Oracle president Mark Hurd gave an elite group of Fortune 500 chief marketing officers a veritable MBA-level seminar on the disruptive forces reshaping the way businesses interact with their customers.
Speaking at the Argyle Executive Forum at New York City's Union League Club on Jan. 16, Hurd offered insights into everything from the how the purchasing power equation has been upended to why week-old leads may be worthless.
"Customer obsessed marketing" might be the best thematic description of Hurd's talk, which was peppered with personal anecdotes and quips as he informally strode the stage in front of the approximately 200 CMOs Argyle had gathered together for its 2014 Chief Marketing Officer Leadership Forum.
Hurd used the opportunity to illustrate how cloud-based marketing tools, infused with information on customer behavior, can help companies differentiate themselves from competitors and better target potential buyers. That's important, he emphasized, because of the increasing footprint of e-commerce-capable devices like smartphones and tablets, the technological affinities of ever-more-youthful buyers, and the lapsing of legacy brand loyalties in the have-it-your-way world of the Internet.
"Let me tell you what’s going on in our industry, because it’s really going to affect you," Hurd said. "Right now, there are about 8 billion devices hooked to the Internet. That's going to increase to 50 billion by the end of the decade."
Those devices constitute the portal to global commerce, which modern marketers must smartly tap with techniques that didn't even exist a decade ago. To place the revenue prospects in perspective, Hurd noted that worldwide gross domestic product (GDP)—that is, all commerce in the world—totals $70 trillion dollars annually. IT spending, at $1.8 trillion, accounts for only a tiny fraction of that.
"But without that IT spend, not much of the other $68 trillion gets done," Hurd said. "You can’t get an airline ticket or trade a share of stock." However, IT adroitly applied can have outsized impact. A case in (marketing) point is that companies want to tell customers "stories" about their brands. However, to be effective, those tales have to be driven by data, the better to hit the bullseye of consumer expectations. So, Hurd emphasized, IT is in fact the key enabler of worldwide commerce.
Because Hurd hit upon so many hot buttons in his exegesis of customer-obsessed marketing, I'm going to summarize his key takeaways in a series of bullet points. (After the indent, we'll dive into each item.)
Businesses are facing a perfect storm of consumerization.
- The Facebook generation is replacing the PC generation.
- Consumers want to connect, engage, and transact via their tool of choice.
- Customers are in the driver's seat.
- Brands must become part of the social conversation.
Marketing has a greater responsibility for the customer relationship than ever before.
- The empowered consumer is driving change.
- The separation between marketing and IT has vanished.
- Automation can transforms sales and marketing to deliver more leads, faster.
- Modern marketing is a team effort.
OK, let's drill down to get deeper perspective. Hurd has had a ringside seat from which to view consumerization of IT. "As the Facebook generation enters the workforce, their expectations for service are much higher than mine," said Hurd. "Their view is, 'I want to connect anywhere. If I can’t, I’m going to somebody else. I have no brand loyalty; I have loyalty to service.' "The upshot is that device-wielding buyers are oftentimes more tech-savvy that the companies trying to sell to them. "The tools at consumers' disposal now outstrip the ability of most companies to deal with those tools," Hurd told the CMOs. "Here's something you probably didn't know: the average age of the customer interacting with your company via a smartphone app is 20 years old. Let me repeat that—you are servicing many customers who are roughly 20 years old."
Such ultra-sophisticated buyers are forcing marketing departments to change up their game. "It used to be that when you ran a business, the relationship was between you and the customer," Hurd explained. "I could typically control that relationship—if you were unhappy, you could call me and I'd listen and address the issue. Maybe I'd give you a coupon. Now, if someone's dissatisfied they can tweet about it and put it on Facebook. You don’t control that interaction. This is causing tremendous change for all of us."
Managing the messaging across that company-to-many communications channel is one reason marketing is assuming greater responsibility for the customer relationship than ever before. Dealing with the deluge of digital information generated by individuals—a corpus of data that's expected to grow twenty-fold by 2020, according to public forecasts from Gartner Inc.—is another.
"As a marketer, this means that you need to be much more engaged in technology decisions and investments," Hurd said. "Your role is now much bigger. It requires connecting, reaching, engaging, and understanding consumers across multiple platforms on their terms. You need to understand how to capture and use data to drive customer engagement and marketing performance."
As CMOs become bigger technology stakeholders, an obvious outgrowth is increased collaboration with CIOs. (For a related article with more on this, see "SocialShakeUp Busts Silos, Seeds CMO-CIO Collaboration.") "The issue is going to be the fusing together of these functions," said Hurd. "You’re not going to be able to survive in the marketing role without a deep capability in IT, because that’s how you reach the customer."
Seeding the Marketing Cloud
The biggest payoff from CMO-CIO partnerships could come from automating the tools used to generate leads. Here, Oracle's skin in the business-to-business marketing game is Eloqua, a cloud-based marketing automation company acquired last year for $871 million. Eloqua enables marketers to target prospects with personalized campaigns, resulting in fresh leads and higher conversion rates.
On the business-to-consumer front, Oracle in December announced its intention to acquire cloud-based marketing software provider Responsys Inc., for approximately $1.5 billion. (Please note that the proposed transaction is subject to Responsys stockholders tendering a majority of Responsys' shares and vested equity incentive awards in the tender offer, certain regulatory approvals and other customary closing conditions, and is expected to close in the first half of 2014. Until the transaction closes, Responsys will continue to operate independently.)
While Oracle is justifiably proud of such closed and prospective deals, it's important to note that we're amid an industrywide boomlet in market automation software, as big IT vendors add the capability to their portfolios and marketing personnel ramp up adoption.
Indeed, expertise in the use of such tools—for example, to generate emails tailored to individual customers' buying patterns—will be one of the defining skill for cutting-edge, customer-obsessed marketers. Hurd explains why. "The role of marketing will change dramatically over the next several years," Hurd said. "Most traditional marketing people have been doing brand advertising and lead generation. Well, we don't need more leads—we need better ones."
What constitutes a meaningful lead? Timeliness has long been one key metric. Whereas names garnered a week ago might have seemed current in the era of the envelope, these days it's assumed the such potential buyers have long since clicked away. Automation tools are clearly ideal for routing prospects names through to marketing more quickly.
A second factor, amenability to one's product, is becoming increasingly important. Hurd pointed to a survey by the Corporate Executive Board, which found that buyers are already 60% through their decision-making process before they ever engage with a salesperson.
"This means that marketing must play a bigger role in harnessing data from every interaction a prospect has with the company," Hurd said. "Marketing must use that data to drive the customer through the purchasing lifecycle. It's all about offering the right solution, closing business faster, and driving adoption. Ultimately, it's about marketing being an effective advocate for your company."
As Hurd's hour-long session at the Argyle Executive Forum drew to a close, he acknowledged that he'd laid out a lengthy and complex roadmap. "Marketing, as I've described it, has a daunting job description," he said. "You can’t embody all the required characteristics in one leader, so I think over time you’ll have to build a team that can execute the holistic nature of the job description."
To be best positioned for success, backing must come from the very top. "There’s nothing that's better than having a CEO who believes that marketing is critical, and is going to support its leadership role," Hurd said. "If you get that, good things are going to happen."
Read Mark Hurd's LinkedIn Influencer posts:
Five Leadership Qualities Great Executives Must Have
How CEOs Can Transform HR into a Revenue Driver
Why CEOs Must Become Customer-Experience Evangelists
Enterprise IT’s New Mandate: Drive Austerity and Innovation