It probably won’t surprise you, but CEOs and CMOs aren’t as aligned as they should be. Driving growth is critical to every company, and the CEO and CMO alignment is a key element of corporate strategy and growth.
A recent study from McKinsey looks at the relationship between CEOs and CMOs as well as the challenges and opportunities. The study also found that “CEOs who place marketing at the core of their growth strategy are twice as likely to have greater than 5 percent annual growth compared with their peers.”
One of the first challenges is the lack of clarity around the role of the CMO and marketing. Before the digital age, marketing was responsible for the four Ps: Price, Promotion, Product, and Place. Of course, these four aspects were easier to manage in an analog business world. Today, the four Ps are spread over different departments. One reason is the segmentation of marketing functions with new executive roles like Chief Growth Officer and Chief Digital Officer.
The new roles have clouded the CEO’s view of who’s responsible for growth initiatives. According to one survey respondent, “Many times, CEOs turn to strategy or operational leaders versus the CMO for growth strategies. As a result, strategies can be more financially and analytically driven versus consumer led.”
While 90% of CEOs think marketing’s role is clearly defined, only half were aligned when asked what it is and compared their answer to their CMOs’ responses. Making alignment even more difficult, 40% of Fortune 500 companies don’t have a CMO on the CEO’s executive committee.
As marketing has evolved into a multi-disciplined, technology-driven department, CEOs may not grasp the amount of data marketing collects and analyzes about customers and prospects. The insights derived from this information can be a significant driver of growth. Part of the reason CEOs don’t fully understand the capabilities of their marketing teams is that only 4% of CEOs have held a marketing leadership position. In comparison, more than 70% of CEOs come from operations and finance.
CEOs are not drawing the link between marketing metrics and business impact. When CEOs and CMOs answered their top three metrics, they were aligned less than half the time. While marketing has evolved from the days of the famous quote, “I know half of my marketing is working, I just don’t know which half,” there is still no strong connection with the CEO on how marketing impacts the bottom line.
CEOs and CMOs must work together to align on the role of the CMO for the short term and the long term. Growth is now an orchestration of multiple teams and requires a thoughtful, deliberate approach to create a streamlined process for growth.
CEOs also need to work on understanding the modern marketing organization. This includes the technologies used and the data captured throughout the customer journey. The CMO must work with the CEO to explain the metrics used in each channel and how they impact sales. By walking through the information together, CEOs can begin to see the impact marketing has on revenue.
According to one study participant, “CEOs should first ask themselves: what outcomes—not activities—do I want from marketing? Then they should ask their CMOs: what are the best levers to achieve the outcomes? Why do you believe in these? What are the returns? Evaluate marketing in a productive way to the business and be open to the idea that marketing can generate value.”
CEO and CMO alignment should be a priority for every organization. Increased growth is there for the taking if you haven’t already created a clear communication path between marketing and the CEO’s office.
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