Once upon a time, the Chief Marketing Officer (CMO) had almost exclusive control of how their organisation spent its advertising budget to reach new customers online. It was a challenging, but relatively straightforward role.
Not anymore. Today’s retail CMOs have to juggle a number of new responsibilities, including evolving profitability KPIs, tech talent shortages and stock worries. Once masters of story, CMOs are now spinning data, analytics and technology plates too.
To increase the pressure even further, retail CMOs are only given a short window to demonstrate their impact. Typically, they only last 40 months in the position, less than half the average tenure of a CEO. Like a Premier League football manager in England, they must deliver results fast.
This is far from easy, considering the continual shifts in the marketing environment. Here are five tips for a modern CMO navigating this fast-changing role:
1. Focus on the biggest metric of all – profitability
With boards focused on the overall balance sheet, it’s vital CMOs do not lose sight of profitability whilst overseeing day-to-day tasks being carried out by their teams, which are more likely to be focused on metrics like return on ad spend (ROAS). Previous marketing KPIs likely revolved around ROAS and cost per acquisition (CPA) as e-commerce became a primary selling channel.
Now in the age of strained budgets these metrics mean less, as businesses prioritise a healthy balance sheet. First and foremost, CMOs and their teams need to ensure their strategies generate profitability.
2. Collaborate with merchandisers
Failure to optimise stocking can sink many strategies. Overstocked goods are proving a challenge for 44% of retailers, with some estimates calculating the average organisation in the UK was sitting on £65,000 worth of products they couldn’t shift after the festive season.
No one can predict the future, but an effective CMO is one who collaborates with merchandisers very closely to track product performance, and can identify deadstock products or those likely to become deadstock. With this visibility, they can employ the necessary strategies before things take a turn for the worse.
3. Understand individual product performance
By identifying the products with low sales but high ad spend, and instead shifting that budget toward their highest revenue producing products, CMOs can improve overall margins.
Understanding the average return rate for each product, and adding that to their understanding of the cost of doing business means CMOs can make a stronger estimation of what they can spend promoting that product before it stops being profitable.
4. Collaborate with other departments for more insight into profitability
Does your marketing team know the purchase price of the products they promote? Does Purchasing know the ad spend behind each product?
When retailers work in silos, they can’t optimise for profitability, because they don’t see the full picture. Unfortunately, having frequent manual briefings with each team about the right products to promote is too time-intensive to be practical. Instead, CMOs should fight for shared KPIs across departments, and a layer of product performance data that every team can access.
5. Make space in the budget for social media and influencers
CMOs must consider how marketing budgets can be best optimised to make room for social media and influencer campaigns.
Marketing campaigns today are likely to involve social media promotions across a number of channels, including Facebook and Instagram. In fact, 66% of purchasers say that social media plays a key role in impacting their decision to buy from a brand. This is not something any CMO can dismiss if they want to maximise impact.
Influencer marketing is also a tactic every large retailer is using – and for good reason. Eight in 10 consumers have purchased a product after an influencer recommended it, typically by clicking on a link or image they shared. But influencer endorsement doesn't come cheap. There’s a level of investment retailers will need to make in order to start seeing the benefits, but if executed correctly, the ‘trending’ culture we all live in means the initial investment could pay for itself overnight.
Moving forward with confidence
There is of course, no magic formula that can deal with every new responsibility the modern CMO has to consider, but product-level performance insights can drive departmental collaboration and give the CMO the data they need to focus on true profitability.
The role of CMO may have evolved, but by focusing on profitability, enabling collaboration, and understanding the full picture of product performance across the company, CMOs can meet the ever more complex internal and external demands on their talents.
By Karel Schindler