The Critical Path Ahead for Tech CMOs
It’s here. The 21st CMO Survey is out and it gives us the opportunity to lift our heads up from our day-to-day work with our Technology clients and understand CMOs’ perspectives on where they are placing bets on growth and where the greatest risks of failure in their operations might be. It’s a good tool for us because it helps direct our focus on what the Go-to-Market priorities must be for our clients for the coming year.
Here are the top-four takeaways from the survey for the Technology industry:
#1: Growth from Existing Markets Dominates Spending…and Requires Better Cross-Sell Analytics
Technology CMOs allocate three-quarters (74%) of their total marketing spend on their top priority: Driving growth from existing markets. Within this spend, an increased and continuous focus on account cross-sell and retention activities was critical. These are areas where predictive analytics can be especially powerful in helping to identify, target and prioritize white space marketing campaigns, next-logical product plays, and new buyer acquisition within the existing client base.
There’s good news here for Tech firms; you have unique data sets versus many other industries. Your growing access to proprietary, IoT-based product telemetry data—plus usage data sourced from Cloud-based services—can hold valuable insights. In 2018, the number of IoT connected devices worldwide is expected to reach 1.2 billion. That’s a lot of potential customer data! Sourcing and finding patterns in that data, especially when combined with additional triggers on marketing engagement and online buying signals is really most of what you require to secure a go-to-market advantage through customer analytics.
Get more detail on cross-sell techniques leveraging IoT data
#2. Digital Starts to Dominate Marketing Activities, but Also Exposes Major Skill Gaps
Marketing budgets for Tech firms grew by 8.6% over the past 12 months, and are expected to tick up slightly to 10% growth for next year. But within that budget, a major strategic shift continues to play out. Spending growth on digital marketing efforts outstripped all other budget areas at a 13.6% YoY growth rate. With 53% of budget already allocated to digital marketing activities, and an expectation that will grow to 62% over the next five years, that shift in spending mix will create more data and greater CEO expectations for a bullet-proof case for empirical, analytics-based allocation of budgets to only the highest ROI programs.
But Tech marketers are playing catch up. 35% of Tech CMOs feel they are below average at developing strong knowledge and skills for learning what works and doesn’t work for digital marketing. That’s likely why building up Marketing Technology skills is a top priority (37% indicate as a top priority skill to hire for) especially with the expected growth in digital campaign spending.
See how Microsoft, Adobe, and SAP are reacting to pressure for better marketing analytics with their Open Data Initiative
#3. Tech Marketers Struggle to Integrate Customer Data and Analytics
Despite the explosion of AI, Predictive Analytics, and Big Data, survey results suggest that spending on analytics as a % of total marketing budget has not changed significantly over the last 6 years (Tech respondents averaged 7.3% in the August 2018 survey). Marketers appear to be behind on tapping into this reserve of potential value.
In fact, only 4 in 10 marketing projects use analytics before approving investment and 1/3 of Tech respondents believe that marketing analytics contributed to their performance “not at all” or only slightly. It’s very unlikely that analytics fails to offer value…and much more likely that CMO’s teams lack the knowledge or skills to tap into valuable insights.
See how leaders are instrumenting marketing analytics efforts to measure “Return on Marketing Analytics”
As an example, over 50% of Tech respondents rated their ability to integrate customer information effectively into marketing programs below average. Worse, only 3% of respondents felt they were “very effectively” doing this. It’s an understatement to say there’s room for improvement.
Most Tech CMOs do appear to realize that they must close this gap. Almost 50% believe that they lack people who can link analytics to marketing practices. As such, future hiring needs around Data Science is the #1 competency gap identified — 37% indicated it’s their primary or second most important need, which is 10 points higher than the average across all respondents (Tech and non-Tech).
#4. Yes, Innovation is Your Responsibility
Marketing budgets at most tech companies are a sizable business expense, 9.7% of Tech firms’ revenues on average. That’s $97 million for every $1 billion in revenue, so expectations are high for ROI.
On top of that, constant change seems to be the only constant in this industry. 41% believe their company’s marketing strategy will be substantially different in five years, and yet less than one-in-five Tech CMO’s indicated that “Innovation” was a primary responsibly of marketing. Three-quarters of respondents already feel pressure from their CEO or Board to prove the value of marketing, and almost 60% see that pressure increasing.
If Marketers don’t lead that substantial strategic change, mainly with deeper customer analytics, stronger skill sets based on best practices, and advanced digital marketing activities, the CEO may be finding someone else to deliver that innovation.
In summary, Technology CMOs, like their peers in most industries surveyed, expect to increase their investments—but they must do so not just in technology tools, but in repeatable processes and skill sets that truly deliver better go-to-market innovation and performance.
What lies ahead for Tech marketers is an exciting path where generating more and more intelligence on customer needs and more quickly engaging buyers with go-to-market programs can deliver exceptional marketing-fueled growth…and the ROI to not only defend, but to grow budgets year-over-year.