Associate Partner McKinsey & Company
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Six customer engagement considerations that must underpin your 2020 transformation

Modernising the marketing organisation to unlock the full potential of the digital revolution requires business leaders to address six considerations. 

29th Jan 2020
Associate Partner McKinsey & Company
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CRM future

Most chief marketing officers (CMOs) understand that the utilisation of data, analyses and algorithms to personalise marketing drives value. When companies do this digital marketing well, we’ve seen revenues quadruple in certain channels. With these benefits becoming increasingly clear and significant, marketing functions should invest in, collect, and analyse available data to support their decision making.

No wonder, then, that one in three CMOs is driving a digitisation initiative with high personal involvement, according to a McKinsey survey.

Despite notable successes, digital marketing has often stalled in a trial phase in many companies. Why is that? We find that the managers responsible often blame it on culture and legacy behavioural patterns. These soft factors tend to have a more important role than technical issues, such as IT infrastructure and data availability, which is not surprising. It is relatively easy enough to buy a new server for the customer database, and even install new customer-relationship-manager software. But how does one change the attitudes and behaviours of those who use the technology?

Based on our experience with multiple digital engagements, modernising the marketing organisation to unlock the full potential of the digital revolution requires business leaders to address six considerations:

1. How to centralise guidance and oversight

Until a few years ago, marketing in many companies was for the most part a national or even regional affair. While the general brand positioning and communication guidelines were laid down centrally, specific concepts and individual campaigns were usually developed locally. However, the need to centralise is increasing.

Why? Data-driven personalisation is overtaking local market expertise. Leading consumer-goods companies are using ever-greater data volumes and artificial intelligence to tailor marketing content, A/B tests, and activation of media to ever-smaller customer groups. And thanks to directly linked success metrics, they can even constantly monitor the returns on investment of individual activities and take targeted measures to tweak and increase them.

2. How to bring together marketing and IT (heart and brain)

Up to now, collaboration between marketing staff and IT specialists has been limited to specific projects, or the yearly Christmas party. Those times are over. To develop personalised content on a large scale and target consumers around the world, much tighter interaction is required between functions - between the heart and brain.

To make that work, functional reporting lines must be stopped. Instead, responsibilities and reporting obligations need to be contained within specific projects and processes so that team members are accountable to the success of their effort, rather than to functional managers who aren’t involved.

3. How to build collaboration and agility

In order to keep up with the rapid pace and changing requirements of digital marketing, the teams involved must alter how they work. The following five factors are key to stay ahead of the skill game:

  • Small teams. A small team of highly motivated professionals is better than a huge department that does just the minimum. By keeping teams small, the people involved remain clearly accountable to one another.
  • Competition that inspires. Teams that compete encourage   each other to achieve peak performance as they strive to outperform one another.
  • New key performance indicators for more entrepreneurial spirit. If marketing teams are measured against their contributions to the outcomes, their mind-sets also change. This means measuring the team against the same metrics (for example, revenue generation and profitability) as the rest of the organisation.
  • Overall responsibility instead of division of labour. Teams that are accountable for the overall end result reach goals faster, as they are incentivised to remain engaged in the entire process, from the idea generation to implementation.
  • Courage to defend personnel changes. A well-versed, old-school marketing professional is not necessarily the best choice for digital marketing, but it often takes courage to act on that reality.

4. How to reinvent HR to meet talent demands

In addition to a profound understanding of customer needs and clear brand values, confident mastery of new technologies—from programme environments, such as Hive and Spark, to cloud-based applications—is becoming increasingly important.

In this war for talent, traditional HR processes often cannot keep up with the shifting needs of the business, and companies must take a more diverse approach to finding and keeping talent, to remain competitive:

  • Internal recruiting. Often there are more suitable candidates among a company’s own staff than some HR managers think. Pioneers of digital marketing make targeted searches for talent of this kind in their own ranks, especially in the IT department, offering them attractive incentives and conditions.
  • External recruiting. Competition for top digital talent is merciless and is being pursued globally. To get the best people, successful players rely not only on appealing tasks and good pay but also on flexible employment models and attractive career paths.
  • Internal skill building. Few companies will be able to hire everyone they need. The entire organisation has to take ownership of the new digital mind-set. Leading companies are therefore making targeted investments in training programmes on topics such as data utilisation and personalisation, making them available across functions and geographies. For existing employees to develop their skill sets in parallel with the expected shifts in marketing, companies will need to use more tailored training, such as formal in-person trainings and modularised online-learning options.

5. How to build flexibility into resource planning

In our experience, 35 to 40% of current marketing job profiles in marketing are fundamentally affected by automation. Its effects are noticeable at least partially in a further 20 to 25%. The placement of digital ads, for example, can be largely automated after defining parameters such as target group, relevant key words, and budget.

To accommodate for the new and rapidly changing requirements of the future, companies must not only continuously upskill their employees but also make marketing resource planning and allocation as flexible as the technologies themselves.

6. How to make cultural change a continuous task

Many employees perceive the switch to data-driven marketing as a threat. To counter this inherent fear, it is necessary to win the underlying culture battle. This does not happen overnight. To make this journey easier for employees and increase the odds for success, managers often rely on incremental changes to roles and processes rather than on a big bang. In addition to sponsorship and guidance by senior marketing leaders, setting aside time to adjust to change is often underestimated but crucial.

Modernising marketing is a process that relies on multiple factors for success. Only by understanding what these are and by focusing on how to address them can marketers hope to get real value from digital.

*The author would like to thank Kai Vollhardt, Miriam Lobis and Patrick Simon for their contributions to this article

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