A New Challenge for CMOs: How to Spend All That Money


According to the consulting firm Gartner, by 2017 chief marketing officers will spend more on technology than their chief information officer counterparts. That money will be spent on customer relationship management (CRM) systems, digital marketing, database marketing, marketing automation, customer analytics, mobile marketing and e-commerce. That seismic shift has led to a Cambrian explosion in marketing technology companies from 150 in 2011 to 3,800 in 2016.

This puts the bank CMO in a tricky spot given a two to three year purchase and integration cycle. How does the CMO know if the technology he or she adopts today won’t be facing extinction three years from now? Moreover, the stakes are high with billions of dollars in venture capital money being invested into disaggregating the banking business—making the need to leverage technologies to preserve and deepen bank customer relationships an almost existential requirement.

What’s a CMO to do? Let’s start by asking the right questions:

  1. What’s the biggest problem I need to solve right now—revenue growth, retention, engagement?
  2. How will I know that I’ve solved it?
  3. Am I likely to solve it by using internal resources given the organization’s past history? And can I do it in the market time allotted?
  4. Do I have time to wait for other banks to solve the problem so I can copy their solution?
  5. How do I select a solution, given the thousands of companies operating in the space?

Here’s my take on the answers:

First, the biggest problem in banking is customer retention; once solved — you get a bank like Wells Fargo, the world’s largest bank by market capitalization. You’ll know if you’ve solved it when your level of customer churn drops to the low single digits.

Second, it’s difficult to bring innovative solutions to life from inside the bank, which means it’s going to be slow going–if it ever happens. The fintech start-ups and their respective investors are placing big bets that innovation won’t come from within so it’s a fair bet that it won’t.

Third, waiting for someone else to solve the problem historically has been a good, low-risk strategy, but it’s incompatible with the rate at which money is being poured into fintech, which aims to disaggregate banking. Banks don’t want to be like taxi companies waiting around to see if another taxi company solves the Uber problem.

And lastly, selecting solutions among thousands of companies begs for some criteria, so here’s my list:

“Plan to kiss a lot of frogs.” Ah, the virtues of lightweight integration. It’ll be difficult to test a bunch of solutions that each take several years and a lot of resources to implement. Look for solutions that can be tested with minimal integration effort and cost. You’ll likely have a long list of candidates to get through. If you think a particular solution will work, you can go ahead and spend the money to do a full integration.

“Don’t try to sweet talk your soon to be ex-customer.” In short, plan to measure customer satisfaction if you aren’t already doing so before you try to test or implement marketing technology solutions. Customer retention is dependent upon delighted customers, the attractiveness of alternatives and the cost of switching. In the bank space, switching costs and happy customers drive retention because the products themselves are difficult to differentiate. Delighted customers can be measured using Bain’s Net Promoter scores, while switching costs can be measured by the number of products and services per customer. These two metrics–NPS and products per customer–enable both problem and success definition. Moreover, you can’t deepen relationships with customers who don’t like the bank no matter how cool the marketing technology may be.

“Get Engaged!” Place a premium on solutions that customers really engage with– and that’s not going to be a better-targeted banner ad. Much more engaging solutions are available today, so find and test them.

“Channel Surf!” All solutions must operate in a coordinated manner across multiple digital channels including: mobile apps, online banking and SMS, and also off the bank’s digital property like Facebook, Twitter and any other website where customers go, for that matter. And solutions must produce actionable feedback out of the channels.

“High IQ!” Machine learning is no longer optional–it’s required because humans just can’t process the amount of data produced through the digital channels in any relevant time frame. Machines have to perform that function in a systematic and additive fashion.

The stakes couldn’t be higher for CMOs but they also have both an unprecedented budget and variety of weapons to choose from to win the war–so choose wisely.

Devon Kinkead