Research manager, professor and founder of the Norwegian Customer Barometer, Tor Wallin Andreassen, believes CMOs must take a greater place in the management team and become responsible for the company’s revenues. Here are some tips and thoughts from Tor on what it takes to succeed as a marketing manager in a B2B company.
Tor Wallin Andreassen is an avid social debater with a great love for marketing. His impressive background in innovation and marketing makes him particularly well suited to think about the development of the marketing profession and the strategically important role that the courageous CMO needs to take in the years to come. We asked him to share a few of his thoughts.
What do you think a CMO needs to focus on for the years to come?
Within B2B, there are two things in particular that I would like to highlight;
- Abandon the idea of being “super sellers.”
- Strengthen the level of knowledge and take a more significant position in the management team.
CMOs are not super sellers. The time axis of sales and marketing is very different. If Marketing is forever, sales are for the fiscal year. Therefore, senior management needs to stop going to the CMO when they need pressure on the top line.
B2B companies have something to learn from B2C companies when it comes to long-term branding. I think too much focus is placed on short-term sales campaigns that should produce results immediately, and too few resources are devoted to long-term branding.
The renowned B2B Institute emphasises that marketing budgets should be distributed approximately equally between branding and tactical campaigns that drive sales
To be part of the senior management team, CMOs must also become economists and managers. It requires expertise. If you do not understand economics but only speak “marketing language”, you will be run over by a CFO. Managers are interested in hard numbers. CMOs must therefore speak business, put an investment analysis on the table and say:
I want to invest 100 million in this campaign, which will give us 300 million back. Here you have my investment analysis.
CMOs must be able to have a finance-driven discussion rooted in marketing and psychology, which makes cash flow seem logical, launched with time and risk, making the CFO say: “Yes, let’s rock’n’roll”.
The CMO must also make the CIO an ally to work more strategically with insight and analysis. The CMO must have close contact with the entire organisation and customers’ customers. Often, the focus is too narrow, and CMOs forget that demand in the B2B market is closely linked to what happens in the B2C market. Therefore, one must talk to customers about what is happening in their downstream activity – and question what this means for their business.
See Also: The Courageous CMO: Marketing is forever
The role in the management team facing the most significant changes in the next few years is the CMO. Do you support that claim?
Yes, senior management sees advertising as increasing market share by using prices, goods or distribution – the most aggressive means in the marketing mix. Instead, they should focus on creating value for customers, which makes them voluntarily give up their money again and again. Increasing market share through price reduction or noisy advertising is, in my eyes, completely wrong. The most important thing a CMO can bring to the management team is to develop new markets. One should move away from a “red ocean” situation, where the focus is on production and cost in an already established market and into a “blue ocean” situation, where the focus is on developing new markets and taking a new position.
Quality is vital to enter the market; innovation is the prerequisite for staying.
What are the most critical measurement parameters for a CMO?
The KPI is essential, but we must not exaggerate its importance – Customer satisfaction is Norway’s most widely used KPI. I believe that many Norwegian companies have too high customer satisfaction and should freeze investments to allocate more funds for innovation – which is undervalued here at home.
One measurement parameter more people should use is relative attractiveness. Many companies score well on quality and satisfaction; businesses must compete on innovation. The sum of quality and innovation makes you attractive in the market – you are chosen again and again in favour of authentic alternatives. Attractiveness as a KPI is linked to the lifetime value of the customer base; This means that you can, for example, use Tobin’s Q to calculate the company’s value. The marketing manager can use these tools to achieve more robust cash flows and greater influence on the senior management team and the board.
NPS (Net Promoter Score) needs to go right away. There is no evidence in the research showing that NPS affects enterprise growth.
About Tor Wallin Andreassen:
Tor Wallin Andreassen is a Professor of Service Innovation at the Norwegian School of Economics. He was head of the Centre for Service Innovation (CSI) at the same university from 2013 to 2019. He was central in establishing the Digital Innovation for a sustained growth research centre at NHH. He is the founder of, among other things, the Norwegian Customer Barometer and the Norwegian Innovation Index and has received NHH’s dissemination award.
Tobin’s Q, also known as Q-ratio, explained:
The Q-ratio is a tool for estimating whether a business or market is over- or undervalued. The Q-ratio is obtained by dividing the cost of replacing the company’s values (e.g. investing in new production assets) by the company’s market value.
A low value (between 0 and 1) means that the cost of replacing the company’s assets is greater than its actual market value. The company is overrated. Conversely, a company will be undervalued if the Q-value is above 1.
Andreassen’s five tips for CMOs:
- Learn to do the math.
- Learn to talk business strategy.
- Regard yourself as responsible for the value creation side of the business.
- Obtain adequate quality.
- Work to be attractive in the market through innovation.
About the author
Andreas Thue is the founder and managing director of Iteo, Norway’s leading B2B agency and one of four BBN partners in the Nordics. Iteo has been recognised as the best Communications-agency in Norway five years in a row (2017-2021) and as the best content & performance agency in 2021.