The CMO's paradox

Jan. 9, 2014 | by Jake Cohen
The CMO's paradox

Chief marketing officers have always been under a lot of pressure — but add year-over-year budget squeezes and watch that pressure triple. For restaurant CMOs, whose brands face increasingly competitive operating margins, job security has never been less assured. The average restaurant CMO in 2012 had a 32-month tenure, as compared to the 45-month tenure of CMOs across all industries (Spencer Stuart, 2013).

This abbreviated tenure can be attributed to a number of factors, though the overriding fact remains that CMOs, especially in the restaurant space, are being asked to accomplish more with much less. And when a CMO succeeds with the limited resources they're offered, they make their jobs exponentially harder in the years that follow.

Because success is measured against previous comp sales, a marketing push is usually designed to beat the last time period's sales numbers. Ad spends are made, agencies are given the green light and marketing campaigns are launched. While this method works in the short-term, the long-term implications can be problematic:

When year-end sales aren't projected to meet plans, marketing creates a fantastic new campaign...and it works! Next year comes along and guess what: the economy and financial plan aren't getting along again. With more money, it's possible to scale the campaign to find success. Marketing can save the day, but the cycle has been established: beating expectations requires another heroic campaign or more budget.

- Aric Nissen, Marketing Executive Group (MEG), National Restaurant Association

The silver lining

What's a CMO to do? How can a marketing team increase revenue sustainably and lower their spending going forward? One way is to unlock the stored value from relationships with consumers who have opted-in to receive marketing messaging.

Reaching enough consumers can be incredibly expensive, especially across traditional media channels. If, however, the brand already has an opt-in relationship with target consumers, the cost of reach declines dramatically. One study shows that it costs approximately $650 to reach 50,000 people with email — roughly 74 times less expensive and 17 times faster to execute than a direct mail campaign with comparable impact (The Web Shoppe, 2013).

But being able to reach consumers for less isn't enough. Marketing needs to say the right things, to the right people, in the right ways, which requires relevant information about each consumer. Unfortunately, most brands don't have the information they need to craft relevant messages, and it hurts them — 72 percent of consumers feel that online promotions or emails they receive don't speak to their personal interests or needs despite the fact that 78 percent of consumers would be more likely to purchase from a retailer again if offers better targeted their interests, needs or wants (Infosys, 2013).

It is important that modern restaurant CMOs invest in technologies that help them collect, understand and organize information about their customers, such as level of online engagement, preferred communication channel, frequently visited locations, or even their favorite dishes. This way, marketing teams can access rich customer profiles which allows for more personalized, more effective and less expensive campaigns.

This may seem obvious — it's the reason loyalty programs were invented — but consumers do not want to enroll in more cards, clubs, or apps. According to a study by Colloquy, the average consumer is enrolled in more than 21 loyalty programs and only actively uses 9.5 of them. This means it's now harder and more expensive to get people to carry another card or download another app. So, how can marketers build and nurture relationships with a consumer who is burned out on loyalty programs yet is still a powerful brand advocate?

Use promotions to earn permission

It's a fact that consumers engage with promotions ­— among unique visitors to brand websites running a campaign through Privy, 11.7 percent engage with promotion content. And consumers are happy to give their email address in exchange for promotions — 77 percent are willing to give their email address to a brand if it means they will get more personalized offers (Infosys, 2013). Once you have earned permission to market to consumers, you can use new marketing software to track their interactions with your marketing messaging as well as whether or not they redeem your promotions in-store. Having this data will inform what type of messaging any specific consumer wants to receive going forward. With that information, marketing teams can build and target narrow segments with personalized emails. Consumers want to receive messaging that is applicable to them, as opposed to a general email blast, and you will lose their attention if you don't treat them as individuals:

A successful program has the customer's personal preferences in mind. Your brand must offer an individual incentive to your customer. If you are not going to differentiate your program from your competitors, then why do it?

- Diane Dillon, former SVP Marketing 99 Restaurants

This new approach of collecting consumer email addresses and using information on each individual customer to inform messaging at scale is a smarter engagement model. It will yield more consumer adoption since it doesn't require an app or a card to participate. Increased adoption means a larger program, more opportunities to gather information on each customer and an ability to influence a greater amount of revenue for less money.

When a program like this is in place, CMOs can deeply engage their audience and get the most out of their marketing dollars. This way, future budgets can focus on acquiring additional new customers and collecting data on them to maximize free communication, instead of repeatedly paying to reach existing ones. Finally, new technology solutions can make this dream a reality. The time is now — welcome to the future.

Topics: Customer Service / Experience, Loyalty Programs, Marketing / Branding / Promotion, Online / Mobile / Social

Jake Cohen
Jake Cohen is the chief operating officer of Privy, a company that enables restaurant brands to track online offers and campaigns to in-store sales in a way that collects email addresses, builds profiles of customers and requires no integration with POS. Cohen’s previous agency experience was with CBS. www

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