Monday, December 30, 2019

Has Martech Killed the CMO?

Video killed the radio star and marketing technology might have "killed" your CMO. Let me explain. 

Ten years ago, Marketing was still more art than science but with the emergence of new marketing automation technology from companies such as Marketo (Adobe), Eloqua (Oracle), and ExactTarget (Salesforce), marketing changed. No longer some creative voodoo, Marketing is now all about processes with very measurable metrics. The CMOs finally have a way to justify their budgets by measuring every step of the pipeline-building process with metrics around MQLs, SALs, SQLs, and their conversion ratios. Marketing is now responsible for something tangible rather than the logo, color palette, and business card design. Marketing is "lives and dies" with the pipeline!  

Except that Marketing doesn’t own the pipeline. Sure, Marketing is responsible for the “top of the funnel", the earliest stages where we gather a list of prospects and filter them down based on their likelihood to buy. But when those prospects become opportunities, the Sales team takes over. Simply put, Marketing owns the early stages of the pipeline, Inside Sales owns the middle stages, and Field Sales owns the final stages:

Stages of the Go-to-Market pipeline 
While all the MQLs and SQLs are useful metrics, what the business really cares about is revenue, win rate, and the number of new accounts. The most meaningful pipeline metric is the revenue forecast and the CMO doesn’t own that. Who does? The head of Sales. Not only does he/she own all the middle and late stages but, in most companies, Marketing only supplies somewhere between 30-70% of the leads. The remaining leads are generated by Sales, channels partners, and strategic partners – all of which are usually run by the head of Sales. That’s perhaps one of the forces behind the recent emergence of a new role, the Chief Revenue Officer (CRO), who’s overseeing the entire go-to-market effort and thus truly owns the pipeline. The CRO is almost always a sales leader; hardly ever a marketing person. 

And so, many CMOs are now finding themselves reporting to the CRO and not to the CEO anymore. With that, the CMO might be a “Chief Officer” in the title but he/she is a peer to the head of Inside Sales and the different Regional Vice Presidents of Sales. While that doesn’t mean that the CMOs are no longer needed, they and their entire Marketing teams don’t see it as a promotion that they have been absorbed into Sales. In a way, the new marketing technology that finally allowed them to measure their contribution to the company’s bottom line led to a restructuring that moved them down a step. 

But what gets lost in this restructuring are all the other things that the CMOs used to do before over-pivoting towards the pipeline. On a high level, Marketing has three main roles and the go-to-market activities are just one of them. The other two are awareness and product marketing and there is a huge value in these activities that goes far beyond the scope of the CRO. Unfortunately, Marketing doesn’t have a single system of record for those activities and their contribution is very difficult to measure. They only system of record that measures their performance is the Marketo/Salesforce combination that tracks the effectiveness of their contribution to the go-to-market effort.  

The awareness activities put the company on the map and increase its brand recognition. Marketing still needs to run PR, thought leadership, advertising, and influencer programs but as those programs don’t directly contribute to the pipeline, they are not top-of-mind for the CRO. To compensate, some companies created a separate role for a Chief Communication Officer, who reports to the CEO, but even further diminishes the role of the CMO.  

The myopic focus on the pipeline also tends to neglect all the product marketing functions. Sure, the product marketing team is probably still creating the content assets for go-to-market campaigns but all those infographics, case studies and videos tend to be very transactional. Yet there are so many great companies that struggle to articulate what they actually do and how it is different from everybody else. This is not about product-level messaging and also not about “selling benefits, not features”. It’s about the corporate narrative. Without a compelling corporate narrative, the messaging is usually watered down to generic benefits around growing revenue or improving margins. Unfortunately, everybody claims they do that. Yet a marketing machine driven by pipeline goals has little time to spend on corporate messages and the people who could do that are too far down in the hierarchy to influence the corporate narrative.   

The same can be said for other strategic marketing roles such as segmentation, branding, pricing, and even analyst relations – the CRO will say they are important but since they only have an indirect impact on the next quarter’s revenue, they will not be a priority. You’ll have an all-day meeting with a Gartner analyst and both the CRO and CMO are bored to death and leave the meeting early to spend their time on some pipeline-related activities. And do you know who notices that? The Gartner analyst!  

Marketing technology has completely revolutionized Marketing over the last decade. What used to be a function that had to consistently justify their budget and existence is now being seen as a critical part of the go-to-market effort with very measurable contribution. This transformation yielded a much better alignment with Sales, greater predictability of revenue, and usually a higher budget as Marketing can show a direct causality between budget and pipeline. All of that is fantastic but looking at the role of Marketing only as a tactical pipeline generating function omits significant strategic contributions to the company that should really matter to the CEO. Because Marketing is not just about the pipeline.

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