Report: The Digital Imperative for CMOs
How Marketing Leaders can Respond and Rebound Through Technology
By Amaryllis Liampoti, Partner and Director, Growth and Nils Melcher, Managing Partner and Director, BCG Digital Ventures
The COVID-19 crisis has presented a series of challenges for marketing and sales leaders, from radical changes in consumer sentiment to unpredictable behavior to threats to brand relevance. Chief Marketing Officers have multiple issues to deal with at once. The primary concerns are twofold: Volatile consumer sentiment and buyer demand, and a radical shift to digital channels.
Research shows that, from the initial stages of the crisis onwards, all categories are seeing incredibly changeable sentiment, with consumer and buyer confidence fluctuating. In the face of this, marketing leaders need to do everything they can to understand their buyers and consumers, and meet them where they are, leveraging technology to keep track of behavior and using it to inform campaigns, messaging, and, most importantly, product/market fit adaptations.
With lockdown orders and social distancing measures in full force, the crisis has brought about a radical shift in consumer and buyer behavior. Internet use is up 70% since the crisis began, and in March, online retail sales grew by 74% in average transaction volumes compared to the previous year. New demographics are coming through e-commerce channels, with existing online shoppers increasing their online presence. Companies who get their digital offering and channel strategy right will be rewarded, as will those who take advantage of decreased digital advertising costs.
To rebound strongly from the crisis, CMOs need to respond to these two issues with a renewed commitment to technology.
MarTech and full-funnel digital capabilities offer the best means by which to understand consumers and buyers, engage with them effectively, and optimize e-commerce channels to maximize revenue.
With this in mind, we’ve put together five steps to help CMOs rebound through technology. You can find full, in-depth details of these steps in our full report.
Five Steps to Rebound
Step One: Create Space
As a CMO, you will have already made major adjustments to your current operations. Many of the campaigns and strategies that were signed-off before the crisis are unlikely to remain relevant, and we’ve already seen entire programs paused or pulled completely. New plans will have to be drawn up that acknowledge the new market landscape and, in some cases, physical restrictions on product or sales.
Beyond the content of new campaigns, the product or offering they focus on and the messaging they use, attention should also be paid to channel strategy. A new approach to reaching customers is also likely to be required, and with advertising platforms seeing pricing fluctuations, drafting a new strategy that takes into account these developments and reviews the most relevant channels will enable you to gain traction at minimum cost. So far, email and performance marketing have been the best solutions for audience engagement.
Finally, although it’s likely you’ll currently be hyper aware of budget due to market conditions, creating space does not mean cutting spending completely. During difficult economic conditions many companies limit, pause, or cancel strategic investments, a category which includes digital capabilities and necessary MarTech tools. However, right now understanding customer behavior in as much detail as possible is imperative to success, so smart investments in MarTech and other capabilities that will help you respond and rebound to the crisis should not be put off.
Step Two: Reassess Product/Market Fit
While it’s unclear what the world will look like once things start to return to normal, we can be sure that consumer and buyer needs will have changed.
There are, however, steps you can take to assess how immediate and medium-term changes will affect your product, and taking an agile approach consisting of frequent, data-informed reassessments will help you adjust to best engage with your customers. Undertaking a comprehensive review of your product and how consumers and buyers have changed their engagement with it is the first step in dialling in a new conception of product/market fit, updated to fit new needs. It’s a good idea to go back to the core; draw up a list of assumptions about your product’s interaction with the market and look at how each has changed. It’s time to return to those core questions: Who is your product for, and why do they need it?
Reviewing product/market fit, customer journey, and value proposition might be approached from a set of qualitative assumptions initially, but it’s vital to understand customer behavior and engagement on a deep quantitative level to test your assumptions and change as soon as behavior changes.
Establish a data-driven process within the organization to analyze different data points and get a firm, evidence-based idea of how your customers are thinking. Social media listening tools, sentiment analysis, and message testing through advertising analytics will all be useful, as will synching with the rest of your organization.
Personalization is also key, and a well set up CRM that leverages consumer and buyer engagement points, enabling you to gauge the success of your new messaging or value proposition, will help you foster customer relationships and understand how to move forward.
Step Three: Optimize Operations
With changes in progress across the organization, staying on the same page as stakeholders outside of your marketing time is incredibly important. Supply chain disruptions, new or changed product offerings, and financial considerations will have implications across teams. Stay connected to synchronize operations.
Introducing new tools and frameworks, perhaps informed by those you’ve used while working remotely, can be deployed to encourage a truly cross-functional and collaborative working process, enabling you to move quickly and gain the insights and skills that aren’t available inside your immediate marketing team. Collaborating with data scientists to work through customer spending patterns might be one example, working with the development team to test and implement e-commerce optimization would be another. Put in place a loose but transparent structure like the one below to encourage accountability while staying agile.
Introduce agile budgeting to allow you to move quickly once you’ve identified areas of opportunity, and test as much as possible, ideally implementing automation technology to enable you to respond to circumstances instantaneously as they change.
Step Four: Leverage Technology, Capture Digital Growth Opportunities
Getting customer experience right is now even higher stakes. Due to the closures of many physical stores, digital channels are now central, with Internet use higher. Demographic shifts towards digital, with older audiences forced to use digital channels for the first time, mean every experience can potentially pose a threat to retention; first-time experiences carry more weight than those of digital natives, for whom experience is less of a hurdle.
With this in mind, making the e-commerce experience as easy as possible will lead to customer retention. Right now, many businesses whose physical stores and operations were their primary channels are having to compete with Amazon. A good customer experience could be the difference between a new, loyal customer or the loss of existing customers, who have now become used to digital channels and will consume less in-person even once the crisis abates.
Ad spend declines up to 50% are expected across all channels, according to advertising professionals. Digital media is likely to retract by around 40%, with social media and paid search down by 33% and 30%, respectively. CPCs are down and CTRs are up across the board.
CMOs will need to be smart about spending; part of the reason for these changes is the increased amount of inventory available that mirrors the greater periods consumers are spending online. With so many new consumers and buyers there to be reached at a diminished price, there’s a huge opportunity to find new customers.
By being smart and using technology, you can find exactly where these new customers might be and reach them with laser-focused targeting. Investing in smart advertising platforms that integrate with your e-commerce and CRM solutions and deploying heavy data analysis is the best way to get the most out of your operations and take advantage of the low price of advertising. Get this right and you’ll see your acquisition costs decrease.
Step Five: Plan and Invest
The landscape for marketers is still fraught and unpredictable, with a difficult economic landscape likely to take hold after the crisis period is over. Nonetheless, planning needs to start as soon as possible. Working with the finance department and leadership on a set of scenario plans that are informed as much as possible by sales and engagement data that you’ve generated will help to stabilize assumptions from all sides and set the company up to weather the storm, adapting to the circumstances and avoiding any surprises.
Scenario plans need to include scope for investment. Assuming that the rebound will lift all boats equally is not enough; marketers need to put themselves in the position to perform. The crisis has shown the importance of emerging technologies in enabling marketers to unearth opportunities and value that is vital for success even in tough times. This lesson must be learned for the future: Smart investments into innovative technologies such as automation, data analytics, e-commerce optimization, and many more are not optional extras but central to rebounding strongly and protecting and expanding market share.
Detecting the signs of this recovery and moving at the right time to take advantage will be incredibly important for marketers looking to reestablish their market positions and increase sales as soon as possible. Obviously some of this lies in monitoring news channels, but tools that can detect upshifts in revenue and track sentiment changes will enable smart marketers to move quicker and with more confidence. Social media monitoring, data processing and projection, and sentiment analysis are part of this toolkit, and the cost of investing in the latest technologies will be offset by revenue and increased market share.
The COVID-19 crisis and its associated conditions have disrupted marketing operations to an unprecedented extent, and the coming months will continue to throw up new challenges that are difficult to predict with any confidence.
It’s vital that marketing leaders move now to ensure a strong rebound. To find full detail of the steps you need to take, download the full report.
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Download the full report here.
