Technology research firm Gartner predicted that by 2017 the Chief Marketing Officer (CMO) will spend more on IT than the Chief Information Officer (CIO). This forecast supports ETF and mutual fund marketing chiefs hoping to ride the digital wave straight to boardroom domination. To a great extent, s/he who controls the budget controls the organization.
Digital budgets are healthy and the fund industry’s enthusiasm for tech-based marketing is growing, but this promising bloom of a new era of fund marketing might yet be cut short if CMOs and CIOs allow departmental egos to get in the way of delivering an integrated, multichannel marketing strategy. If the industry really is to reinvent itself for a new generation of networked investors, collaboration must be the name of the game.
In 2013, digital marketing accounted for nearly one third of total industry marketing spend. This year, it’s expected to grow further as fund firms of all shapes and sizes tame the digital dragon and exploit web-based tools to foster client engagement.
The dominance of technology in all areas of customer experience has fueled predictions that CMOs will soon spend more on IT than CIOs, but while some CMOs relish the opportunity, others feel rather unprepared.
Accenture recently revealed, “CMOs regard digital orientation as their weakest capability – at the exact moment when it needs to be their strongest.” Research found the most important priority for marketers was integrating data across the enterprise but that, worryingly, many firms lack the knowledge and skills required to do so.
“One my first priorities was to automate the data flow and any manual processes,” says Ondina Purcell, who joined Highland Capital last year as head of marketing. “For us, updating monthly marketing collateral like fund fact sheets has meant a significant time commitment for marketing personnel, and with the chance of human error, it’s just smarter to automate this workflow.”
The outsourcing of fund performance data flow is a big step toward other digital marketing output, such as presentations, fund comparison tools and interactive displays. Gartner’s 2013 spending survey found that culturally, marketing is accustomed to outsourcing — up to 50% of digital marketing activities are outsourced.
The fact that digital will demand more attention and larger budgets seems beyond doubt. Whether launching an ETF or a sophisticated online campaign, the benefits of embedding digital approaches across mutual fund firms are clear; digital tools enhance client servicing and drive more effective investor acquisition, but crucially they also help to control costs. In a world where margin erosion threatens overall profitability, that’s a winning combination.
CMOs can easily morph into CIOs – “information” and data now sits at the heart of fund marketing strategy and covers far more than acquisition campaigns, but if digital orientation really is their weakest suit, that’s a dangerous shift to make. So how can they collaborate better with IT?
In the early days of digital, marketing led from the front. At many mutual funds, the CMO waged, or continues to wage, a long battle to introduce digital tools, interactive client reporting and social communication channels, often without the support of their CIO. In fact, just one in 10 of those surveyed by Accenture said there was sufficient collaboration between marketing and IT. Both CMOs and CIOs admit to building other C-suite relationships before investing in the marketing-IT relationship according to Accenture’s report.
At the heart of the issue is speed. CMOs often expect much quicker turnaround and higher quality output than is feasible from in-house IT. But rather than argue internally, the real solution might well lie beyond the organization with external partners. Technological innovation is happening at such lightning speed that it’s inevitable that mutual funds will rely on more support from external vendors.
For many CMOs who are used to long waits for internal IT builds or ongoing battles to win the internal jostling for IT resource, the opportunity to partner with an external provider may be a welcome breath of fresh air. Battle weary from internal arguments, most will jump at the chance to cost-effectively bring their customer experience into the digital age. Yet, they would be ill-advised to go it alone. It’s true that a larger proportion of IT will be delivered from outside a firm in future, but that shouldn’t mean a diminished role for the CIO. In fact, it underlines the absolute importance of fostering the marketing/IT alliance as a strategic partnership.
Just as marketing teams are skilled at spotting customer needs and identifying digital tools to respond to them, IT functions have years of experience, not to mention a unique insight into the current state of data within a firm. Bringing the CIO on board early with new projects will not only save time and maximize project efficiency, but learning to genuinely trust the advice of your IT colleagues might well lead to better vendor choice in the first place.
Digital has opened up all sorts of new opportunities for fund firms to build new relationships with clients. User data lets firms respond to personalized client needs, customized reporting requests and real-time customer service issues. Simply, digital has enhanced the client/firm relationship and created genuine, two-way dialogue that’s mutually beneficial.
Taking that example and applying it internally to boost the meaningful dialogue between marketing and IT will only hasten the rewards that digital offers. Digital integration is the single biggest issue for most firms. Getting it right, building cohesive relationships that add value has an amazing potential to enhance performance. In fact, getting it right just might mean getting fund marketing and client service right — and that’s a big prize indeed.