Customer Intimacy Redux in the Digital Ecosystem

As the systems that run the way we work and live become smarter with the onset of the new digital ecosystem, the workplace as we know it is undergoing a dramatic change.

The social Web has forever changed the balance of power between the individual and the institution. It has given control of the relationship to customers, who have the power to influence others in their social networks. They can make or break brands overnight. This shift of power has left CMOs struggling to address these challenges.

To gain insights into how these changes are affecting CMOs and marketing, IBM undertook its first-ever Global Chief Marketing Officer Study. The study surveyed more than 1,700 CMOs from 64 countries, the largest survey of its type ever conducted.

Eighty-one percent said they planned to increase their use of CRM technologies within three to five years. This is comparable to the percentage who are planning to increase their use of social media (82 percent), customer analytics (81 percent), and mobile apps (80 percent).

Traditional CRM strategies typically are designed with an internal, operational focus to manage the customer relationship through controlled interactions. While companies recognize the need to be active in social media, far fewer have rethought their CRM strategies. IBM's analysis reveals that CMOs must help their companies move toward an integrated social CRM strategy that provides value to both customers and the business.

When companies think of their customers only in the context of their "consumption roles"—as shoppers, travelers, patients, etc.—they can forget they are multidimensional people with complex needs. Marketing must move from point-in-time customer touches to continuous engagement. The always-on customer also expects contextual interactions that blend both digital and physical worlds, such as location-based, real-time coupon delivery.

As a result, CMOs are recalibrating investments.

One-third expect to allocate 21 to 40 percent of their marketing budget to strategies leveraging social marketing and other interactive digital tools in three to five years; one in five expects to allocate more than 40 percent.

The most proactive CMOs try to understand individuals as well as markets. Even CEOs regard getting closer to customers as one of three prerequisites for success today, according to IBM's most recent CEO study.

To cultivate meaningful relationships with their customers, CMOs will have to connect with them in ways their customers perceive as valuable. This entails engaging with them throughout the entire customer life cycle, and building online and offline communities of interest. Some organizations utilize social forums to answer customers' questions, and create a real-time dialogue that blurs the line between marketing and customer care. At the same time, these organizations' employees are individually tweeting or blogging on topics that interest customers.

CMOs must work with the rest of the C-suite to fuse the external—as well as the internal—faces of the enterprise to deliver the brand promise consistently to customers. This is even more important now that the traditional marketing funnel has morphed into a series of loops. Customers evaluate a shifting array of options by consulting peers, family members, independent experts, and retailers.

Moreover, engaging with customers is not just about communicating with them. It's also about helping them enjoy the products and services they've bought and collaborating with them to co-create new products and services. If CMOs are to provide value to these customers, they must invest in new technologies and advanced analytics to get a better grasp of how individual customers behave. This requires marketing to shift its emphasis beyond transactions and consider the interactions that take place across all touch points. Through advanced data analytics, marketing can develop the meaningful insights that will feed the CMO's customer relationship strategies to improve the intimacy they seek.

Today's CMOs are uniquely positioned to capture and disseminate customer insights throughout the organization, evolving their role from gatekeeper of the brand message to change agent using technology to their advantage.

Download a copy of the 2011 Global CMO Study at www.ibm.com/cmostudy.

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Carolyn Baird is the CRM Global Research Leader and CMO Study Director at IBM Institute for Business Value.

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