From reading the press, I think it’s fair to say that we look to members of the financial sector to tell us where the economy is going. These soothsayers read the tea leaves using metrics like interest rates, capital expenditures, unemployment and stock market reactions. This is all well and good, but it is incomplete. I think it is also wise to tap into the collective wisdom of marketing leaders who have their fingers on the pulse of the market’s biggest engine—customers.
In the February 2013 CMO Survey, 468 U.S. CMOs rated their optimism for the economy on a scale of 0 (lowest) to 100 (highest). The average score was 62.7, which is up from 58.4 in August 2012. This ~10% increase is important but a set of follow up questions tells us even more. Specifically, CMOs were asked to state whether they were “more optimistic,” “less optimistic,” or “no change” compared to the prior quarter. In August 2012, results indicated that uncertainty was rampant with about one third of the sample more optimistic, another third less optimistic, and the final third no change (see Figure 1). Results of the February survey indicate that CMOs who were more optimistic increased from 29 percent of the sample in August 2012 to a whopping 56 percent in the current survey! This 93 percent increase offers a very strong signal that economic uncertainty is fading.
Figure 1. CMO optimism for U.S. economy compared to last quarter
This confidence also appears in the responses to a set of customer metrics tracked by The CMO Survey. CMOs were asked which customer behaviors they expected to increase in the next 12 months. Top marketers expect customers to buy more volume, buy related products and services (think growth opportunity), and pay a higher price per unit. Finally, 67.7% of CMOs expect that their companies will be able to acquire more customers in the next 12 months. More customers, higher purchases, and higher prices = higher company earnings, all else equal.
Finally, I asked CMOs to rate what they thought will be first, second, and third most important customer priorities in the next year—low price, quality, innovation, brand, trust, or service. Looking at Figure 2, the most striking finding is that CMOs believe that low price will be significantly less important while factors such as quality, innovation, trust, and brand will more important. The latter can form the basis for relationships, not transactions. This again points to good news for companies that want their customers to stick around for as long as possible.
Bulls and bears have their own opinions. My bet is on the CMO who knows his or her customers.