With change happening faster, and the marketplace becoming increasingly volatile, top marketing executives need to deploy advanced technologies, support innovation, and be more adaptable to change than ever before. To win, marketing will need to focus on delivering value to the customer as well as society at large, through improved execution of offers that are contextual, personalized and omnichannel.
According to Gartner, “Strategic marketing leaders must now take the lead to advocate and deliver on strategies that embrace digital as the foundation of new connections with and between customers, employees, business partners and social influencers, not just of existing relationships.” The reward for organizations that deliver relevant communication at the time of greatest need will be a value transfer that includes higher engagement, greater word-of-mouth benefits, and increased trust, loyalty and revenues.
Many Marketers Unprepared for the Future
Unfortunately, most financial marketers are not yet prepared for this massive paradigm shift. Many of the modern marketing tools available are not fully understood by current CMOs, with the potential impact of these tools even less understood. Many CMOs also do not fully understand the definition or power of innovation within a digital ecosystem. Adding to these challenges is the reduction of budgets at many organizations at a time when investment increases are needed.
The Gartner CMO Spend Survey 2021-2022 revealed that financial industry marketing budgets as a percent of overall company revenue dropped to their lowest levels in history — to 7.4% in 2021 from 10.7% in 2020. Part of this reduction was caused by a reallocation of funds from marketing to digital transformation efforts that were required as consumers increasingly demanded improved digital experiences. With this shift in budget, many marketers were also faced with a loss of control of the digital experience.
Doing More With Less:
As organizations responded to the shift to digital caused by the pandemic, many marketing budgets were negatively impacted by changes in funding priorities.
“CMOs must not only focus on how to reclaim the wholly cut resources needed to achieve their objectives, but also continuously justify their ownership in both budget and delivery of critical business priorities,” Gartner states.
Despite the reduction in budget, it is important for banks and credit unions to leverage artificial intelligence (AI) and machine learning to innovate and interact across the entire customer journey, combining both digital and human engagement in real-time. In this new environment, consumers may be working from home for an extended period and interactions between employees, customers, businesses and society at large need to be nurtured.
As consumers increasingly make purchases via social media platforms, and digital technology enables organizations to process data and analytics faster, the decisions of the CMO are more impactful than ever. So, what should financial marketers do?
Marketers Must Prioritize Innovation and Digital Transformation
More than ever, banking CMOs need to be at the center of efforts to improve customer engagement and experiences. But, with budgets being slashed, there is a greater emphasis on justifying investments and illustrating how marketing is key to growth and digital transformation. This will require a greater understanding by CMOs of how data and analytics can result in enhanced revenues and how marketshare can be gained through innovation.
Despite budgets dropping, marketing funds have been increasingly shifted to innovation efforts. In fact, 72% of marketing leaders across industries reported that their marketing innovation budgets increased year over year according to Gartner. The challenge is that 91% of CMOs struggle to measure the impact of innovation, and 83% said that innovation has not delivered to management’s expectations. Part of this is due to a lack of a clear definition and shared understanding of what marketing innovation actually is.
Gartner states that CMOs should consider the following:
- Create an agreed-upon definition of marketing innovation across the organization.
- Differentiate between what is considered new to the organization vs. new to the industry.
- Share the importance of both transformational and incremental innovation in terms of risk and reward.
Marketers Must Bridge the Digital Transformation Knowledge Gap
A majority of CMOs (80%) said they felt they are solely responsible for, or play a leading role in, setting their company’s digital business transformation strategy, according to research from Gartner. This is aligned with the need for key leaders within an organization to respond to the needs of an increasingly digital marketplace.
The challenge is that only 17% of marketing organizations have the necessary digital capabilities and competencies to operate successfully as a digital business, with one-third of organizations being early in their journey. This creates a mismatch between the role that many marketers are playing and their credentials for this role. It is obviously a situation of ‘learning while doing’.
On the Job Learning:
Many CMOs have assumed roles in the digital transformation process before fully understanding the range of changes needed.
When asked where marketing had a key role with digital business initiatives, the primary areas were aligned with traditional marketing roles as opposed to more expansive (and equally important) roles around business model changes, channel optimization and analytics. This knowledge gap further minimizes the impact marketers may have in the overall digital transformation process.
Future Role of a CMO
Marketing departments within financial institutions need to focus on speed, internal collaboration, and an enhanced focus on the customer experience. This is not so much a major change in what marketing does as it is how marketing is done. McKinsey created a strong visual of what constitutes a model for modern marketing. While the components are not new, it is important to understand how the different components interact with each other.
In the past, most marketing initiatives were linear, performing tasks as needed. A modern marketing organization has systems that can process large volumes of messages and content constantly, with performance analytics allowing for almost instant adjustments based on real-time results. As with the challenge of digital transformation, the core issue that inhibits change is the lack of commitment to all of the changes needed and a lack of clarity about many of the interactions and dependencies.
It may seem obvious, yet very difficult to achieve – with marketplace changes continuing to accelerate, the prioritization of becoming a ‘modern CMO’ has never been more important or more timely.