How marketing is taking charge:
leading the customer experience
Insights from the IBM State of Marketing 2013 survey
2 How marketing is taking charge: leading the customer experience
In the United States alone, roughly
US$83 billion is lost each year as a result of
poor customer experiences.1
That’s more than
the revenue for the entire U.S. e-commerce
retail sector.2
Many businesses have yet to
unlock the potential of information, technology
and customer engagement to stem these losses.
A number of leading companies, however,
are using marketing technology and
information resources to take charge of the
customer experience from end to end,
“owning” it to improve business outcomes
and achieve better financial performance.
The IBM State of Marketing 2013 survey
examined what these Leaders are doing to
differentiate themselves in a perpetually
shifting omnichannel world.
A fresh look at the customer experience–
and why it matters
In the IBM State of Marketing 2012 survey, leading companies
reported that they were investing heavily in marketing
technology and working to build effective omnichannel
systems of engagement. This year’s survey shows that the
focus has shifted in an important way. Investment and
development of marketing systems and competencies is
ongoing, but there’s a difference: the Leaders now place
increasing emphasis on using those tools to deliver
differentiating customer experiences.
Last year, forward-thinking marketers were working hard to
redefine their role and influence within the enterprise. Today,
they’ve earned a seat at the business strategy table and are
taking on the hard work of “owning” the customer experience
across the enterprise. They’re seeking to integrate customer
insight and omnichannel engagement – including social and
mobile, as well as more traditional channels – to coordinate
activities and improve the overall customer experience.
Marketing technology is an essential component of these
efforts; however, it’s not just the breadth of technology
adoption alone that matters, but how well it’s integrated across
channels and the enterprise.
This subtle shift in emphasis led to a new examination of
leading marketers in this year’s survey. The respondents were
categorized by the degree to which they proactively influence
the customer experience across channels and the extent to
which they optimize marketing technology to coordinate
their activities (see Figure 1). This segmentation revealed that
those who excel at both also significantly outperform their
peers (see Figure 2).
About the study
To understand the impact of marketing management on business
outcomes, IBM regularly surveys marketing professionals
from around the world and across many industries. Their
responses are linked to publicly available financial information
to identify the correlation between marketing sophistication
and financial performance. In the latest survey, we engaged
more than 500 professionals across 15 industries.
3
Figure 2–When companies are able to effectively integrate technology to influence the customer experience, they can achieve financial results that far
outpace their peers.
Adoptionofcross-channeloptimizationtechnologies
Less proactive More proactive
Across
some
or all
channels
None
Ownership of customer experience across channels
Leaders use technology to influence customer experience
Leading marketers
All other marketers
80% 20%
Figure 1–Technology alone is not enough to proactively drive customer experiences across channels–“ownership” is also necessary.
2009-2012
gross profit CAGR
7.8%
13.8%
1.8x
2009-2012
net income CAGR
7.0%
23.5%
3.4x
2009-2012
stock price CAGR
5.5%
13.0%
2.4x
Leading marketers outperform financially
Leading marketers
All other marketers
4 How marketing is taking charge: leading the customer experience
Looking more closely at the Leaders, three common
characteristics stand out–attributes that can serve as valuable
guideposts for those looking to ramp up the quality of their
customer engagement:
•	 Know customer context and integrate accordingly–The best
marketers not only understand the context of customer
interactions, but also put integrated capabilities in place to
take action based on that knowledge. As a result, they’re more
flexible and responsive to fast-shifting expectations and
circumstances.
•	 Act on insights systematically–Leaders make better use of
technology to develop customer insights and act on them in a
consistent, systematic and in many cases automatic manner.
•	 Take a broader view of the customer experience–Forward-thinking
marketers understand in detail the full scope and nature of
their engagement with customers. They use rigorous
measurement to guide their actions and build customer
relationships that grow and strengthen over time.
Marketing takes the lead
By its very nature, the customer experience extends to every
customer touch point within an enterprise, from the call center
to a mobile app to the store floor. Marketing can play a vital
role even in areas beyond its traditional realm by addressing
difficult issues tied to that experience. How can the company
orchestrate the engagement of its customers across all its
channels? How can it understand the context and motivations
of that engagement? And how can it differentiate itself with
highly personalized and unique communications? Across
industries, some companies are renowned for their
sophistication in finding the answers to these questions. They
approach the challenge of creating superior cross-channel
experiences by making full use of every tool available to them.
Consider how Apple has taken ownership of the entire
customer experience by using marketing technology, insight
and engagement in a carefully orchestrated way. When
customers want to schedule an in-store service appointment,
they encounter a seamless blend of live web information and
interaction, relevant in-store displays and in-person employee
interaction that is both customized to them and made more
convenient by mobile technology. The entire process flows
smoothly. An experience like this does more than employ
channels effectively. It sends a powerful message that the brand
is invested in building a better customer relationship by
making it easier to interact and conduct transactions. This
cross-channel illustration displays broad understanding,
knowledge of context and ability to take systematic action, all
brought to life through a single customer interaction.
Combined with marketing’s greater influence and
accountability across the enterprise, these three attributes help
to make the Leaders better at addressing the classic “four Ps”
of marketing–product, price, place and promotion–that
underpin customer experiences. The survey results bear this
out: Leaders are 1.6 times more effective at influencing
products (functionality, brand, packaging) and place
(distribution, channels, logistics). Influence over pricing is even
greater: 1.8 times that of their peers. Only in promotion, an
activity most companies already link to marketing, is the gap
close, and even then the Leaders outstrip their peers by 1.3x.
5
Context, systematic action and the broad
view: inside the differentiators
The survey highlights where the Leaders are focusing their
efforts–in understanding customer context and integrating
accordingly, systematically acting on insights and taking a
broad view of the entire customer experience. They see these
competencies as essential elements of a differentiated customer
experience and engage in them to a much greater degree than
their peers (see Figure 3).
Figure 3–Leading marketers engage in critical activities tied to customer experience far more than others.
When real-time understanding of customer context can be
achieved and used to coordinate activities, for example, it
becomes possible to create highly sought-after right-time,
right-place offers. Monitoring, tracking and understanding the
quantitative value of customer experiences also provides critical
insight that can directly influence the company’s actions–and
help to ensure that the correct choices are consistently made.
These outperformers devote considerably more effort to
understanding what’s going on and then use the resulting
knowledge to drive action. They measure results, identify
what’s working and what isn’t, and follow up to verify that their
efforts are making a difference.
Others Leaders Difference
15%
Adjusts real-time offers
based on context
Uses optimization tech.
across all channels
Conducts root-cause analysis
of customer insights
Knows customer
context and
integrates
accordingly
Acts on insights -
systematically
8%
33%
Applies advanced analytics
to determine media spend
31%
Detects transaction struggles
and takes action
27%
68%
69%
60%
Integrates inbound/outbound
and online/offline
68%
39% 2.6x
5.6x
1.4x
2.1x
2.2x
2.2x
45%
Tracks commitments from
service interactions
Takes a broader
view of the
customer
experience
39%
Identifies/remedies execution
gaps in brand promise
58%
Tracks customer lifetime value 16%
75%
32%
1.9x
1.4x
2.0x
92%
80%
Competencies that distinguish leading marketers
6 How marketing is taking charge: leading the customer experience
Knowing the customer context and
integrating accordingly
Leaders use every interaction as an opportunity to enhance
the overall experience. To do this well, a company needs to be
hypersensitive to not only behavior, history and preferences,
but also the real-time circumstances customers are facing.
For example, a wireless subscriber with a history of heavy
smart phone usage might be browsing for a tablet, indicating
that it’s an ideal time to make an offer to move them to a
higher-tier data plan that matches their consumption pattern.
Leading companies are more than twice as likely to be able to
capitalize on such an opportunity, because they can adjust
offers in real time.
There’s a major challenge, however. Understanding the full
context of each and every customer interaction across all
channels is a gargantuan task, far too complex to manage
manually. The Leaders tackle this issue by automating their
decision processes across channels to calibrate their responses
based on the behavior and context of each individual
engagement. For example, a contact via social media might
automatically prompt a tailored response via the customer’s
preferred contact method – say, a mobile app – without manual
intervention. When extended across the entire range of
customer touchpoints and transactions, such actions would be
impossible without underlying automated business logic for
each personalized engagement.
Real-time action is important, but it’s not enough. If actions
are disjointed across channels – if what’s encountered online,
via mobile devices, in social media and physical stores differ
– the company has failed in its task of creating an integrated
and consistent customer experience. To win customers’ trust
and loyalty, it’s essential to coordinate activities and messages
across all channels at all times and keep them aligned as
circumstances change (see Figure 4). For the company, it’s a
highly dynamic and interdependent undertaking. But for the
customer, it’s a seamless experience that sends the message that
the company truly knows and understands them.
This is a major point of differentiation. Leaders are generally
more likely to integrate inbound, outbound, online and offline
marketing across some channels (as shown in Figure 3).
However, when it comes to integrating across all channels,
Leaders outnumber their peers three to one. In fact, almost 40
percent of their peers aren’t integrating at all.
Adjusting real-time offers
based on context
Leading marketers
All other marketers
15%
39%
2.6x
Currently integrated
across all channels
12%
35%
2.9x
Integration and context enable action
Personalized offers yield a €20M earnings increase
ING, a major European bank, was struggling with
ineffective outbound campaigns because it wasn’t taking
advantage of inbound interactions. By deploying a system
that enabled unified cross-channel customer relationships
and interactions, it was able to create dynamic web offers
that generate 4x more revenue than the previous static
offers, reduce its direct marketing costs by over a third
and foster higher response rates, resulting in millions in
incremental revenue. 3
Figure 4 – Leaders are able to respond to customer context more
effectively because they have done a better job of integrating and
optimizing across channels.
7
Acting on insights systematically
For the Leaders, insight informs action and action drives
revenue. While many companies are investing in analytics,
the Leaders are adopting a much more rigorous approach to
analysis and measurement–and integrating it into business
processes. The technical ability to act in real time is of limited
use if there is no insight into what is happening and what
should be done about it. Conversely, insight has little value if
the ability to act on it is absent.
To the Leaders, the quality of a customer experience is tangible
–it can be measured and analyzed so that action can be taken
to correct any shortcomings. Nearly two-thirds of the Leaders
do exactly that, systematically determining the monetary value
of individual customer engagements by measuring the revenue
generated–or lost–and then using that data to take action (see
Figure 5). For example, how well is the business converting all
of its customer interactions? Have all the obstacles to online
purchases been removed? Can the company identify and
re-target those customers that have abandoned their online
purchase to recover lost revenue?
Conduct root-cause analysis
and determine revenue impact
33%
68%
2.1x
Automatically detect transaction
struggles and take corrective action
27%
60%
2.2x
Identify individual customers
to target revenue recovery
36%
60%
1.7x
Leading marketers
All other marketers
Leaders take a more rigorous approach to corrective action
Those that perform best are highly sophisticated in their
understanding of marketing’s impact on the business. More
than 90 percent tie business performance directly to specific
marketing activities. Moreover, they measure more broadly
than other companies, going far beyond standard metrics like
net sales increases. They’re twice as likely as their competitors
to measure customer lifetime value and 1.8 times more likely
to quantify purchase intent. These companies know what
works and what does not in great depth. As a result, leading
marketers are more able to quantify impact and outcome,
which allows them to justify a broader functional role within
the enterprise that’s focused on the customer experience.
Figure 5–The Leaders link insight to corrective action at roughly double the rate of their competitors, often through automated processes.
Increasing campaign relevancy, integration and speed
boosts ROI by 600 percent
First Tennessee Bank had reporting and tracking systems
that were slow and limited its ability to develop and act on
customer insights. By improving its ability to analyze
customer data and implementing a system to generate and
deliver offers in real time, the bank was able to achieve a
600 percent increase in marketing campaign ROI.4
8 How marketing is taking charge: leading the customer experience
Taking a broader view of the customer experience
In the IBM State of Marketing 2012 survey, leading marketers
reported how rigorous and extensive analytics were enabling
them to demonstrate the outcomes of their efforts to different
parts of the enterprise. In so doing, they clearly defined the
customer context and its value to the business–and created a
case for a larger role in the end-to-end customer experience.
In the 2013 survey, this expanded role expressed itself in many
ways. These range from an in-depth understanding of how
different touch points affect customer context to deeper
involvement in individual channel activities related to customer
experience, such as brand training for call center and sales staff.
This broader view of–and involvement in–the customer
experience makes leading marketers stewards of their brands,
able to bring clarity, consistency and high standards to every
customer interaction. The Leaders demonstrate greater care
for the brand in all its dimensions–reputation, message,
delivery and communication both internally and externally–
and its execution in the marketplace.
The alignment and ownership of the brand allows for a much
broader operating construct to manage the customer
experience, ensuring its continuity and authenticity across all
facets of the purchasing cycle and relationship with a customer.
Leaders understand that, while optimizing each customer
transaction is important, the real key to success is the ability to
look beyond the short-term gain. They are extending
themselves beyond the traditional realm of marketing, viewing
customer relationships holistically and influencing business
functions outside their own domain.
Here too, the Leaders are far more likely to use performance
metrics and analytics to guide their actions and wield influence
over customer interactions. They are far more likely to
monitor and track commitments to ensure fulfillment, contact
customers to measure satisfaction and do a better job of
training customer-facing staff (see Figure 6).
Figure 6–The Leaders extend the influence of marketing across far more
of the customer experience than their peers. This enhances their ability to
influence customer interactions.
Four-fold increase in cross-sell activity through
cross-channel promotion
One of Asia’s leading telecommunications groups knew
it had an opportunity to improve cross-sell/upsell activities
across all customer interactions, not just those that take
place in its stores. Its marketing group deployed a system
that connected those channels and enabled the company
to develop and deploy personalized offers in call center service
interactions and mobile channels, as well as in stores.
By leveraging its broader view of the customer experience
across channels, the company quadrupled its cross-sell/
upsell success rate.
76%
44%
Contacts customers to
gauge their satisfaction
75%
39%
Monitors and tracks
delivery commitments
to ensure fulfillment
73%
47%
Identifies cross- and
upsell opportunities
for sales and customerfacing
staff
71%
46%
Trains sales and
customer-facing
staff on product and
service lines
69%
46%
Designs marketing
offers for point
of purchase
Leading marketers
All other marketers
Extending the influence of marketing
9
Learning from the Leaders
The IBM State of Marketing 2013 survey showed that, when it
comes to creating superior customer experiences, many companies
have at least some of the elements in place. Yet only one
in five has managed to leverage its technology investments and
marketing capabilities to effectively drive better cross-channel
customer experiences. The reward for those that have has been
markedly greater financial performance. By examining how the
select few have achieved this higher rate of return, others can
work to create similar success.
These Leaders are focusing intently on customer engagement
–“owning” the entire customer experience and delivering
it through tightly integrated cross-channel marketing
technology. They’ve worked hard to develop valuable
customer insight–but more importantly, equipped themselves
to act on it.
The way in which leading marketers have taken charge of
the customer experience points the way for companies that
aspire to similar success. They must address both their
technology and the role of marketing across the enterprise.
Critical goals include:
•	 Accelerating channel integration–Channel activities should be
mapped and prioritized to foster integration, ideally under the
purview of a cross-channel marketing leader with broad
authority and influence. To lay the foundation, a common
data repository containing all customer interactions will be
needed, as well as an anchor technology platform that extends
across channels.
•	 Building an insight-driven organization–The Leaders measure
more than just individual transactions. Insights should be
developed to create a holistic view of the customer
relationship and should be applied systematically. It is also
critical to invest in the skills and resources needed to uncover,
understand and act on relevant insights.
•	 Focusing on customer experience enterprisewide–It is essential to
understand in depth how customers engage with you to
identify opportunities to serve them better. That’s a two-way
street that entails “living” the brand and placing the customer
at the center of the business.
While these leading marketers are outperforming on the
financial front, they still face important challenges. Integration
issues continue to exist, with only a third of leading marketers
fully able to coordinate their programs across all channels. In
addition, like 31 percent of their peers, leading marketers
struggle integrating mobile and social channels with other
campaigns and tactics.
What sets the Leaders apart, however, is a clear vision of the
end game. They view marketing as much more than a siloed
function. Its influence–and responsibility–extends across the
entire buy/market/sell/service cycle to bring all channels and
all kinds of interaction together. They understand that success
is about more than making an individual sale. To them,
superior end-to-end customer experiences are critical to
success and worthy of great attention. It’s a lesson that these
exemplary organizations have taken to heart and one that can
show the way forward for many others. If companies seize the
opportunity, it can result in a winning scenario for customers
and business alike, both in a better experience for the customer
and improved revenue for the company.
10 How marketing is taking charge: leading the customer experience
About the IBM Center for Applied Insights
ibm.com/ibmcai
The IBM Center for Applied Insights introduces new ways of
thinking, working and leading. Through evidence-based
research, the Center arms leaders with pragmatic guidance
and the case for change.
About the authors
Derek Franks is a consultant with the IBM Center for Applied
Insights. In this role, his focus is on research that provides
insight into emerging business and technology trends. Prior to
joining the Center, he was part of IBM Retail Store Solutions
group where his work centered on how enterprises can use
technology to drive improved business results. He has been a
speaker at global conferences and collaborated with top
companies from around the world. He can be contacted at
defranks@us.ibm.com
Jay Henderson leads product strategy for the IBM Enterprise
Marketing Management group. Jay is an expert in crosschannel
marketing, customer analytics, digital analytics and
marketing technology. He came to IBM through its acquisition
of Unica. He holds degrees from the MIT Sloan School of
Management and La Sorbonne (Paris IV). He can be contacted
at jay.henderson@us.ibm.com
Special acknowledgements
We’d like to acknowledge the special contributions from our
core team without whose gracious contribution of time and
expertise this work would not have been completed.
Elana Anderson
Angie Casey
Leah Paschall
Kevin Thompson
11
Notes:
SWE14004-USEN-01
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Notes and sources
1 Loechner, Jack. “Poor Customer Service Costs Companies $83 Billion
Annually.” Center for Media Research Brief. February 18, 2010. http://
www.mediapost.com/publications/article/122502/#axzz2VqTBpIp7
2 U.S. Department of Commerce data, 2012. http://www.census.gov/retail/
3 ING achieves 3x gain in marketing response with personalization.
IBM case study. December 2012.
http://www-01.ibm.com/software/success/cssdb.nsf/CS/DJOY-93DT26
4 First Tennessee: Banking on Targeted Marketing Strategies. IBM Leadership
Series. http://www.ibm.com/smarterplanet/us/en/leadership/firsttenbank/