October 20, 2021
More than most, CMOs of consumer-packaged-goods (CPG) companies are on the hot seat.
CPG companies are in dire need of a rebound after absorbing a chunk of the pandemic’s crushing blow on business. For more than a year, consumers hunkered down in their homes and shut their wallets. Now the job of driving revenue growth has landed on marketing’s shoulders.
“After a year like no other, CPG marketers face a hard question: how to power above-average growth in the next normal,” say McKinsey & Company consultants in an article last month, The New Marketing Model for Growth: How CPGs Can Crack the Code.
At this moment, McKinsey says CPG CMOs face the following trends:
1. Nearly 80% of CEOs are looking to marketing leaders to drive revenue growth
2. E-commerce, which produces thinner margins, is still 35% above pre-COVID levels
3. More than one-third of consumers continue to switch brands
There’s no question brand abandonment is a powerful phenomenon in the digital world, as consumers research products and prices and easily click away to competitors. CPG CMOs will have to act fast to win in this data-driven and technology dependent environment.
This means CPG CMOs must shore up their messy MarTech stacks and hunt for real-time customer data to fuel their artificial intelligence (AI) engines. The goal, of course, is to deliver the right message to the right consumer at the right moment over the right channel— and at scale.
It’s a tall order, which is why CMOs will need CIOs in their corner. A good CMO-CIO working relationship leads to critical MarTech capabilities, such as integration to core systems, data security and privacy, speed and frequency of data transfers, and access to enterprise data stores. Each can make or break a MarTech investment.
Unfortunately, a new CMO Council-KPMG study found that only one out of four consumer-products marketing organizations has a “very effective” working relationship with IT. The report, Making Consumer Products MarTech Pay Off, is based on a survey of over 100 consumer products marketing leaders across companies in consumer durables, CPG, automotive and fast-moving consumer goods.
“What we are seeing is that a merely effective CMO-CIO working relationship may not support the required levels of customer experience and growth,” says Jason Galloway, principal at KPMG Customer Solutions Advisory Services US Marketing Consulting Practice Lead, in the report. “Effective may no longer be sufficient.”
Consumer products CMOs in “very effective” relationships with IT are more likely to have multi-year strategic MarTech plans in place and support those plans with 18-month or longer funding perspectives. In comparison, almost three-quarters of marketers in “moderately effective” relationships report they only identify MarTech funding requirements when new technology is being considered.
Short-term planning is a particular problem as MarTech investments grow and more importance is placed on data and technology to win and retain consumers. It can result in too much noise, chaos and inconsistency in the MarTech ecosystem.
Simply put, CPG CMOs can’t afford to make missteps with so much at stake. Nor can they take a conservative, wait-and-see approach. It’s time for action. On the upside, many of them are taking up the banner and running with it. The CMO Council says 69% of marketers plan to increase their MarTech spend this year as part of their revenue-growth strategy.
“As consumer products companies emerge from the pandemic, marketing and MarTech lie at the heart of the recovery,” says the report, Making Consumer Products MarTech Pay Off. “CMOs are under immense pressure to leverage data and analytics to better allocate resources, improve the customer experience, and grow revenue through customer acquisition and retention.”
Tom Kaneshige is the Chief Content Officer at the CMO Council. He creates all forms of digital thought leadership content that helps growth and revenue officers, line of business leaders, and chief marketers succeed in their rapidly evolving roles. You can reach him at firstname.lastname@example.org.
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