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A/Cokins begins this week by stating that “CIOs want to make sure that their executive teams look at the value of a customer from a lifetime perspective” (Cokins, 2011). Customers influence the profitability of the organization, and the happier the customers are, the more likely they will be to continue in the partnership. He lists 5 forces that require the supplier to focus more and more on the customer: customer retention, a shift in the course for competitive advantage, one-to-one marketing, expanded product diversity, and power shift to customers.

The CIO must be prepared with various strategies that include:

· Identifying, understanding, and addressing the best (and worst) customers

· Targeting and selling existing products and services to existing customers

· Targeting prospective customers with similar profiles as your most valuable customers

(Cokins, 2011).

The CLV (customer lifetime value) is defined as the “net present value of the likely future net positive cash flow stream from an individual customer” (Cokins, 2011). Simply speaking, it evaluates and determines the amount of business the customer will bring to the organization. CLV focuses on the customer, and not the products or services offered by the organization.

The CIO needs to work with and support the CMO in marketing, sales initiatives, and metrics.

Chad Latz says that c-suite officers “want measurement outcomes that can impress the audiences that matter most to them, whether it is the board of directors or the investor community” (How do you work, 2012). He continues his interview by stating that digital and social media offer the much-needed platforms for measuring and tracking the vast amount of data that is captured.

Bill Ogle states that it is “crucial to constantly examine various metrics that demonstrate how consumers experience and interact with” (How do you work, 2012) the products and company.

Eve Stevens believes that communication is the way to approach the problem. She says “communication pro must remember the fundamentals of business excellence – we must be able to articulate what we are trying to achieve and then be able to repeat it” (How do you work, 2012).

References

Cokins, G. (2011). How to Measure and Manage Customer Value and Customer Profitability. In J. Stenzel, CIO Best Practices: Enabling Strategic Value with Information Technology (pp. 237-279). Hoboken, NJ, USA: John Wiley & Sons, Inc.

How do you work with the CEO or CMO to identify which metrics matter most? (February, 2012). Retrieved from prweekus.com.

B/ In order to position the business for success, the CIO needs to make sure their focus includes that of providing decision support through data. While the hardware infrastructure and the software support is important, businesses who do not have evaluative data on how they are doing are not positioning themselves for success. And the CIO is at the center of that. While the CMO would probably be fine setting their marketing budget for the year at the same number or a higher number than last year, and basing that on historical hunches, the CIO needs to position themselves to be able to provide useful data. If the CIO can take the data that is in all of the different systems the company uses, and present analytics around that data to the other executives on a regular basis, that can really position the CIO for success. Businesses can begin to examine what marketing strategies are working, what their ideal customers look like, and what their non-ideal customers look like. They will be able to find ways to focus in on markets based on hard facts rather than either historical spending or ideas about what customers like. As the technological advancements allow, there are tools for analyzing data to a more precise degree every day. The old methods of classifying customers is old and new ways are much more accurate and predictive to smaller segments of customers. In comparison to this level of data analysis, the process of figuring out ROI for purchasing equipment is very easy. If the CIO can present this data, and present it faster, the business can become much more nimble in their approach, which can lead to a higher profit (Cokins, 2011).

If businesses take the time to set their KPI (key performance indicators), they can use those indicators to work with the CIO to determine the specific types of output of data and analytics that are most valuable to the business. Usually when businesses are having these conversations, the discussion turns too quickly to the type of tool. If the CIO takes the reigns and positions himself to figure out the tool, it then lets the overall executive conversation focus in on the outcome objectives. Having really strong data can impress the board or the investors, and can instill confidence in the executive team that the business is heading in the right direction. The CIO can set that expectation, and provide the proper context of data to the people that either need it or want it, aligning the indicators with the proof data (How do you work, 2012).

Cokins, G. (2011). How to Measure and Manage Customer Value and Customer Profitability. In Stenzel, J. (Ed.) CIO Best Practices: Enabling Strategic Value with Information Technology (pp. 237-279).Hoboken, NJ: John Wiley & Sons, Inc.

How do you work with the CEO or CMO to identify which metrics matter most? (February 2012). Retrieved from prweekus.com.

C/ The CIO needs to think beyond short-term revenue and profitability and think about increasing the profit margin and commoditization. Most companies are focused on “product-out rather than customer-in” (Cokins, 2011). If the company pay more attention on getting products out instead of what the customer really wants, then they will lose customers due to irrelevant sale tactics geared towards them. CIOs will need to work with both the chief financial officer (CFO) and the chief marketing officer (CMO) in appealing to what the customer wants. In order to gauge what customers wants, they will need to start identifying metrics to measure what works and what doesn’t. Identifying key performance indicators (KPIs) will help with measure the success or failure of a business. “By establishing business-driven KPIs, defining process inputs and a baseline, you have the foundation for an approach that measures and optimizes your program while quantifying impact and ROI” (How do you work, 2012). Public Relations (PR) and the social media departments rely on performance indicators of customers liking something but this really can’t be measured. Strictly relying on the PR or social media department which gauges performance by “reach and impressions” (How do you work, 2012), is not a strategy that the CMO is content with. KPIs should be focused on what’s important to the CEO or CMO.

If the CIO is to work with the CEO and CMO on getting and retaining customers for a long time, the CIO needs to understand the five major marketing challenges:

Customer retention – find ways to earn the customers’ satisfaction

Shift in source for competitive advantage - satisfied customers tend to spread the word which brings on more customers. Let the satisfied customers do the informal marketing.

One-to-one marketing - geared towards the customer and what they can afford instead of a one-size fits all marketing strategy.

Expanded product diversity, variation, and customization - addressed with activity-based cost (ABC) which “trace and assigns costs based on cause-and effect relationships” (Cokins, 2011). Learn the purchasing behavior of the different customers and use that information to market those particular items.

Power shift to customers – customers have more control via the internet. More options are available for them and they can choose the best one.

If the CMO doesn’t cater the marketing strategy to the customers but instead uses the one-size fits all market strategy, the company won’t see a growth on their ROI. The company needs to know their customers and be able to segment them in different categories to customize their requirements and behavior. This is called the customer-centric approach. “Market basket analysis allows an organization to predict likely candidate customers for cross-sell opportunities given historical data on products and service lines previously purchased by customers, as well a customer demographics, purchase patterns, and other telling variables” (Cokins, 2011). The company needs to view the customers as an investment which is known at the customer lifetime value (CLV). “CLV is about the customer’s influence on a company’s profitability than only the company’s products and service lines” (Cokins, 2011). Knowing the customers’ needs and customizing the marketing strategy for the customers and not the company’s products will have a greater ROI than if the strategy wasn’t customized.

How do you work with the CEO or CMO to identify which metrics matter most? (February 2012). Retrieved from prweekus.com

D/ The discussion of the role of the CIO has been a prevalent and consistent discussion throughout this semester. The role of the CIO is diverse and key in the overall success of the organization. The CIO uses their skills and knowledge to uncover the appropriate IT information to disseminate to business leaders to make sound business decisions. They also have to determine what tools to use to address the issues and concerns of the customers. The CIO also has to consider the significance/impact of their decisions or recommendations on customers. The two articles address a myriad of issues and concerns related around these topics. According to Cokins, organizations have to consider PM management scorecards to monitor how well its sales and marketing teams are accomplishing its customer profitability targets (Cokins, 2011). There is a definite link between customer satisfaction, sales, profitability, and ROI. They are all tied to the long-term success of the company. The CIO has to be able to monitor and align these characteristics with the values of the firm. The article gave an excellent example of demonstrating how it is important for organizations to manage short term and long term revenues in order to be successful. Best Buy shifted their business model to increase sales and profitability by considering strategic customers and understanding their buying powers and preferences (Cokins, 2011). Organizations have to enhance long-term customer relationship capital, as well as appreciating customer value.

“The CIO function is challenged today to deliver well beyond just maintaining and improving reliable transaction-based information systems and including effective decision support as well—which some refer to as business intelligence. The CIO's role is to service both functions as the bridge between them is strengthened” (Cokins, 2011) The CIO addresses how to decide which analytical tools are appropriate for addressing the CLV problem through understanding the link between customer satisfaction and increasing revenues. The CIO has to find economic value, in relation to customer management. The use of performance metrics, according the article, are key in addressing the CLV problems. The performance measures discussed in the article are based upon customer satisfaction and managing marketing initiatives. The CIO has to work with the CMO to ensure customer relationships are managed in a manner that fosters profitability, productivity, and long term growth. The CIO has to understand customer behavior and customer attitude to add value to the organization. This takes a self-analysis and truth finding mission of the business and its customer satisfaction initiatives. The organization has to have metrics in place to monitor and track these concerns and address them in accordance to the values of the company. The article discusses how these cost based methods help to add value and profitability to the organization (Cokins, 2011). The organization has to view customers as assets and treat them as so. If they treat them as assets, just like their other assets, there will be competitive advantages and wealth obtained in short and long term. Organizations must be able to be able to analyze their customer base, in order to determine and address the reasons and methods to secure customer loyalty and retain their competitive advantage. They must also ensure that the organization has the appropriate systems in place to address risks and potential threats. The article explains that the CIO has to use and evaluate its IT customers and resources to ensure customer and business needs are meet (Cokins, 2011). IT can use certain IT software to maximize profit and satisfy customer demand.

Just as we have discussed this semester, alignment is monumental. In this case, IT has to be aligned with customer value for the success of the organization. “Once the company has accurate customer value scores and tracking mechanisms in hand, managers can establish the strategy, processes, and policies for increasing that value and managing the customer experience. It is then up to customer-facing teams to coordinate to implement management's strategic intent and directives” (Cokins, 2011). This statement reaffirms the importance of understanding and appreciating customer value as it relates to the success and profitability of the company. There has to be constant measuring and analyzation of company strategies for the sustainment of success. Value has to be created by the company and proactively sustained. The easiest way to fulfill that requirement would be through customer satisfaction and customer valuation. Profitability lies in increasing shareholder wealth. CIO’s and financial managers also prepare to decide which analytical tools by following certain prescribed financial guilders for the organization’s success, such as GAAP standards (Cokins, 2011). Following certain standards enables the firm to concentrate its resources and obtain market advantage with proper strategic planning. The metrics established to monitor success come in various forms and are organizational specific. Hence, firms may use such things as marketing analysis, retention ratios, sales history, referral programs, and investment portfolios. CLV values customers as an investment tool for the success of the company. CIO’s use analytical tools to understand and appreciate the fact that customer bases have to be fostered and nurtured over a lifetime not just once. Customer prosperity and customer loyalty long term affect the long-term success of an organization. Sustained growth and competitive advantages are key in a firm’s prosperity. CLV processing also enables the firm to understand the importance of probability analysis and the usefulness in the firm’s success. The CIO has to understand the financial aspect, as well as IT. This involves being able to correlate the information in such financial standards such as ABC costing, Capital Budgeting, and Wealth Management.

The second article discussed how to identify the metrics involved to ensure optimizing ROI for a firm. It went over different views or train of thoughts on the subject (authors unknown). One author states that the firm must use metrics to align marketing activities with strategic goals (How do you work, 2012). There has to be value found in this alignment for firms to remain and sustain profitability. The metric results have to have the CIO and CMO working together for monitoring and measurement analysis. Another view is that firms must understand how consumers behave (How do you work, 2012). This is important because customer satisfaction is key to long-term valuation of a firm’s ROI and profitability. The take away from this article, regardless of the author’s is that each firm must determine which metrics to use for customer valuation and satisfaction. These metrics will enable the company to understand their customer base and how it impacts their success and long-term profitability. These steps have to be completed for organizational fortitude and prosperity.

References

How do you work with the CEO or CMO to identify which metrics matter most? (February 2012). Retrieved from prweekus.com.

Crystal Evans

E/ According to Cokins, the CIOs must have a plan on building a strong foundation on customer management portfolio. This will help in understanding the ways customer's behaviors drives or undermine enterprise profitability. Cokins also says that the CIO must not obsess the customers, rather they should simply focus on them because most of the data resides in multiple and disparate databases. The focus will dwell on the following areas:

· Identify, understand, and address your best (and worst) customers.

· Target and sell existing products and services to existing customers.

· Target new prospective customers with similar profiles as your most valuable existing customers.

· Develop compelling new product and standard service line offerings, price schemes, and marketing programs for the entire customer portfolio.

· Retain and maximize the share of wallet for profitable customers as well as those who have a high probability of becoming profitable, hence more "valuable," in the future.

The other step that CIOs must follow is to ensure that there is a single view of customers. This is necessary in accessing, consolidating and analyzing the necessary customer data that exists across the various system. CIOs must understand customer value and profitability drivers. By doing so, CIOs can prove or refute theories about which customers are most valuable to serve and retain and which are not.

F/ Over these last six weeks, we have discussed the Best Practice CIO and the tremendous responsibility that has been placed on them within the organization. In an earlier edition to the text, Cokin (2007, 226) states “Companies must improve in several areas when it comes to strategizing, measuring, and acting on customer value. …To further complicate matters, the CIO is tasked with the challenge of satisfying two somewhat disparate views and perspective of their organization—the information technology (IT) stakeholders and the business management leaders.” We have learned that not only do the CIOs have to balance the day-to-day tactical operations of their organizations; they must also lead the charge when it comes to innovation, IT Finance, Performance Measurement and Monitoring, and now Enhanced Customer Value. This expanded responsibility is supported by research that was conducted consisting of 2,598 CIOs in 78 countries across 19 industries. The CIO’s within high-growth organizations are “profoundly more engaged in setting strategy, driving tangible innovation, connecting with customers, and optimizing business processes" (Evans, 2009).

Carlos (2009) supports the notion that CIOs must support people, process and technology and indicates that the building blocks for the IT model should include:

1. Scoping and organizing;

2. IT strategy development coupled closely with business and competitive assessment;

3. assessment of the current business state within that business/competitor/IT strategy environment; and

4. IT opportunities R&D.

5. Business, competitive assessment, and analysis of the current business state directly relate to customer value.

There is ample evidence to support the assertion that the CIO must address the customer issue and the heart of the question this week is does the CIO have the capacity to overwhelm the short sighted, immature, diminished abilities of his/her organizational counterparts to lead the organization's "customer question"? Perhaps so. How so?

A way to address customer value is by using Business Intelligence (BI) in meaningful ways. Cokin (2007, 234) says “Meaningful transactional and descriptive customer data coupled with the right analytic processes and software provided by the CIO can prove or refute theories about which customers are most valuable to serve and retain and which are not.” Some of the available commercial IT solutions include (Cokin, 2007):

1. Marketing automation software

2. Interaction management software

3. Marketing optimization software

Providing customer information in real or near-real time allows for organizational agility to respond to customer trends and increase the opportunity to cross and up-sell.

Cokin (2007) makes a bold statement which seems to address the question of could the CIO have told the CEO that the SUV had outlived its usefulness to a potential customer base? Here is the key: If we believe that organizations make decisions based on cold hard facts, and the CIO provides the tools that allow for meaningful analysis of these facts, then the CIO could impact CEO decisions regarding bad business plans. Cokin (2007) says “organizational realignment around customer value cannot happen without technology. Fortunately, technology has matured to the point where it can collect and distribute the customer intelligence needed to keep employees focused on building customer value.” By extension, one would think this same business intelligence would provide the data around which management could make informed decisions and prevent pursuing a path destined for obsolescence.

When we talk about conspiring with other departments or cooptation, aren't we really talking about how IT aligns with the business? You say "Coopting means to give someone what they think they want in order to have them give something you want." Using marketing as an example, IT provides a BI solution that allows for meaningful dissection of data for the CMO and the CIO gets to be...gets to be what? Gets to stay CIO? gets to work on cool IT projects? Gets to demonstrate IT prowess? Isn't it just an opportunity for IT to address a business concern and provide a solution in alignment with business goals?

The best practices CIO has two main focuses. The first is the tactical IT-keeping the shop running; and the strategic and innovative IT. We know the IT department has to keep the desktop and servers running but we have read that their primary focus should be on innovation and process improvement. We have talked about IT Finance, Marketing and Metrics but aren't they all just areas where the CIO has an opportunity to address a business concern for a functional area within the organization and provide innovation? What other position besides CEO has such breadth of responsibility? The CIO has to have an understanding of the machinations of each of the org chart areas to address compelling business problems and provide data, solutions, or process efficiencies for all areas of the company.

To my point, T.K (2009) provides an example from Disney Interactive Media Group's CIO, Bud Albers. He says "Albers teamed up with business leaders across those properties to take a few steps that would improve coordination while also ensuring that his group's transformation would result in the ability to satisfy the business's varied requirements." The CIO was responsible to provide solutions for a diverse business population. To get meaningful insight into the business unit's needs, he planted representatives from the IT group in each functional area to be the 'feet on the street' to detect opportunities for improvement. He then goes on to address metrics "Albers now has his sights set on improving cost transparency related to Disney's shared infrastructure. In other words, he wants to establish a utility model in which use of the Interactive Media Group's shared services resources can be broken down by business unit. That would give each unit's leadership a clearer picture of resource usage relative to needs and would ensure more efficient use of shared technology assets. 'If I can better show them the cost drivers directly, they can make better decisions on the business side,' says Albers. 'I want to provide the various business leaders with levers that they can pull and maneuver.' "

Finally T.K. (2009) reports in his conversation "If you try to run the technology organization as a business much the way your compatriots do on the business side, you're going to find yourself in alignment more easily than you might otherwise." To me that sounds more like symbiosis, an interdependent or mutually beneficial relationship between two persons or groups, i.e., alignment.

Carlos, B. 2009. The Strategic CIO: Transformational CIO building blocks. CIO (132845). Retrieved from http://search.ebscohost.com.ezproxy.umuc.edu

Cokins, G. 2007. How to measure and manage customer value and customer profitability. CIO Best Practices Enabling Strategic Values with Information Technology. Stenzel et al. (Eds) Hoboken, NJ: John Wiley & Sons, Inc.

Evans, B.. September 2009. Got Innovation? InformationWeek,(12), 18. Retrieved from ABI/INFORM Global. (Document ID: 1866230351).

T., K. 2009. The magical benefits of alignment. CIO Insight, (104), 20. Retrieved from http://search.ebscohost.com.ezproxy.umuc.edu.

Reply to Thread

G/ Customer Centricity For a client driven business, the most useful resource is the client. The benefits created amid the maintenance stage are regularly known as client lifetime esteem or CLV. Client Lifetime Value (CLV) measures the benefit your association makes from any given client. (Hujsak, J.2010).

Measuring and overseeing client productivity is progressively essential to any business organization. The CIO can be a scaffold between capital fund, showcasing, and deals capacities. This part addresses the developing relationship between an endeavours’ CFO and the head-advertising officer (CMO). It delves further into the two important money-related measures for client evaluation administration: client benefit and client lifetime esteem (CLV). The part puts client relationship administration into a deep structure and setting.

It displays a normal system for survey client administration from realigning the undertaking around clients as opposed to items or administrations. The section fortifies the significance of the ways that customers impact benefit as a part of a condition that incorporates articles and administrations. Finally, the section addresses the crossing point between business knowledge (BI) and execution administration (PM) with ways that the CIO can improve the harmony amongst client and shareholder esteem creation.

Distinguishing measurements that matter most requires asking the undeniable inquiries first. What are the greatest issues confronting the business? What are the most squeezing needs and goals? Is the first center notoriety, monetary, or a mix of the two? From that point, you have a gauge to set key execution markers (KPIs) and results.

Learned officials and advertisers are not buried in the perplexity amongst checking and accurate estimation, which is centered on a quantifiable result. Shockingly, the discussion around estimation is regularly instrument driven and not result situated. The esteem is in the examination and having a business-adjusted estimation system in any case.

We are frequently requested that make an incorporated estimation methodology for customers that assesses the relationship and yield of earned, possessed, and paid media to drive activity and aim. While fan obtaining is a piece of the methodology, it ordinarily isn't the outcome the CMO is searching for. Administrators need estimation results that can inspire the gatherings of people that matter most to them, whether it is the Directorate or the speculator group.

Advanced and web-based social networking help us advance our way to deal with estimation with instruments and the capacity to gather and track high measures of information. Online networking has permitted us to bring new KPIs into the vernacular, however, insights, for example, some preferences or adherents are good for nothing on the off chance that they cannot be followed through to a result.

Paid media has for some time been held to a standard that shows changes. Therefore, I have not met a CMO why should content give their PR or online networking organization a chance to free with an estimation procedure just in light of reaches and impressions. Rather, they request more esteem and an estimation approach that highlights and exhibits business results.

By building up business-driven KPIs, characterizing process inputs and a standard, you have the establishment for an approach that measures and enhances your program while evaluating effect and ROI.

For most organizations, the general objective - whether through advertising, deals, or item advancement - is to locate an immediate connection between brand engagement and budgetary execution. However, in spite of all the estimation devices available to us, distinguishing measurements that precisely mirror this relationship is regularly a test for CMOs and their showcasing operations.

Key measurements are basic to deciding how fruitful you are showcasing exercises have been as far as adjusting to your organization's important objectives. This implies distinguishing execution based measurements to assemble proficient estimation systems that go past replying "Was this battle a victory?" The question we ought to ask is, "How impactful was this crusade to our general business destinations?"

My first-hand experience has shown me that purchasers need innovation to associate each part of their bustling lives. To an ever-increasing extent, this request impacts how and when shoppers settle on buys choices. It likewise gives direction that helps us shape and measures our publicizing, PR, and online networking effort.

It is essential to continually analyse different measurements that show how purchasers encounter and communicate with our items, channels, and organization. By review the whole playing field, an association will be better ready to see which advertising endeavours make its gatherings of people draw in with them most, open up its image, and guide to its objectives.

Obviously, you should not disregard well-known measurements, for example, site guests, occasion participants, media impressions, and share of voice. These estimations are as essential today as ever. Be that as it may, to increase useful bits of knowledge and manufacture a purchaser-driven brand, it is vital to take a more high point of view. (Hinton, M. 2015).That implies recognizing the focuses at which different measurements meet, and additionally seeing how purchasers carry on at these convergences.

Gone are the times of introducing a swarmed table of KPIs to your official group. Advertisers and PR aces are working in a world with no default KPIs; no settled reporting rehearses, and a commercial center is brimming with instruments and clashing suppositions.

Advertisers that transform information into moving stories for administration transcend the commotion. The best storytellers utilize their information to answer more extensive business addresses that are top of psyche for the CEO or CMO.

To indicate computerized measurements in setting with more great business subjects, advertisers need to begin by asking the CMO or CEO what they think about more by and large.

On the off chance that administration is centered on developing piece of the overall industry, then make KPIs that relate your projects to the opposition, measure mark authority, and contrast execution with industry pioneers. Nonetheless, if the administration is centered on e-business deals, fabricate an entire story to demonstrate the downstream effect of each of your social channels, instead of concentrating on transformation rates amid a specific month.

This approach moves you far from separated Excel information tables and gives your story a chance to wind up something greater. It puts setting behind your activities, and your association can start to see advanced projects as a key some portion of more broad business objectives.

In a space where new channels and investigation devices are springing up constantly, having the capacity to recount a reasonable story to administration will help you to designate the time and assets better. This is something your group can rally behind. It additionally helps officials comprehend what "showcasing is doing" in respect to their bigger business objectives.

REFERENCES

Cokins, G., Schubert, K. D., Hugos, M. H., Betancourt, R., Farrell, A., Flemming, B., & Hujsak, J. (2010). CIO best practices: Enabling strategic value with information technology (Vol. 34). John Wiley & Sons.

Richardson, K. B., & Hinton, M. (2015). Applied Public Relations: Cases in Stakeholder Management. Routledge.

H/ Data is very essential in businesses, it tells a story. Not all data/metrics are of use. To identify which metrics matter most first you have to ask "what biggest facing the business?" and what are the most pressing priorities and objectives?" in order to create KPIs and outcomes (Latz, 2012). Many organizations' measurement is tool-centric rather than outcome-oriented. When presenting metrics, you have to be specific in terms of the measurement outcome. You have to remember that the goal of the analysis is to have the business-aligned measurement strategy in the first place. Metrics has to be something that be measurable and impressive to the audience and more importantly impactful to the overall business objective.

Reply to Thread

Great post.

In my expereince company's collect a lot of data and the reporting on this data does not give the business executives what they need. Metrics need to be specific, measurable and align with the company goals and objectives. Your point about tool-centric and outcome oriented is right on. Businesses should be focused on outcome oriented instead of tool-centric. Outcome oriented approach has the business focusing on the actual business outcome. What the business is trying to achieve and the metrics should be on this. Really good points in your post.

Thanks,

Last edited: Wednesday, November 9, 2016 9:35 PM EST

I agree with you that the importance of metrics cannot be overstated. Metrics must lead to the information being sought, and metrics must be able to be somewhat accurately measured. This is the hard part. Establishing relevant metrics that can be measured of things like return on sales or amount of time it takes to accomplish a task are easy. However, as Cokins (2011) points out, metrics for things like marketing return on investment are not so easy. The challenge is to come up with ways to measure the effectiveness of customer-based concepts without resorting to wild guesses. Ultimately, the metrics need to give the executives and the decision makers the information they need to develop and refine their business/marketing/sales strategy.

Reference:

I like how you brought up the point that not all data metrics are of use. I think that is a sticky subject that we fail to realize. I think it is most important that firms understand and realize what metrics best work for them and how they are quantified. It is a self-evaluation piece that is important in the firm's future success. KPI's and other key financial strategies are helpful in this case. For example, capital budgeting models and ABC/M management enable firms to analyze the probabilities of the success of projects and value of projects. Regardless of the metrics, the CIO and CMO have to have programs in place to ensure customer satisfaction and valuation. Customers have to be valued and managed as assets. Strategic alignment is key, as we have been discussing throughout this semester. Constant analysis of a firms practices and using IT advancements, will ensure success and profitability long-run. Short run success is desired, but long-term success optimization should be the central focus. This focus can only be achieved through customer satisfaction and reduction of costs and waste. Metrics can be helpful with cost management, as well as customer management. Firms must appreciate and understand ROI in terms of the programs they have in place not to obtain those goals.

I/ Customer-centric business. This is where Cokins (2011) finds marketing, sales, and finance intersecting and where the CIO provide an indispensable service to all three of these entities. The customer focused approach represents a paradigm shift from the model of product-focused marketing that formerly prevailed, and for a company to take this approach, completely different marketing methods are required. In this age of big data, Cokins (2011) talks about how marketing is a resource that needs to be intelligently and efficiently applied. Mass marketing is a very inefficient way to reach prospective customers, so the problem becomes matching marketing and sales resources on those customers who are likeliest to give a positive return on investment, so to speak. Cokins (2011) discusses different ways of achieving this, such as separating potential customers into various segments based on what is determined to be relevant criteria and targeting each segment differently or ignoring some segments altogether. Another concept that Cokins (2011) touches upon is customer lifetime value (CLV), which is essentially an attempt to assess a customer's profitability by calculating a net present value for that customer.

We can see plenty of examples of these concepts at work. For example, Google has built a multi-billion-dollar empire based mostly on advertising revenue—basically giving companies a platform with which to target certain specific customer groups with their advertising efforts. The concept here is that through targeted advertising, marketing dollars will generate a higher rate of return. Does this actually work? Based on the huge success Google has had with targeted advertising it would appear that the myriad of companies that advertise through Google think so.

I see the relevance for the CIO in this subject as being largely in a supporting role. This customer-centric approach is only possible because of the information systems that can ingest and process the vast amount of data required to profile customers to this level of detail. Whether calculating CLV or doing predictive analysis on a customer segment, sales and marketing departments will need IT support to perform these tasks. The role of the CIO in this environment is to be involved in the planning, so that once the company decides to go the customer-centric route, the CIO can identify the IT requirements and ensure IT is postured to meet those requirements.

The other aspect of making all this work is finding the right metrics which would allow the company reach the information it desires on customers. This goes right along with the Master Class article, which talks about the importance of metrics in evaluating the effectiveness of marketing (How do you work, 2012). So metrics have a two-fold purpose: obtaining customer information such as CLV and measuring the effectiveness of marketing and sales efforts. Getting relevant metrics, especially for intangibles such as marketing, can be an incredible challenge, and the CIO's job is to get the information systems to turn those metrics into information useful to the consumers of that information—in this case, the sales, marketing, and finance departments.

References:

How do you work with the CEO or CMO to identify which metrics matter most? (February 2012). Retrieved from prweekus.com

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