Driven by data: what every Chief Marketing Officer needs to know about the impact of AI

30 Mar 2021

Driven by data: what every Chief Marketing Officer needs to know about the impact of AI

As marketing moves from the age of intuition to a data-driven technical function, CMOs will need to make their own considerable transition, as our AI Report explains.

There’s a good reason why the CMO needs to become among the most AI-savvy members of the board. Customer data is clearly a critical asset for any company, while also being highly sensitive and increasingly regulated, especially in Europe.

Already, marketing and sales have arguably been the single largest area for early AI-based solutions over the past few years, enjoying increasingly finer segmentation and targeting, with new capabilities and platforms evolving daily.

There are multiple developments to stay abreast of. Like exploiting the potential for AI-optimized customer journeys and advertising. Managing the mushrooming number of customer touch-points and the resultant sea of data. Finding the balance between what AI can do with how comfortable customers feel with a non-human, potentially intrusive experience. Managing a human and machine data-driven sales function.

We are seeing the constant transformation of marketing into a data-driven ‘technical’ department.

“Customer-facing processes are the lifeline for a customer focused, inspiration and tech driven company such as ours. And Artificial Intelligence – properly applied – is the single most powerful tool set going forward.” Sebastian Klauke, Member of the Executive Board of Otto Group, responsible for E-Commerce

A whole new context for marketing

Leveraging the ever-increasing body of customer data and interaction points has been the biggest megatrend in marketing in recent years.

In the consumer space, the famous ‘segment-of-one’ is no longer the limit. With AI, you can now build in the specific context the individual is at that moment.

Some companies have gone from one message to all customers per week to multiple messages to every individual customer per day.

Demand forecasting, advertising, messaging, targeting of offers, customization of products and services—all of these have undergone a major transformation powered by AI.

CMOs, CIOs, and CTOs have learned to collaborate with each other, whether proactively or forced ‘the hard way’ by their markets and competitors.

More data, less intuition

AI drastically changes the marketing function into a totally data-driven and increasingly technical discipline. ‘Intuition’, traditionally valued as the ultimate skill amongst marketers, has almost become a derogatory term. The dominant channel for advertising is now online, where everything is optimized by AI. So, a CMO would be in serious trouble if they uttered the once-acceptable claim, ‘Half of my advertising budget is wasted—but I don’t know which half’.

Marketing departments must meet the new demands (infrastructure, skillset) and allocate resources towards implementing AI-driven approaches.

“While the innovations we describe have often been associated with B2C marketing, it now encompasses B2B too, creating online customer journeys and continuous interactions along the way. Similarly, in the machine IOT world, ubiquitous sensors are providing a wealth of data of usage and performance states, so as to allow for critical improvements and targeted offerings.”, adds Silvia Eggenweiler, Partner at Odgers Berndtson Germany.

Avoiding the personal data traps

In the best examples, AI developments might very well lead to a much closer customer relationship, but there are traps for the unwary.

In Europe, a large body of regulations around customer data, most prominently GDPR, need to be observed. But all across the world too, the balance between enabling superior customer service and risking the perception of privacy intrusion, surveillance, and manipulation needs to be respected.

Also, automated customer interactions (e.g., via chat bots) can be a source of delight or a turn-off, depending on the implementation.

So, the CMO always needs to keep in mind the potential negative sides of AI products for the brand and for customer experience.

Sales. Powered by AI.

“The large impact of AI on marketing translates almost directly into a similar impact on sales. Also with the increasing, partly COVID-based digitalization of the customer journey and the customer experience, the entire process becomes transparent. Also in B2B environments and in Germany’s Mittelstand, we currently see an increased demand for e. g. CIDOs with a focus on digitizing processes and building up data structures”, says Markus Trost, who heads the Technology Practice in Germany. "For something like the rapidly increasing online transaction market, this is obvious."

Even for many offline transactions, such as cars, most of the ‘action’ already happens online, powered by AI. And when a physical sales force is prevalent, AI-powered support for ‘next best offer’ and ‘effective sales-force management’ is becoming commonplace.

Formerly intangible knowledge of individual sales representatives is now digitized and transparent and can be used as input for AI applications. This allows for more informed AI-supported decision-making and management.

Whether Sales or Marketing, those in charge will lead huge changes in the next five years, re-writing whole swathes of job descriptions.

AI has enormous potential, but the learning curve will be very steep.

“We have already started to use AI in our marketing cloud and in product data generation, among other things. But I am convinced that marketing, and also my role, will change profoundly with AI. We, as a marketing team, have to put much more focus on data than we do now, and this is fundamentally changing the way we work.” Christian Sallach, CMO & CDO, WAGO Kontakttechnik

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To discuss your organization’s talent plans, or your personal career, in the light of our report, and your adoption of AI, please get in touch. We will be happy to discuss how we can help.