The Pitch: Boards need more marketing skills

By BRENDON O'CONNOR*

Theresa Gattung is an exception that proves the rule. She was a highly regarded marketer who became CEO of Telecom.

But it seems most of New Zealand's CEOs and directors arrived there through technical expertise, industry connections, finance or legal backgrounds.

There is no typical path to CEO or directorship. But if CEOs and directors are not from the marketing discipline - rather their expertise is related to the supply side or administration aspects - boards are at risk of not understanding their market.

What is being discussed at the board table in relation to customers? What marketing information is being sought and analysed?

Boards typically prioritise shareholder value as measured by an estimate of future cashflow and, somewhat contradictorily, monitor operating performance using short-term historical financial measures.

Would shareholders in New Zealand companies have been better off if those directors accused of destroying value over the past 20 years had been nurturing their market-based assets with the same attention given to quarterly accounting profit?

Boards are spending more time on compliance issues since the stock exchange introduced constant disclosure obligations requiring "timely advice to the market of information required to keep the market informed of events and developments, as they occur".

This potentially onerous responsibility will skew future board representation even more towards financial and legal representation.

It reduces further the opportunity for board attention to be focused on customer and marketing data.

University of New South Wales research shows that in Australia, customer-based measures such as satisfaction, brand awareness and brand equity reach only about one in five boards. Strategic issues such as brand image and indicators of differentiation reach board level in fewer than one in 10 corporations. Customer acquisitions and market penetration almost never get there.

If marketers are not represented and as a director you lack top level marketing information, what should you do? As a starting point directors could ask their CEOs and senior marketers the following questions:

* How are the trends in our market affecting the customers we serve?

* Which new customers will we acquire over the next two years?

* How can we link investment in marketing to shareholder value?

* Which metrics best measure changes in our market-based assets?

Any marketers who can provide quality information for questions such as these will be taken seriously in the boardroom.

Many a marketer expresses frustration about their CEO or directors not understanding the importance of marketing! To paraphrase Jerry Maguire - "help them, to help you ... help them, to help you ... HELP THEM, TO HELP YOU".

* Brendon O'Connor is a marketing and customer relationships specialist at Charlton Road Consulting.


* brendon@charltonroadconsulting.co.nz



* The Pitch is a forum for those working in advertising, marketing, public relations and communications. We welcome lively and topical 500-word contributions.
Email Simon Hendery.