GET TO KNOW A CMO:

Marketing Magnified: You mentioned that your responsibilities include managing a global staff of nearly 7,000. How are you organized to manage that many people?

Well, of that number about 1,000 are headquarters and marketing staff and the rest are sales, customer service, reservations, etc… I have responsibility for the revenue side of the business with the support of five direct reports: The senior vice president of network strategy handles route planning; the senior vice president of global sales has responsibility for both sales and reservations, which includes 4,000 people; standard marketing programs like advertising, public relations, direct marketing, etc… are managed by the senior vice president of marketing programs; pricing and revenue is the responsibility of the vice president of pricing and revenue management; and, the senior vice president of Continental Micronesia takes care of our operation in the south Pacific and all of our global alliances and partnerships. It’s enough to keep me busy on most days.

Marketing Magnified: Environmental marketing and “green” programs seem to be on the rise. Since this month celebrates Earth Day, how active is Continental in this area?

Very. Just recently Fortune magazine named Continental one of the top ten global companies across all industries in the Community/Environment category on its list of Global Most Admired Companies. Overall, we were ranked the number one most admired global airline. Global climate change is an important issue and we recognize that greenhouse gas emissions are everyone’s concern. Today, Continental is nearly 35% more fuel efficient for every mile a passenger flies compared with 1997. Continental also has the youngest fleet of all airlines. To further reduce emissions we will continue to invest in efficient and advanced aircraft technology. We are also working with national and international governments to improve air traffic control systems so that aircraft routings will result in fewer emissions. We will also use electric rather than fossil fuel for our ground equipment wherever feasible and are testing alternative fuels and fuel additives. Finally, we are committed to constructing our airport facilities according to the U.S. Green Building Council Leadership in Energy and Environmental Design (LEED) and Environmental Protection Agency Energy Star standards when feasible.

Marketing Magnified: How are you organized to deliver on your “green” programs, Jim?

Ned Walker, our senior vice president of worldwide corporate communications, leads an internal team in program development and, most importantly, creating an internal culture that thinks “green.” As head of global marketing I am a key member of the team and budget resources to support the implementation of the program as well as communicate its benefits to our audiences.

Marketing Magnified: The airline industry is extremely competitive. How does Continental go about differentiating itself from the other guys?

Our differentiation is our full service offering. We provide full service at the same prices other legacy carriers charge with less than full service. Our customers recognize the added value we provide, that’s why we keep winning awards and maintain our profitability. Our biggest challenge is to keep our cost structure in line while continuing to provide full service. We are making a huge investment in the new Boeing 787 Dreamliner, which will fly farther than any other plane and will be 20% more fuel-efficient. We will begin taking delivery of this new aircraft in 2009. The distance these new planes fly will help us further penetrate new international markets, which is a major strategic focus for Continental. Another challenge, by the way, is distribution costs. We are working hard to lower costs we incur through the booking process. Our website is the most profitable booking tool we have so we continually invest in improving the customer experience at that contact point. We are also working with our Global Distribution System – which includes systems like Sabre – to lower costs and continue to negotiate cost effective agreements with online travel agencies like Expedia.

Marketing Magnified: How are you using technology to improve customer experience?

Well, trying to stay in touch with our business customers is a high priority and is a big challenge in a very changing environment. We want to increase business usage because they are our best customers. We are using technology to make their flight experience better. We have developed what we call Trip Alerts, which let our customers know if a flight is delayed, on time, and other information they need to know on a real-time basis. We can communicate with them through their Blackberries and other devices. We also have kiosks at the airports to let them check in and avoid long lines. Using technology to improve the customer experience brings big benefits…you will see more from Continental.

DEFINE & ALIGN THE CMO

The casualty rate of Chief Marketing Officers can be reduced if CEOs and boards better understood the role, requirements and value of a CMO and empowered the right individuals to architect all aspects of a company’s operations around the customer experience, says a new study that looks at how to better “Define & Align the CMO” in the enterprise.

Conducted by the Chief Marketing Officer (CMO) Council and sponsored by MarketBridge, a leader in building high-growth sales and marketing operations for Fortune 500 companies, the study found that a paucity of effective ROI metrics for marketing was also undermining the CMO position and function as a whole.

Title inflation, unrealistic expectations, flawed hiring practices, talent deficiencies, and lack of requisite business and strategic leadership skills are big contributors to the limited shelf life of CMOs. The Council’s research also points to the fact that 50 percent of executive searches are to replace incumbent CMOs who are primarily hired to fix broken marketing organizations, not drive business value.

The landmark study uncovers startling contradictions in upper management: most executives consider the CMO a valued member of the executive team, yet they also believe many CMOs lack the background and skills needed to be a top management player; a challenge numerous senior marketers share with their CIO counterparts at many companies.

In a sharp commentary on the connection between strategic value and performance, most CMOs involved in top-level decision-making get high marks from their CEOs for their overall performance, while those CMOs who remain in tactical mode get significantly lower grades. The blame for these problems, meanwhile, extends to executive recruiters who draft candidates without gaining true insight from their clients into the skill sets, qualifications and experiences needed for the job and cultural environment

The complete 82 page report captures this extensive quantitative feedback and qualitative insight and presents a compelling narrative addressing All You Need to Know About the CMO, When You Know You Need a CMO, and How to Grow a CMO; the Report also includes Detailed Findings from the 3 surveys conducted (with executive search firm principals, CEOs and Board members, and senior marketers), topical insights from CMOs on a range of relevant topics and issues, and the CMO Council CMO Scorecard.

The complete Final Report is available for purchase for $295. A complimentary Executive Abstract is also available for download

THE GREEN FIELDS OF TECHNOLOGY

The technology industry is celebrating Earth Month by plowing money into the new green fields of alternative energy at record rates. The San JoseMercury News reported this month that alternative energy investments have hit record levels, reaching over $.5 billion in 2006, a 190 percent increase over the previous year. Kleiner Perkins Caufield & Byers and other venture capital firms are pouring money into portfolios of green companies to catch the next big wave and help save the planet from overheating.

As the public and the guys with the deep pockets warm to the idea of global climate change and fast disappearing oil, SunPower, a San Jose, Caifornia-based spinoff from Cypess Semiconductors is at the forefront of this new green revolution and is spending millions of dollars expanding factories to keep up with demand for silicon-based solar cells.

“SunPower’s biggest problem is keeping up with demand, says Jan Soderstrom, who served as the company’s acting CMO and now consults with the company. "We are limited primarily by the production of raw materials. We have to compete with other industries for silicon, but that situation should be alleviated somewhat in 2008.”

SunPower says they make the world’s most efficient solar cells as measured by the percentage of sunlight captured and converted into electricity. Typical solar cells convert about 14 to 16 percent of sunlight into electricity, but SunPower cells achieve efficiencies in the 20 to 22 percent range. The company claims its solar cells and modules generate up to 50 percent more power per unit area than conventional solar technologies. “That is our point of differentiation, Soderstrom says, driven by our intelligent engineering. We also differentiate on the aesthetic appeal of our products…great design.”

SunPower competes against big brands like Sharp and BP, and has muscled past BP in the U.S. to claim the number two position . “I was brought in three years ago to help create a brand for SunPower and develop a sustainable, long-term positioning, Soderstrom explains. The company had been in business for over 20 years but wanted to move aggressively into the consumer market.”

The company was co-founded by Dick Swanson, SunPower’s current chief technology officer while he was teaching at Stanford University. While trying to determine how to maximize the light-to-energy ratio, SunPower came up with a new solar design that significantly improved efficiency. The new design was used by NASA to power an experimental aircraft called Helios back in 1999. Cypress Semiconductor purchased a majority interest in SunPower in 2002 and supported the development and mass production of solar cells. Cypress spun SunPower off a year and a half ago but still retains majority ownership.

Today, SunPower markets to both business-to-business and consumer markets and is growing at a double-digit rate, restrained only by production capabilities. Currently 70% of its U.S. business is in California, where sunshine and subsidies help fuel the market. “Most of our customers are looking for a system that will provide them with a lower tier electricity rate and expect that a solar source will supply 70 to 80 percent of their needs, Soderstrom explains. For a 3,000-square-foot house the average price would be around $30,000, but with state and federal subsidies the price drops to $20,000.”

The company is targeting the consumer domestic market primarily in those states that have abundant sunshine and favorable subsidies. Marketing is aimed at generating quality leads that are then screened by customer service using a qualifying questionnaire that determines the prospect’s readiness for solar, including amount of available sunshine, unobstructed view of sun, and other factors. Once a prospect is qualified, the lead goes to a dealer in the area and the dealer does an ROI estimate. To help seal the deal, SunPower offers financing programs.

To move beyond its component-level business-to-business markets SunPower recently acquired PowerLight, a Berkeley, California-based designer and installer of grid-connected solar electric systems. Combined, the two companies are approaching $1 billion in revenue, split approximately 70 percent business-to-business and 30 percent consumer installations. The PowerLight addition provides the company with an entrée into the business and government alternative energy markets and importantly leverages PowerLight’s installation capabilities.

“Our biggest marketing challenge still is keeping up with the demand for solar electricity. This market is still in its early growth stage where technology acceptance and adoption are key, but we are laying the groundwork for the next stage when brand becomes paramount and the battle really begins.”

Looking ahead Soderstrom sees a very bright future for solar. “Smarter techniques for installation, lower cost of manufacturing, improvements in efficiency and other cost improvements will really open up this market in the next three to five years, says Soderstrom. Given the change in public opinion and the venture capital rush to alternative energies, SunPower and companies like it will continue to shine.

Bob Nelson is the editor of Marketing Magnified.

Point of View: Collin O'Mara

“San Jose,” a brand name long associated with world-changing innovation, continues to strengthen its marketplace perception by mining new advances in technology addressing today’s and the future’s energy needs. Clean technologies, or CleanTech, present unprecedented opportunities to benefit from the multi-trillion dollar energy industry as individuals and businesses around the globe re-engineer the way they live, work, and play. 

For the uninitiated, CleanTech is the emerging industry sector which includes market-driven innovations that utilize renewable energy resources, manage existing resources more efficiently, or mitigate environmental impacts of human activities.  The rapid growth of CleanTech industries over the past few years has been staggering.  For example, CleanTech companies received a record $2.9 billion in the United States out of $25.5 billion investments in 2006, according to CleanTech Venture Network, and there is no end to the investment in sight.

The unique competitive advantages of Silicon Valley will catalyze the growth of CleanTech industries in San Jose.  The region presents unrivalled access to venture funding, highly skilled individuals and research institutions, entrepreneurial expertise in bringing ideas from conception to market, opportunities for synergies with other emerging innovations such as new Web 2.0 start-ups, and supportive government policies.  To date, venture capital investments in CleanTech firms have exceeded over $1.5 billion in Silicon Valley and increased by over 600% from 2005 to 2006.  The region’s engineering expertise, combined with continuous advances in semi-conductor, nanotechnology, and optics R&D, presents CleanTech firms locating in San Jose with opportunities to accelerate the development and production process by increasing the degree of innovation and reducing time to market.   Many San Jose companies are already benefiting from this unique environment as they lead the world in renewable energy development (SunPower and Nanosolar) and energy efficiency innovation (Philips Lumileds, OSRAM, and Fat Spaniel).

San Jose is positioned as a national leader in fostering, nurturing, and developing emerging technologies that become the driving industries of tomorrow.  However, growth in this region has not occurred by chance, but rather is a result of an environment built to help innovative companies flourish.  In addition to a wide array of supportive economic development programs and policies, San Jose has taken a series of steps to support CleanTech companies. The San Jose Environmental Business Cluster is an incubator that provides support for CleanTech start-ups, such as NuEdison, a developer of solar concentrators for PV solar.  San Jose has invested in spurring innovation in alternative energy vehicles as home to the Electronic Transportation Collaboration Center, which focuses on early-stage development of alternative fuels and hybrid commercial vehicles. The City is also working to shock local demand for CleanTech products through procurement and building efforts.  San Jose has adopted an ‘all hands on deck’ approach by partnering with the private sector, civic organizations, utility companies, local universities and research institutions. 

CleanTech innovations will fundamentally change the world in which we live and present economic opportunities for generations to come.  Ensuring that this next wave innovation occurs in San Jose will require aggressive development and promotion of the emerging CleanTech industry cluster.  Through these efforts, San Jose will maintain its brand leadership as the Capital of Silicon Valley and continue to serve as a global epicenter of innovation.

1001 Marketing Metrics Never Tell The Full Story

Most large marketing organizations have made significant strides in the development of sophisticated methods to improve marketing measurement. Ph.D. mathematicians are commonly on staff, stewarding elaborate survey research, media-mix models, and analytical models for assessing the return from proposed initiatives.

But step back from the complexity and one can’t help but wonder if all that measurement is being approached too tactically to credibly tell the overall story of marketing effectiveness and efficiency. With few exceptions, marketing departments appear to be measuring payback in a disjointed series of technically sound yet ad-hoc ways, best represented as silos of metrics.

Each silo measures different elements of marketing effectiveness in different ways:

• Customer metrics silo - looks at how prospects become customers. From awareness to preference to trial to repeat purchase, many companies track progression through a “hierarchy of effects” model to track evolution of broad market potential to specific revenue opportunities.

• Unit metrics silo - the one likely to be at an advanced state of maturity in most companies, owing to the underlying IT systems ability to tell what was sold, where, and at what price. With some quick math, they can figure out the marketing cost per unit as a gross method of measuring efficiency.

• Cash-flow metrics silo - focuses on efficiency of marketing expenditures in achieving short-term returns. Program and campaign ROI models measure the immediate impact or net present value of profits expected to be derived from a given investment initiative. Media-mix models use statistical regression techniques to identify which combinations of media placements, integrated media elements, and even copy executions generate the most profitable response from customers

• Brand metrics silo - tracks the development of the longer-term impact of marketing through brand health. Survey-based tracking studies gauge customer and prospective customer perspectives on the brand. Brand scorecards monitor the evolution of these perspectives over time within market segments and across multiple constituencies to get a full view of brand equity drivers.

Yet despite the implementation of effective measurement systems within one or more of the silos, most marketing departments still struggle to synthesize insights gained across silos in a manner that helps one silo explain another or clarifies the predictive drivers of the business on a broader level.

For most companies, it’s not possible to do this scientifically since it’s not an econometric modeling problem solvable by equations and computers. Each silo measures very different components of marketing effectiveness in very different ways. Some are shorter term and some longer term. Linking them algorithmically forces you to make some very large assumptions that may be unreliable in the face of actual marketplace dynamics. Even if you can solve the problem algebraically, you will likely have to employ statistical techniques of such sophistication that few people in either marketing or finance will understand sufficiently to embrace and defend the conclusions.

The net effect of all this uncoordinated measurement is that marketing gets lost trying to divine the true story of effectiveness of resource allocation from 100 data points on a three-dimensional scatter plot with no clear picture emerging. And while it may have been accepted practice in the past to throw this measurement spaghetti at the wall when asked about the payback on spend, today’s CEOs and CFOs have little patience for the fog of complexity.

This is why we’re hearing and reading so much about marketing dashboards these days. A well-designed dashboard can structure many disparate sources of information in a comprehensive, organized manner and present the insights derived from each silo in a graphically related view that facilitates the human brain’s incredible power to find subtle, contextual links. An effective dashboard suggests to the user that the many individual component metrics are actually all part of one single story, not a jumble of dozens of separate ones.

The debate on the “art” or “science” nature of marketing is over. It’s both.

The science underlying the mathematical, cognitive, and behavioral tools help identify opportunities and gauge our success at exploiting them. Our repertoires are expanding with every passing year as more researchers develop better tools and techniques.

The art has historically been defined as the creative spark of imagination behind our execution of marketing messages in words, pictures, and forms used to engage the customer.

But in a measurement context, that art is increasingly needed to help make sense of the science. The best scientific measurement techniques are lost on the audience that suffers through dry and uninspired soliloquies of interpretation, or, worse yet, death by 100 pages of charts and tables.

As true marketers, we should be able to paint a picture to tell a better story. The dashboard can be a powerful canvas.

Pat LaPointe is co-managing partner of MarketingNPV, a highly specialized advisory firm that links marketing investments to financial value creation, enabling clients to measure the payback on their marketing efforts and take smarter risks with resource allocation. Pat is a board member of the Business Marketing Association.

Copyright © 2006 MarketingNPV LLC

THE DOWNLOAD

New PR Week Marketing Management Survey:

The PRWeek Marketing Management Survey gives marketers the opportunity to share valuable information about the role of various disciplines- including PR- in the marketing mix. All respondents that complete the survey will be entered into a drawing to win an iPod, so please click here to take it, or pass this along to your marketing colleagues.
To take the survey, click here

New Book Says Advertisers Must Understand How Consumers are Emotionally Wired

In his new book, Gimme! The Human Nature of Successful Marketing, business and advertising research veteran John Hallward explores our evolutionary traits to help anyone involved in advertising, marketing or public relations better tap into primary human motivations for greater success.

Advertising is a $350-billion industry worldwide. But for too long, the author says, marketers have ignored the basics of how human beings are wired and how they work emotionally. As a result, costly marketing and advertising campaigns have suffered to the point where the majority of advertising campaigns fail.

Hallward, a former marketer with Procter & Gamble and Johnson & Johnson and now chief of new product development for Ipsos ASI, The Advertising Research Company, writes: "The role of marketing is to drive behavior to generate sales. But it is surprising how much advertising is about saying what the advertisers want to say about themselves and how little advertising focuses on the minds, moods and motivations of consumers... what I call "gimmes" - the emotional payoffs consumers expect from brands. Gimme! Is about how to apply the insights of how humans are wired to make advertising, marketing and PR work better."

The book, published by John Wiley and Sons and available around the world, is based on Hallward's 20 years of experience in the ad research world and supported by the Ipsos ASI database of more than 3 million brand assessments. According to Ipsos ASI research, only about one-fifth of advertising campaigns have a significant measurable impact on the brand. Many campaigns fail to grab the consumer's attention. Half of those that do so fail to motivate consumers in meaningful ways.

"To build successful brands you need to build emotional rewards for buying the product, creating emotional benefits beyond raw functional requirements," Hallward writes. "Our research shows that the more a brand has extra appealing emotional associations, the greater the purchase commitment to the brand."

Hallward believes too many ad and marketing professionals know far too little about how our brains work and how to leverage our genetic wiring for mutually beneficial purposes.

"As a whole, brand managers, ad execs, and marketing research suppliers are not knowledgeable enough about the aspects of emotions and needs, behavioral psychology, self-perception theory and genetic evolution," Hallward writes. "We lack enough sensitivity to and appreciation of the human sciences. We all need to admit that humans feel much more than they think."

Study Reports Email Metrics and Bounce Management Not Keeping Pace with Email Evolution

A new study by the Deliverability Roundtable of the Email Experience Council says email metrics and bounce management have not kept pace with e-mail’s evolution. Further, the study showed that the lack of standards around industry metrics, bounce data, definitions and bounce management practices resulted in the inability of Mailers and Electronic Service Providers (ESPs) to properly execute, measure and compare results on their programs.

The study reports that while four-fifths of ESPs calculate "delivered" by deducting all failures from total mailed, the remaining one-fifth calculate it by deducting only hard bounces from total mailed. Consensus for Mailers is even less pronounced. Two-thirds of Mailers expressed uncertainty as to how delivery was calculated or just guessed. Methodologies for calculating open and click rates were even more convoluted and inconsistent.

In addition, the survey revealed considerable confusion around one of the key processes effecting deliverability - bounce management. There is widespread industry disagreement on how bounces should be defined and treated and a lack of visibility into specific bounce reasons. The survey also highlights a problem with inconsistent bounce data being provided by ISPs.

The report concludes that these issues pose a significant, bottom line risk to email marketers who are unable to adequately measure their results, clean their lists, improve their practices and safeguard their reputations because of inconsistent metrics and unreliable or inadequate data.

Email is the only direct marketing channel that lacks a standardized set of metrics, says the white paper summarizing the survey. The survey findings validate the need for such metrics as well as common definitions and uniform practices.

The white paper can be downloaded from: http://www.emailexperience.org/resources/deliverability-rt-study/

UPCOMING EVENTS

BtoB's NetMarketing Breakfast in New York
Learn how to get the best results out of your interactive marketing campaigns.
Wednesday, May 16, 2007
 7:45 AM - 10:00 AM
The Hilton New York, 1335 Avenue of the Americas
New York, NY
Home page: www.btobonline.com
To register click here

A Secure the Trust of Your Brand Online Event:
Safeguarding Customer Contact Center Data
May 22, 2007
2:00 PM EDT \ 11:00 AM PDT
Join the CMO Council for an interactive online discussion about brand integrity risks from customer record exposure and information leakage in the estimated 100,000 call centers worldwide. 

Business Marketing Association 2007 Annual Conference
“On Their Terms: Winning with Today’s ‘Give Me’ Customer”
June 13 – 15, 2007
The Venetian Resort Hotel and Casino, Las Vegas
Website: http://www.bmaconference.com

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