‘CMOs have a tough job today’

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Published: March 13, 2018 12:15:29 AM

I would say that digital is changing the pathway to the customer and it is reducing the friction for the customer. And in certain cases, it is even creating new business models.

Julio Hernandez, CMO, brandwagon, KPMGI would say that digital is changing the pathway to the customer and it is reducing the friction for the customer. And in certain cases, it is even creating new business models.

Today, when the ever-evolving and ‘know-it-all customer is changing how business is done, it is very important to harness and employ data, analytics capabilities and tools to help drive profitable insights. KPMG, through its Customer Centre of Excellence (COE), has been helping its clients achieve that. Julio Hernandez talks about how one needs to design and deliver relevant customer experiences that drive engagement and result in sustainable customer relationships, in an interaction with BrandWagon’s Meghna Sharma. Edited excerpts:

Why is COE important for businesses today?

When we talk to CEOs and ask them what is really important today for their business, 70% of them say that driving profitable growth is their number one objective. And they are going to do that by getting close to their customers. Over 85% of these clients say that they are going to use customer experience to differentiate themselves in the marketplace. But not only do they want to grow customers, they also want to keep their existing customers; because if they are not driving their topline growth, they are going to find themselves in an unenviable position of being asked, “Why are they not growing?” In addition, today’s customer is forever changing — she has more information, access to pricing and reviews in the way she did not have in the past. Recently, we released a survey — Me, My Life, My Wallet — where we have looked at consumers across four markets, the US, the UK, China and India; and found many common trends, but customers being informed was at the forefront. They just know what they want and want businesses to take care of that.

What are the challenges faced by companies while building the right customer experience?

There are a couple of challenges. One of them is about really understanding customer values. The second is calibrating what your customer experience needs to be and the third is, understanding the economics of the customer experience. Often, companies say ‘Oh, we need to delight the customer’ and we believe that delivering great customer experience is important, but delighting may not be what the customer wants or might be willing to pay for. So you have to know the economics of what the customer experience is going to deliver and how much is the customer going to pay. Most of our clients are trying to understand the right level of customer experience that they need to deliver. Also, they are trying to differentiate themselves against competition, so they need to benchmark against that competition and also understand what other emerging players are doing.

Last year, a KPMG study found that new or disruptor brands entering a market (like Amazon) were often perceived by customers to offer better service. Why is it so?

I think a part of it is because they engineer from a clean sheet of paper. They do not have a legacy infrastructure, legacy IT, legacy of employee base and policy. Having said that, they also do not have the knowledge of the market like a local player does. When a new entrant comes in, it decides very selectively which customer it wants to win over and focusses only on that. Also, some of these new entrants have the scale and really refined operating models — they know what their customer wants and align their business to be able to deliver on that.

How are some of the old retailers like Walmart dealing with digital disruption and changing their customer experiences?

Recently, I read that Walmart is taking an interest in online retailers in India. You will see that Walmart made some significant acquisitions and is putting a lot of energy in its online business. It is partly in response to the competitive threats from the likes of Amazon because consumers are flocking to them. I would say that digital is changing the pathway to the customer and it is reducing the friction for the customer. And in certain cases, it is even creating new business models. I think CEOs, CFOs and CMOs are all thinking about how to use digital to enhance how they engage in the marketplace; and it varies for companies. One example would be the recent acquisition of Dollar Shave Club by Unilever. Unilever has been able to create successful brand awareness through advertising; it develops great products and puts those products where people want to buy it. But what Unilever discovered was that by buying Dollar Shave Club, it can understand a new business model to make a direct connection with the customer. So, many clients are thinking how to connect with the customer and they cannot take their business model forward without digital.

How has the role of the CMO evolved over the years?

First and foremost, the CMO today has a tough job. They have more pressure on them today than they ever had before. If they are not delivering and driving growth, they are at risk. Accountability of a CMO has increased. CMOs have evolved over time. Earlier, it was about creating a brand with emphasis on creative and marketing being at the highest level; now, there is a need for precision and analytics to drive the decision making, so it is not just creative, but more about where does one want to compete and win. Using analytics is significant now; some CMOs have done a great job in evolving in that role and some have not. Also, technologies the CMO needs to engage with have increased dramatically. Channel proliferation has really made the CMO think about all that. This has led to a new relationship between the CTO and the CMO to understand what technologies they can use.

Compared to the West, how different is the Indian consumer?

The marketplace in India is a bit more fragmented than in the US. Customers make a tradeoff between the businesses they know and the pricing of the product. According to Me, My Life, My Wallet, the two mys are my wallet and my watch. In countries where there is more time, there is less ‘wallet’ whereas in some countries there is less wallet and more time. So, if we look at India, we will have to break it down in segments because one cannot make a universal statement about India. This country is a diverse place with over a billion people — very rural, very urban and places in between. So, one needs to understand at what price point and in what geography which product sells.


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