One of the early challenges for a newly appointed CMO is to decide how she is going to structure her marketing organization. This decision is normally a reflection of her strategy, exposure to a variety of structures at prior companies, and the organization’s existing structure. There are a lot of ways to do this, but I believe the ideal option is ultimately a matrixed organization structured around marketing functions and target customer segments.
This is not too dissimilar from how most marketing organizations are structured today, by function, but it layers on and emphasizes customer segments. This is done by taking members of the various functional teams, like Market Research, Demand Generation, and Customer Marketing, and assigning them to virtual teams assigned to specific customer segments. These virtual teams would be augmented with members from any of the other departments, like Sales and IT, as needed.
The trick is that the organization’s goals would be set for each segments, including targets for all stages of the customer lifecycle, like customer acquisition cost and lifetime value, and shared by all members of the virtual team. In that way, a team like Market Research could set functional goals, but they would have to be in service to the broader goals for the segments they are supporting.
This type of structure provides a number of benefits.
- It limits the number of target segments that a marketing organization can support, allowing the teams to operationalize around those segments effectively. A small marketing organization would need to focus on 1-2 segments max. And as the number of target segments increase, the size of the marketing organization would need to increase as well.
- It provides a shared set of goals for a cross-functional team, creating one of the elements of an adaptable organization, a mesh network set of relationships, as described by General McChrystal in his excellent book Team of Teams. This type of organization is better suited to handle the complexity and evolving needs of today’s markets.
- It orients the organization around the customers via the virtual teams and shared segment goals without sacrificing the ability to develop deep functional expertise in each of the marketing teams.
- It allows all fo the teams to have context into the broader set of activities that are required to attract new customers, develop strong relationships with those customers, and gradually build the strong brands required to remain relevant in the fragmenting and blurring hyper-competitive markets.
If I were designing a marketing organization today, this is how I would structure it for the aforementioned reasons. But creating the right marketing structure isn’t enough for the organization to be effective. It would need to also be supported with the data, tools, and executive support necessary to make good decisions and test new strategies to improve performance through a perpetual cycle of test and learn.