The Gist
- Data's your friend. CMOs should use data to optimize marketing spend and campaigns during recessions.
- Retention + satisfaction = CX win. CMOs should prioritize customer retention and satisfaction by improving customer experiences.
- Marketing transformation. CMOs should invest in industrializing customer data to make better, more informed decisions and transform how they market to both existing and new customers.
Recessions are a challenging time for every business function. They are a time for leaders to stand and deliver. For CMOs, recessions are an opportunity to become data driven. Recessions are a time for CMOs to do three things: 1) show off their data chops, 2) fix their firm’s customer experience, and 3) invest in industrializing their customer data. All three will help their organizations better weather recession and come out of recession stronger. Let’s look at how each matters.
Time for CMOs to Show Their Data Chops
Obviously, it is critical that CMOs be good stewards of the marketing budget during a recession. This is about more than just cutting expenditure. It is about ensuring that marketing spend and campaigns deliver leads and revenue. To do this, CMOs need to use data to figure out which campaigns and events provide revenue and sales qualified leads. In good times, CMOs can afford to do a lot of experiments. Also, during good times, partners can get CMOs to spend money where there is not a good return. This must stop.
Put simply, recessions are times for CMOs to ask questions. Often, these should start by analyzing consumer buying patterns and how they have changed because of recession. “This information can be used to optimize marketing campaigns, product pricing and inventory management,” says Boris Jabes, CEO and co-founder, Census. The goal should be to determine which campaigns bring in leads and which channels bring in the most engaged visitors.
In this process, smart CMOs also use data to reevaluate partners and to become as efficient as possible. This includes using data to audit channels and then prune those that are not working. To be clear, experimentation is something for better times. Recessions are a time for careful prioritization of marketing spend. One more thing, this is not a time for across-the-board price cuts. If products are early in their product life cycle, differentiated and experiencing growth, CMOs should not touch their pricing. To be clear, CMOs should wait until the data says a change is needed to maintain share. To be clear, the goal here should be to spend better and smarter.
Related Article: Why CMOs Need a Strategic Growth Blueprint
CMOs Should Focus on Existing Customers and Fix Their Customer Experiences
Several years ago, Theodore Levitt wrote the marketing classic, "Marketing Imagination." In his book he shared that the purpose of business is “to find and keep a customer.” In a recession, the focus should, however, move to keeping and expanding existing customers. A long-standing metric shows that it costs more than double to find new customers. By treating existing customers well and focusing more on their experiences, marketers can retain existing customers including B2B customers. The goal in a recession should be to increase customer satisfaction. And executing on customer experience can even bring about new customers because word of mouth remains a powerful way to market. So how should CMOs fix customer experience? They should do the following:
- Develop more attractive customer offers.
- Build mobile apps and websites.
- Improve call centers.
- Empower relationship managers.
All these together can increase customer satisfaction especially if you do what I suggest next. Nothing will empower relationship managers more than making it easier to do their jobs.
Now Is the Time for CMOs to Industrialize Their Data
According to the research of MIT-CISR, 51% of legacy companies still have their data residing in "silos and spaghetti." This means it is harder to cross-sell and upsell customers. I want to suggest this is something that is critical to fix during recession. Additionally, poorly integrated data means customer experience is often based upon the heroics and skill of customer relationship managers navigating system after system to try and provide decent customer service.
A recession is a great time to finally fix the data that powers customer experience. This will help you as well make better decisions because your data will be better. It will also transform how you market existing and new customers. Put simply, this is a time to invest to fix issues that have plagued every marketer and every predictive model. This includes customer data quality, lack of a single view of customer and the list goes on.
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For organizations that succeed at transforming how they use data and transform customer experience the results are amazing. According to the research of Jeanne Ross, MIT-CISR director emeritus, Nordstrom was seeing increasing competition from Amazon and other specialty retailers that focused on what Nordstrom was traditionally good at, great customer service. To out Amazon, Nordstrom fixed its customer data and connected it to items that were in their supply chain. They then put a predictive model on top of the combined data. This meant that regardless of channel, Nordstrom could provide customers and sellers offers that were relevant.
Meanwhile, Paul Leinwand and Mahadeva Matt Mani share in their book, “Beyond Digital”, the story of Zara. Zara put in RFID tags on outfits. Honestly, the initial objective was to better manage inventory and shrinkage. However, they soon discovered that the data was critical elsewhere. This was because the data told designers which outfits were moving. Given this, the head of design did something amazingly obvious. They told designers to make more of the popular SKUs and less of the less popular. In the research that I did on recessions, I found recessions are not a time for marketers to sit still. They need to use data to make better and more informed decisions. This includes the marketing mix.
So, what is involved in industrializing data? According to the authors of “Future Ready” it is about best engineered data practices. What some organizations call a modern data stack. Firms that achieve this “combine data collected from customer interactions and elsewhere to become a single source of truth that anyone with permission in the firm can use in decision making” and in data modeling. Doing this, says Marco Iansiti and Karim Lakhani, in “Competing in the Age of AI” is about getting to “aggregated, cleaned refined and processed data that is made available through consistent interfaces.” The goal is to “make clean, consistent, data available.” Unfortunately, the authors of "Future Ready" found that only 7% of firms they researched have industrialized their data and fixed their customer experience.
Related Article: The Top Challenges Facing CMOs in 2023
These 3 Things Can Help CMOs Guide Companies Through Recessions Better
In Roaring Out of Recession, the authors found that in recent recessions a small number of companies weathered recessions better. These firms did three things. First, they evaluated their business processes for inefficiencies. Second, they focused more on cuts related to inefficiencies rather than blanket across the board cuts. And third they invested selectively to come out stronger. This is place where CMOs should stand up and be a real advocate for their CIOs. Because the fact is that firms that do all three experience, have 10% higher growth than others within their industry group for the three years post-recession.
Even better, MIT-CISR’s research says that firms that fix their customer experience and industrialize their data — become "Future Ready" — have revenue growth 17.3% higher and net margin 14% higher than their industry average. This is a time not to waste a good economic downturn. It is a time to build firms that roar out of recession. In summary, this is a time for CMOs to do three things: 1) show their data chops, 2) fix customer experience and 3) invest in industrializing data. It is time for the data-driven CMO!
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