashioned it for their own company, but they used it for new product introductions, they asked it on their warranty cards, for all different kinds of decisions. And then the CFO could get behind it, the CMO could get behind it, the head of R&D could get behind it, because everybody knew kind of what the number meant. And they were able to then track things over time in a way where they could get some shared view of what that return on marketing looked like.
So sometimes it's better to just come to a decision. The CMO at the time referred to that as his secret sauce, just getting that shared view. Sometimes we complicate things: mostly because we're afraid that we're going to make a mistake if we don't capture the universe of metrics that are out there, but sometimes it's better to just make some choices and focus.
Rich: Where do you think right now, marketers are missing opportunities? I mean, there's a lot going on out there. There's changing landscape and just curious to hear your thoughts on that.
Christine: Well, there's a lot of marketing leadership challenges going on these days, but let me focus on one that I think is probably important to many of your listeners, which is the idea of diversity, equity and inclusion in marketing. This is something we focused on after what happened in the summer of 2020. So what I can share with with all of you is that marketers report spending about 8.9% more on DEI [diversity, equity and inclusion] initiatives over the last year. And when we put that in context, remember earlier I mentioned that marketing spending actually decreased last year by 3.9%. So that 8.9% increase in DEI related spending actually means in fact that marketers did give some priority to these initiatives.
But what's less impressive, I think, is that marketers have not really transformed all aspects of their work. So what we see is that we see kind of a tendency to focus on external facing things. So for example, areas of greatest emphasis are around communications and branding. They were emphasized by 63% and 61% of marketers, then it drops from there.
So we think there is an opportunity here to really improve, it's probably worthy of an entire podcast on its own. How do you really think through how to demonstrate the impact of DEI, make that case internally, and I think it does involve a series of starting with principles, thinking about culture change, putting processes in place. There's a lot of ways to get there. But I think marketers need to really embrace this path if we're going to see real transformation.