CMO Insights: Marketing Innovation

Look around your home, and you’ll find that you own at least one product by 3M. Chances are you own many. And the brand isn’t only an American staple, it’s made its way into marketplaces across the globe. From Post-It Notes and reflective traffic signs to your dentist’s favorite cleaning tools, 3M prides itself on providing useful products to customers around the world.

Part of what keeps 3M so successful is its ability to innovate and adapt to consumers’ changing needs in the digital space. Heading up this effort is Raj Rao, who chatted with me during the CMO Club Awards, where he took home a much-deserved Programmatic Marketing Award. And with a title like VP for Global eTransformation, it’s no wonder—Rao lives and breathes marketing innovation on a day-to-day basis. Enjoy, as he gives us a glimpse into the eCommerce operations behind 3M.

Drew: I love that your title suggests forward movement and innovation. What are your responsibilities?
My role in the organization is to use social and digital channels to strengthen 3M’s product innovation and eCommerce commercialization programs product roadmap activity for multiple brands in several global locations. As a marketer, my responsibility is to drive digital excellence through the adoption of world-class cloud and on-premise services that enable our marketers to get to real-time engagement and strengthen the competitiveness of 3M brands in industrial, professional, government and retail channels. A second key responsibility is to foster new skills and capabilities at all levels of our marketing and sales teams so that they can embrace new tools and insights that accelerate our commercialization programs.

Drew: A CMO has a lot of choices in terms of where he/she invests their time. What have been your top priorities in the last 12 months?
The top 4 priorities for my team have been a) content excellence programs that improve our social and online brand engagement programs, b) ROI and marketing analytics that focus our investments on the right portfolio of programs, c) eCommerce webstore functionality and SEO/organic search optimization to lead to higher sales conversion, and d) migration and upgrade of 3M marketing platforms to responsive design capabilities, leading to optimized desktop, tablet and mobile experiences.

Drew: Have there been any big surprises in terms of what’s worked really well and what hasn’t?
The big wins have been the real-time personalization using heuristics and our self-solve tool box. We have seen a significant increase in eCommerce conversion and lower costs of sales lead management as a result of these programs. I was also surprised at the rapid rise of marketplaces in China (like TMall), which eclipses all other 3M eCommerce channels in the APAC region. What has not delivered for 3M is apps. We have not been successful at driving branded engagement in the markets where we have invested. I am not sure that there is a real opportunity for branded apps.

Drew: Many people don’t realize that a huge part of the 3M business model is dedicated to developing new technologies. What roles do technology and innovation play in your marketing strategies?
We strive to create extended product experiences through digital channels. This has been evident in the cloud library service that we have successfully launched, in the custom car wrap business and in our health care brands. The digital channels play a key part in providing a differentiated user experience in all these businesses. Recently we unveiled an innovative partnership between our Post It brand and Evernote. We have an exciting pipeline of innovative solutions that exemplify the inherent technology strengths in diverse 3M markets and channels. Our marketing strategies are to promote user engagement and strengthen our insights so that we can drive focused commercialization programs.

Drew: Content marketing is a hot topic at the moment.  What’s your perspective on content in terms of its effectiveness? Are you increasing your investment in this area?
Yes, we do believe that content marketing holds the key to success with our top two digital priorities. Through our work in the healthcare (dental) industry, where we’ve invested in several content marketing programs, we have seen strong progress with eCommerce sales and actionable insights based on customer engagement. In the social media programs, content marketing is driving much stronger brand engagement, fueling the growth of advocates and influential followers on LinkedIn, Facebook and Twitter. In China, our content programs in TMall and Weibo are leading to remarkable improvements in sales for both B2B and B2C sales.

Drew: How do you evaluate/measure the success of your marketing?  Are there some channels that work a lot better for you than others?
We measure 3 ways: the adoption of world-class tools and processes by brand teams and product marketers; the impact of the programs by audience and stage of engagement; and, the competitive benchmark performance. It is clear to us that our brand URLs are particularly effective for conversion tactics, while YouTube and social channels are well-suited to drive contextual engagement. The call center and webchat are very useful for issue resolution and responding to user issues. I am very impressed by the role that Amazon is playing in delivering high quality eCommerce programs for our consumer portfolio, and increasingly with our long tail B2B markets where we can increase market coverage and deliver new product applications.

Drew: 3M is the parent company of nearly a dozen different brands and operates within nearly every market segment. How do you stay close to your customers when you operate in so many markets and have so many different types of customers?  
3M has over 25 strategic global brands in consumer, industrial, professional and electronic markets. We also have a large portfolio of local brands that are organized by regional or local market. The key to success is the sustained investment in technology platforms that enable these brands to deliver compelling customer experiences. The $1.5 billion R&D budget provides a continuous supply of new formulations, advanced packaging formats, improved sustainability and differentiated benefits that are continuous and aligned to mega trends. We like to keep the customer insights separate yet connected with the technology roadmaps. This enables us to deliver a concurrent stream of “new to market Class V” innovations like the 3M Cloud Library, with “adjacent innovation Class III” products like Scotch Brite brand dish wands.  In fact, the diversity of brands, customer touch points and technology platforms is a tremendous source of strength for 3M. It drives our competitiveness and provides an endless stream of innovation outcomes.

Drew: Innovation is a sexy word but not as sexy to a CEO as ROI. Have you been able to link your innovative marketing activities to the kinds of business metrics favored by CEOs?
Our marketing activities enable the commercialization of 3M Innovation. Our CEO has challenged the teams to achieve a 40% NPVI metric by 2016. This means that new products and services need to account for 40% of 3M’s revenue in 2016. We are not far from that metric, but it is challenging to meet that goal while continuing to delivering 8-10% EPS growth each year. Sometimes this causes a paradox of choice. Should I optimize the current portfolio to drive margins, or should I create new products and invest in telling a new story to my customers? I think it’s a fine balance. Marketing activities like social media programs and YouTube video enable us to remain connected with influencers, while eCommerce initiatives allow us to test price points and packaging configurations ahead of finely-tuned broad market execution. Our CEO also wants our brands to exemplify the innovation positions in their markets in a manner that supports higher prices and premium margins. This can only be achieved when marketing activities are closely aligned to these objectives and allow us control over the conversations we need to have with the customers, versus relinquishing that to the channels.

Drew: How are you integrating social media into marketing efforts at 3M? Have social platforms proved to be a valuable channel for your brands?
Yes, social media has been a significant driver to value to our brands and corporate reputation. Recently, Interbrand called out our social media efforts as a key contributor to our position on the Global 100 Power Brands list. It provides the means for engagement with investors, employees, customers and media. Each of them is a voice for our brand and our global programs. Social media has also become a source for inspired ideas that translate to new products. For example, in China we developed a new line of pedestrian safety solutions, based in large part on social media listening programs that identified unmet needs and a groundswell of interest in new solutions. We also have used social media as a means to drive new product reviews that enable us to have stronger engagement with trade channels. By knowing how customers use our products in daily situations, we are better positioned to place the products in the right store aisle, optimize search results on digital eCommerce platform and train the instore sales personnel on what to recommend. In Latin America, some of the brands are using social media channels like Facebook to lunch new products. This is a really interesting proposition for 3M since it allows us to rapidly assess buyer sentiment.

Drew: Finally, I’ve heard it said , especially when it comes to the customer experience. Do you agree with that notion that “marketing is everything and everything is marketing,” and if so, how have you extended the boundaries of your job beyond the normal purview of the CMO?  
This is a really interesting point. My perspective is that the CMO needs to have strong operational knowledge of sales and customer service. Customers no longer follow a linear path to purchase, nor are they tied to any single channel. They are using digital tools like never before, amplifying brand experiences without any relationship boundaries and demanding more service options as part of the product purchase. So, the role of CMO needs to have that broader perspective on the customers’ experience journey and be prepared to generate appropriate content for that diversity. The big challenge is designing learning experiences for different levels of the organization that foster a new level of understanding, yet challenge us to break free from current channel or buyer/persona silos that are no longer relevant. To achieve this, we need to have courage and be prepared to risk losing some of the cultural heritage that has become embedded in our operational DNA. 3M is very well positioned for this change, and has already taken big steps in several business teams to make the leap forward.