By nickjohnson - June 14th, 2013
Marc Speichert is the Chief Marketing Officer at L'Oreal USA. He is one of 13 CMOs who contributed to the Incite: Summit East. We spent some time talking with him about his role at L'Oreal and some of the key challenges and opportunities he has faced, and those he anticipates for the year ahead.
To kick things off, could you describe your role at L’Oreal?
I joined L’Oreal 3 years ago. My mission was to establish a structure and organisation that didn’t exist before - there was no CMO position at L'Oreal before me.
The idea was to create a transversal marketing structure that would provide added value to the organisation in three different areas:
First was to centralize our disparate market research teams into one insights function. That was the first team we created, in an attempt to ensure we tackle the previously ad hoc and segmented market research.
Second was to make sure we bring more central governance across our media function, in an attempt to leverage the fact we’re the 5th biggest advertiser in the US. Centralization helps us as we negotiate with our different external partners.
Also within that media area, we focused on how we ensure we accelerate innovation. That led to the foundation of the ‘Next Fund’, our fund to encourage innovation - we wanted to give L’Oreal increased capacity for innovation, and we felt the Next Fund was our best solution.
The third area of focus was business development for marketing. We identified specific battlefields throughout L’Oreal USA, and made sure that, be it category battlefields, demographic battlefields, or channel battlefields, that we developed specific plans for each area. The aim was to help the organisation identify the next sources of growth for the business.
Your second focus was the centralization of the governance of your media function.
Was that centralization done purely for additional leverage when negotiating media buys, or did you find there were additional benefits in pooling resources, when it comes to tracking, analysis and other things?
I think both. There were many benefits.
First we had many many different media agencies which we streamlined. Now, for instance, Moxie is the one digital agency we’re using across all the brands that we have within the building.
Another benefit was that we can now ensure we have a simplified ‘rate card’ approach to all our marketing - so all the brands benefit from the same rate, which wasn’t the case before, because every brand went to their own agency.
Also - very importantly to your point - now I have the ability to understand what is in the plans for all the brands, because there’s only one agency developing all the plans for L'Oreal USA.
That gives me very good visibility on spending, and also very good visibility on how we should be tracking different campaigns, what kind of ROI methodologies I want to put in place.
All of those were benefits of the centralization of the media function.
Another innovation you brought to the table at L'Oreal was the unification of your various 'insights' functions.
Has that been an effective move? Can you take us through some of the benefits of this centralization?
Well, one of our key competitive advantages - something we’re really trying to capitalize on now - is that we’re the only beauty player that’s truly multi-channel. What I mean by 'multi-channel' is that we’re competing in the mass market channel (the Wal-Marts and Targets of the world); we’re competing in luxury - with department stores like Macy’s and Nordstrom; we have salon brands; and we have the pharmacy channel as well.
Moving towards a centralized insights function means that we’re now really able to follow our consumers, whichever channel they move in - wherever he or she goes from a shopping perspective.
Before we centralized our market research teams, we had a lot of depth in understanding channel by channel. So, we had a few dedicated to the mass market channel - and they knew everything inside out for that channel - but not so much the others.
And yet, the reality is that the percentage of consumers that are only shopping in one channel of distribution is very small. So being able to track that consumer across all of our distribution channels has been very valuable. It helps us to better position our portfolio of brands - and also have more productive conversations with the retail organisations across these channels.
That recognition seems to chime closely with the idea of ‘customer-centricity’ - specifically a re-organisation internally away from focusing on products, towards focusing on customers.
Is customer-centricity as a term something that matters to you?
We have an ambition to reach an additional one billion consumers in the next ten years. That’s ambitious - because globally, we currently reach one billion in total. We’re talking about doubling the size of the consumer base we’re reaching.
A lot of these new customers will obviously come from the emerging world. But also, very importantly, we have identified significant opportunity here in the USA.
From that perspective, understanding more about those people who do not buy our products right now is vital.
There’s a pretty big segment of the population who do not use any of our brands. We have about a 62% penetration in beauty across all of our brands - so there is still a big chunk of consumers who do not use L'Oreal products.
So being more consumer-centric is critical - so we understand who the consumers that are not currently being reached are, and how we should most effectively target and engage them in the future.
What steps have you taken to achieve that aim? What have you done to make L'Oreal more customer-centric?
We’ve done a lot of work around the path to purchase. We partnered with McKinsey, to help us rethink how consumers are actually approaching, and how they think about purchasing, beauty.
That led us to move from the traditional funnel metaphor to a more circular path to purchase. In this circular model, it all starts with consideration, then moves to evaluation, to purchase, and then to advocacy. Understanding when people move from one step to another, by each category, is very important for us.
Moving forward, we then use those learnings to think differently about our Go To Market strategies as we launch products.
Those would be some key facts around how we’ve been able to elevate consumer-centricity.
In addition, we’ve looked to develop expertise and capabilities in areas that are newer to us.
We’re doing very well with the female - our penetration with females is much higher than it is with men. So, how do we make sure we develop the same level of expertise and consumer understanding that we have on females with men? That’s another key focus, and another area impacted by this focus on customer-centricity.
Customer-centricity often impacts on internal organisation at companies.
Have you found that because of this focus on customer-centricity at L’Oreal, internal roles and responsibilities are changing?
I think it’s an exciting time for marketing, because things are being transformed quite significantly. If I were a brand manager, I’d see it more as an opportunity than a threat.
But it means that people need to think differently about what the future looks like, and equip themselves with the right skills.
At L'Oreal, we’ve been talking a lot about what ‘marketing reinvented’ looks like, and how digital is a catalyst for that. It’s therefore important for a marketing person to understand how digital is changing their role in a few ways:
- How they think about the creative process
- How they think about the media element of marketing
- How digital changes how we partner with our retailers
- How digital impacts on our products and our business models.
It’s exciting because the rise of digital has changed the relationship between the consumer and the marketing person.
Those marketing executives need to understand how they can best impact that. And yes, it does mean that there are some things that need to be done differently.
If there’s not that realization that things are changing, then maybe in a couple of years you will become obsolete. Because the marketing of tomorrow will not be the marketing of yesterday - things are changing and accelerating fast.
But it’s exciting! All our marketeers are very positively approaching this.
You say that digital is the catalyst for an awful lot of this change. Could you go into a little more detail? How is it that you would see marketing changing over the next two or three years?
I think we are in an exciting category - because the consumer is very involved. So the path to purchase is quite sophisticated and complex for us, maybe more so than in some other categories.
One of the things that we’re seeing is that the barriers for entry for brands are getting lower and lower. So you have a lot of little brands that are appearing, and that are - in aggregation - becoming a pretty big chunk of the overall market.
For us, that’s very stimulating. It means that we have competition not only from the big brands, like we've historically had, that spend a lot of money. But that we also get competition from very small brands, that in aggregation are becoming important and that we need to pay attention to.
It has impacted on our acquisition strategy. We've begun to look at very small, niche acquisitions in a world where lots of smaller brands are popping up - and see how we can actually incubate them and make them bigger.
That’s something we've recently done with a brand called Baxter of California, which is a men’s grooming brand.
We think we’ll do more and more of this moving forward - because it enables us to continue to complement the portfolio brands that we have, to make sure that we’re very targeted and segmented in how we position our brands for specific segments.
I think the world of tomorrow is a world where you’re not going to have less beauty brands, you’re going to have more. I think the reason we've been successful as an organisation is because we’re not a one-beauty-brand player - we have many many different brands, and a very broad portfolio. I think the ability to continue to expand that portfolio with the right brands will be a key success factor for us as we continue to move forward.
You mentioned niche brands. The word ‘niche’ brings to mind another recent development - the fact that there are far more niche marketing channels that one can use now, a far more fragmented marketing landscape. How do you approach this new environment for the marketer?
I think what’s important is just making sure that you’re always grounded in defining what’s important at each of the steps on the path to purchase. You've got to think about this from the point of view of that path to purchase.
We spend the bulk of our resources and spending at the ‘consideration’ phase of the ‘marketing circle’ I mentioned above - through TV, print or display advertising. Those things continue to be very important - we've actually increased spending in that areas.
However, it’s also important to make sure that we’re also clearly present in the other steps on the path to purchase.
Think about the evaluation step. That’s very important to us, because a very high percentage of consumers are now doing some form of evaluation before they purchase a product. On average it’s about 30% for our categories.
So you can be very successful at consideration, but if you’re not successful at evaluation, then you miss the consumer before they actually purchase and convert.
So making sure, to your question on channels - how I make sure I select the right channels in the area of evaluation is critical. How do I do the same on the consideration phase, making sure I've ROI-optimized my selections in terms of awareness-building? What are the best, most efficient print books, TV channels, display banners - and how do I optimize that so I can redistribute some of those savings into other areas, like evaluation?
Of course, it looks different by brand, by category - what works in terms of channel mix for our hair colour products doesn’t necessarily work for our makeup or skin care ranges. The path to purchase for the different categories is quite different, and drives different channel selections.
Let’s look to the past and the future. As a CMO, what’s the biggest thing you have learnt over the last twelve months?
Everything seems to be transforming and rapidly changing in this space. Therefore, it’s important to be very focused on what your key priorities are, and not to get distracted by the shiny objects that are appearing left and right.
How do you best marry the very disciplined approach to where you’re putting your investments and your dollars, while at the same time, giving yourself the room and opportunity to experiment in new areas?
You first focus on the basics, and make sure you’re doing those flawlessly. Only then do you put in place (as we have with the Next Fund) an experimentation capability. That is certainly something that works well for us, and we need to make sure we continue to drive this.
At the same time, you've got to ensure you don’t make mistakes - and really start to pull a lot of money into areas which are not necessarily proven yet. Our whole philosophy to safeguard against that is to do the experimentation on a smaller scale - so that you can learn a lot fast, and if it doesn't work, you learn from what didn't work, and make sure you’re not replicating the same mistakes.
And in the future? What do you think is the biggest opportunity for the next twelve months?
We've done a lot of experimentation on mobile.
We've been quite successful in regards to making sure that we are leading in the mobile search area, the way we’ve been leading in search overall from a beauty perspective. We've had some great results in that specific area, and that will be a key focus area moving forward.
I think there’s still some experimentation that needs to be done on the mobile side beyond search though. And that’s why the focus of the Next Fund in 2013 was mobile, exclusively. In the past we might have had a few different strategic focus areas, as we did in 2012.
In 2013, we said no, we want to crack the code beyond search on mobile. That’s why we focused the whole fund on that.
Because while everybody is excited about mobile, and I certainly am as well, it’s going to be transformative for us - there are a lot of things we still need to prove and test and learn from.So it’s 2013 key focus for us.
That's the end of our interview with Marc Speichert, the Chief Marketing Officer at L'Oreal USA. If you'd like to learn more from Marc, then check out the recordings from the Incite: Summit East, which took place on September 18-19, 2013 in New York.