How to Hire a Chief Marketing Officer
Philip Kotler
CEOs generally have little training or experience in marketing. Most CEOs come from finance, accounting, law or engineering. Only about 10% of CEOs have marketing experience. Less than 4% have CMO experience. It should not be surprising that a CEO would be poorly prepared to know what to look for in appointing a new CMO.
So much technological, legal, political and social change has occurred in such a brief time. Will there be any new CMO equipped with sufficient knowledge and skills to deal with the rapid changes in technology, inflation, changing consumer behavior, new competitors, new media, and new channels of distribution.
Today’s CMOs are expected to lead in growth, data analytics, customization, personalization, digital campaigns, and optimization.
A new CMO would need not only wide-ranging knowledge but a winning temperament to deal with members of the marketing department (50% of the time) and with the other chief company officers (50% of the time).
Is the new CEO aware that marketing is more than just managing existing demand? Is the new CEO also prepared to create new demand through innovation and brand building?
The CEO, in hiring a new CMO, needs to define the company’s sales and profit expectations. In response, the new CMO needs to state to the CEO what he or she needs as a marketing budget to achieve the expected sales and profits.
A recent study showed that high-growth companies invested three times more in marketing than firms in the bottom two quartiles did. Is the CEO open to this larger budget?
The new CMO needs to be included in all the company’s planning activities. Research showed that Fortune 500 companies usually do not have anyone from marketing on their executive committees. Companies that included their marketing leaders in strategic planning grew 1.3 times faster than firms that didn’t.
The new CMO’s main officer to please is the company’s Chief Financial Officer (CFO). CFO’s need to make sure that the company is spending its money wisely. The CFO will ask the CMO for evidence of the impact of the marketing spend on market share and market growth. There are difficulties in identifying the impact of different market mix tools on sales. John Wanamaker, the merchant, said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” The task of the CMO, in working with the CFO, is to find and eliminate “the half that is wasted.” A great relationship between CMO and CFO took place at Mastercard. Worldwide CMO Raja Rajamannar described the steps he took to build a great working relationship with his CFO in Raja’s book Quantam Marketing (2021)
The CMO also needs to work closely with the company officer responsible for new product development. Too often, companies develop new products and services without including someone from the marketing group. After the product is ready to be launched, they call in the marketing group to plan the new product’s launch. At that point, the marketing group points out many weaknesses in product features, pricing, services that would have been mentioned earlier if they had been included. Marketing should be included at the beginning stage of every new product under development, not at the end.
Needless to say, the new CEO would have to work closely the Sales Force Vice President as well as the advertising agency account executives.
How Important is Marketing to the Firm?
All business functions are important in a firm. Yet in a manufacturing firm, production efficiency is the major function. In an investment firm, financial skills are primary. In a consumer goods firm, marketing is central to the firm’s success. Procter and Gamble even calls itself a marketing company. Everyone in P&G thinks “customer” and “marketing” whether they are in marketing, production, finance, logistics, or human relations. While I would not say that marketing is the most important function in all firms, most firms are typically too light in their use of marketing and probably would have grown faster in sales and profits.
