By Frank Koechlein for the Financial Brand
Senior marketers at smaller banks and credit unions can sense the urgency: it’s time to hop on the analytics bandwagon… or risk getting left behind.
These senior marketing managers are now being tasked with designing, building and implementing sophisticated marketing analytics platforms. This will involve some major shifts in how they — and everyone around them — view their role. Here are four changes involved with this transformation that senior marketers can look forward to when implementing a marketing analytics strategy at their institution.
1. As MarTech Budgets Grow, So Will The Tension Between CMOs and CIOs
As marketing begins to move into the realm of analytics, the marketing budget will look more and more like an IT budget. A recent survey of CMOs found that technology was the second largest component of the average marketing budget. This trend will only continue. But this means marketing and IT now compete for the institution’s scarce budget and technology resources.
This growth in marketing technology expense doesn’t all come from the gathering, storing and analyzing of customer data. In smaller institutions, some quasi-analytics expenses might include the costs for mobile applications, websites, digital marketing, social media and SEO — all of which are potentially rich sources of data.
Because the expansion of responsibilities for many CMOs can be somewhat overwhelming, pieces of the data analytics puzzle might get handed over to other non-marketing (technical) managers, making the overall control of specific marketing messages and brand management becomes much more difficult. This can also exacerbate competition between CIOs and CMOs.
Despite this friction, CMOs need to avoid a turf war. There are many technical aspects to data collecting, standardizing, and warehousing that clearly fall outside the expertise of the marketing department and would be better handled by the IT department. In a perfect data analytics world, there is a partnership between the CMO and CIO. Marketing can create value from the data collected thanks to the efforts of the IT department. The CIO determines the data architecture (storing and processing data) while the CMO can choose the analytics tools and automated marketing platforms that are right for the institution.
In the right culture and with a team-oriented CEO, this type of partnership can become a reality.
2. CMOs Must Raise Their Profile Across The Organization
For a small bank to have a culture that is conducive to the implementation of marketing analytics, the following relationships and processes must be established and maintained.
To successfully implement an analytics platform, it’s critical for the CMO to identify all the organization’s stakeholders, and to manage their expectations so the end result matches reasonably close.
This can be a significant jump in job scope for many senior marketing managers, and one that will ruffle a few feathers no doubt. The CMO must work hard to not only be an advocate for the new analytics culture, but to also foster a team attitude as the importance of data analytics within the organization grows.
As marketing leaders, CMOs need to pull these key stakeholders together from across the company. This includes all customer-facing and operational departments. These stakeholders must be able to see and feel the power of data analytics. With it, they can make decisions that increase revenue, manage costs, increase profitability, improve processes and enhance services.
3. CMOs will know where all the bodies are buried
The best thing about being the chief marketer in charge of analytics is that you will know the sales/service performance metrics of all departments. While maybe not as connected as the Accounting department (they tend to know everything), but still being pretty plugged in. The new marketing analytics platform will provide the CMO with insights as to what is working or not working in the branches, with commercial sales, the call center, and all online marketing activities.
CMOs might want to consider assigning ownership to specific individual data set to others in their organization. If only one person — the CMO — owns all the data, then other departments might feel threatened (e.g., “Ugh, I’m afraid to have the CMO rub my nose in another spreadsheet at our next leadership meeting”). Distributing ownership of specific sales numbers and similar performance-related activities can help eliminate this “gotchya” type reporting that undermines a team culture.
With a fully functioning analytics platform, CMOs are in a position to see and review data organization-wide and be able to offer unique insights into possible solutions on challenges facing the bank. And the numbers being reported require an explanation to help put them into right context to be evaluated correctly. This jump in knowledge and ability to research issues in greater depth than peers, increases the influence of the CMO in strategic decision making.
4. The CMO’s Stress Levels Will Balloon Exponentially
With interest rates still at historical lows, increasing security/regulatory expenses and increased competition, smaller institutions are seeing their operating margins continue to narrow. This means many CEOs are feeling pressure to show their Board of Directors new sources of growth and revenue. While many small banks and credit unions have added insurance and investment services to increase fee income. For most, this strategy has not lived up to expectations.
Now CEOs are increasingly looking to CMOs to use marketing analytics to find new markets/uses for the bank’s existing mix of products and service delivery. Given the hype of big data analytics many CEOs believe this should be a relatively easy deliverable. This need to reach goals by creating new markets for existing products/services has been defined as “disruptive growth.” In the old days we called it “pulling a rabbit out of your hat.”
Unfortunately, many CMOs are not taking the initiative. It’s no doubt easier to focus on the traditional tactics that seemed to have worked in the past vs. venturing into anything new. Many times, CMOs like to stay in their comfort zone — it’s what they know and what they’re used to. Yes, change can be hard. But as the new marketing analytics continues to impact CMOs, it’s critical that they enter this new world confidently with the ability to think outside the box and really take charge.
While there are distinct stresses and pitfall for the CMO looking to institute a solid marketing analytics strategy, the payoff for the bank and the individual are substantial. Let’s face it: many institutions compete in markets where competitive pressures have commoditized our banking products through various pricing strategies. In this environment, the only differentiating factor (unique selling proposition) for many CMOs is the quality of their data analytics and how effectively they use this information to drive better marketing. Capturing and using consumer insights can be an important differentiator for banks hoping to build new relationships and solidify those relationships already in place. And when you boil it all down. Isn’t that the primary role of a CMO?
And let’s not forget… marketing fundamentals are still important. To be successful, the modern CMO must still have a strong marketing/business instinct, creativity and the ability to derive insights from both traditional and non-traditional data. Understanding your customers and marketplace will always be a core element of success.
Frank Koechlein is the Managing Director at Velocity Marketing Analytics and coauthor of the marketing resource book “The New Marketing Analytics”. Frank has 40 years of marketing experience in the financial services industry. He has held several senior marketing positions including SVP, Marketing with the Dreyfus Corp and Director of Marketing with Prudential Direct, Prudential’s in-house, direct response agency.