Former Procter & Gamble global CMO Jim Stengel: A hyperfocus on customers builds trust in tough times

Joe Kornik: Welcome to the VISION by Protiviti interview. I’m Joe Kornik, Editor-in-Chief of VISION by Protiviti, our global content resource examining big themes that will impact the C-suite and executive boardrooms worldwide. Today, we’re exploring the customer experience, and I’m happy to be joined by Jim Stengel, former Global Marketing Officer at Procter & Gamble where he spent 25 years leading the effort to reinvigorate the consumer giant. He is a globally recognized speaker and author, host of the CMO Podcast with Jim Stengel, and president and CEO of the Jim Stengel Group. Today, he’ll be speaking with my Protiviti colleague, Managing Director Jen Friese, Global Digital Marketing Solutions Lead for Protiviti. Jen, I’ll turn it over to you to begin.

Jen Friese: Thanks, Joe. Hello, Jim. It’s great to be here today.

Jim Stengel: Hi, Jen. We’re talking about brands and marketing and competition and customers. My favorite topics. I’m so happy to be here.

Friese: I love it. Jim, you’ve been at this for a long time, more than 40 years.

Stengel: Yes.

Friese: I’m sure you would agree that this is one of the most disruptive times for marketers. With the rapid growth of AI, technology and innovation we are seeing changing expectations from consumers and unpredictable consumer behavior. What is your perspective on the state of the industry?

Stengel: Yes, it’s a big question. We can probably speak the entire show about that. I want to reflect on a little bit of a personal story before we start, Jen. Last week, I was in Chicago. I was teaching in the Kellogg School Executive Education CMO Program, which is a residential program for CMOs, about 22 people. So, an intense immersion into what’s going on with them. Later that week we had an annual Kellogg School Marketing Summit where we invite all sorts of thought leaders, academics, practitioners for a day and a half. So, a good immersion into sort of what’s on people’s mind. I mean, I talk to a CMO every week on my show but I have to say the mood was — with all the stuff going on in the world — the mood was very positive. I reflected on that before our conversation, thinking, “Why would that be?” I think it is related to the chaotic world we’re in right now. So, what happens with people when things are changing a lot, when trust is eroding in big institutions, when prices are going up, when there’s unpredictability at large? I think what happens is you look for something that you can trust, that might be familiar. That’s a huge role for brands today. 

So, I think this era of building brands, building organizations that people admire, want to be a part of, feel like they share their values, is actually more important now than ever because of the macroeconomic world we’re in. What happens when prices go up and people start to get a little bit nervous? They go to a brand they can trust because they don’t want to take the chance. What makes for a great brand? Part of it is pricing flexibility, which is really, really important. Anyway, the mood at least from my immersion last week very, very positive. 

One theme with everyone was the importance of relationships with each other as employees with our customers and with everyone who is a stakeholder for your brand. It’s interesting when there is deep trust creativity can happen, innovation can happen, and brand loyalty can happen. That’s for the environment. 

In terms of beyond that, what successful brands could do in this situation we are in? The number one principle — I spent 25 years in Procter & Gamble. Procter & Gamble is very good at being consumer-centric. You’ve got to be in touch with customers today because things are changing so freaking fast. So, the organizations that are in touch and agile to respond to changing needs, desires, wants, are the ones that will win. There is one story told at this conference last week, it’s of the Chili’s brand, the casual dining. Their stock price in the last year is up 2 ½ times. In the last three years it’s up five X. What’s the key to it? They’re listening to customers and acting on it. 

One simple thing — I won’t talk all day about this but one simple thing is —they noticed on social media a lot of people are driving through fast food chains and holding the receipt up. So, Chili’s says, “Aha!” They’re saying, “Well, we’re going to make them our competitive foil. We’re going to change our marketing message to say, ‘We’re about the same price as fast food but when you come to Chili’s you get a friendly server. You get chips. You get a $6.00 margarita and you get a great burger and fries for about $12.00 or $13.00.’” Their business is going like that. In touch with customers, what are they saying, acting on it, and the business results follow. So, that’s a big win. 

Beyond that, of course, it’s all about building trust, building advocacy, focus on the customer experience, which brings everyone together in a company, and the last one is, never lose sight that we’re in the trust and attention game. If you’re building trust and getting attention you have a higher likelihood of building a great brand.

Friese: You mentioned many things that are impacting the industry. We know that marketing spend has dropped 7.7% from overall company revenue. It’s the lowest in three years. Knowing that marketing budgets are tight and customer experience is so important, how do you think marketers can better plan to hit their performance KPIs while also building their brand? What’s your advice for how marketers can thrive in this austerity mode?

Stengel: Yes. Let me take the first one on brand and performance marketing. That’s maybe the hottest debate we have in the industry. I teach a program at the Cannes Festival every year. We always survey the people coming into the program about the hot issue on their mind. For the last years it has been — one of the top three has been brand and performance marketing. So, it’s a really, really big issue. I ask that a lot of guests on my show about how they’re thinking about it. There’s one really fundamental thing that we should’t just breeze by. If you do have two separate organizations internally, one that runs brand and one that runs performance — put them together. Physically maybe or metaphorically but they should be helping each other. They should be working off the same song sheet in terms of the kind of brand we’re trying to build. They should be held accountable for both. They should have the same KPIs. If you do that you will get — the sum of the parts will be a lot of greater than the whole — or the whole will be a lot of greater than the sum of the parts. 

That’s a really powerful one. We can act on that. It’s not something we have to invent. It’s proven in companies that are doing it. I had the CMO of Autodesk on my show. They put those departments together and they’re crushing it. That’s the first one. 

The second one is we have to, all of us, whether we’re B2B or B2C, challenge the assumption that great brand campaigns can’t build performance. Great performance campaigns can’t build the brand. If you challenge those two assumptions and hold those, whoever is running those elements of your marketing in-house, to those standards great things happen. 

One brand that I admire a lot these days is Duolingo, the language learning brand, the education brand. It’s super hot. It’s in culture. It’s growing like crazy, great team. They simply believed that their brand communication can build demand and they have the data to prove it. So, when they do all the snarky things they do with the owl, which is building their brand, it’s also bringing new users and having lapsed users come back to the brand. So, it’s about putting them together. It’s about changing expectations. That’s why I like to think about performance marketing. If we’re siloed in thinking about those things then I don’t think your odds of building a great brand that has great metrics and performance and brand, they are less optimal. 

In terms of how to think about marketing today and the environment we’re in with signs of recessions, certainly signs of inflation, I’ve been through a lot of these. Maybe not as extreme as we’re going through now with the tariffs and so on, but I’ve been through lots of ups and downs on many brands in my career. The one very empowering thing we can all do is we can pull our organizations together and say value, which is always important, is going to be more important than ever. So, what are some ideas that we can come to market with that really hit value with our consumers? 

I can tell you this is a bit of dated story but still a very relevant one. When I was — I was the Global Head of Pampers when I was back in P&G before I became a Global Marketing Officer, and before that I was the West and European Head of Pampers, it’s P&G’s biggest brand. We had trouble cracking Pampers in developing markets. A lot of parents didn’t use any diapers. It was a cultural thing. We did some pretty serious research to show that when you wore a diaper at night you slept more deeply and you slept better, and sleep is very important for developing babies. The cost of one diaper in developing markets was about 30 cents. So, we had a brand campaign which said, “If your baby sleeps better they will develop better. We have research on that. If they wear Pampers they sleep better. It costs about 30 cents.” What happened is, the brand exploded because we reframed the value. So, it’s all about reframing value. 

In fact, the Chili’s story, I told a minute ago, they reframed their value, “We’re about the same price as fast food and you can have a great experience.” When you tap into an organization’s imagination to come together on some new ideas or some ideas you might have had in your past that you want to bring forward again to reinforce the value you have. By the way, if you don’t have a strong value then work on that.

Friese: Right, there’s a problem. [Laughter]

Stengel: I think this is a great time for marketers, honestly.

Friese: Yes.

Stengel: It really is.

Friese: No, I couldn’t agree more. We know it has been a while since you published your “Unleashing the Innovators” where you explored how legacy companies can renew themselves by acquiring new technologies and creating new business lines, sparking innovation, and learning from failures. How have these lessons changed?

Stengel: Yes. That book — it was a great project to work on, that book it came out within 2018-ish. So, it’s several years ago. The reason I wrote it, which is interesting, Jen, was there were at that time lots of big companies experimenting with startups. It was in the press a lot. My book agent said to me, “What are people using as guidelines? Is there a playbook for these collaborations?” There wasn’t. I thought it was a really interesting topic so I started interviewing. I did a big quantitative study about what’s working in partnerships. I worked with a data group within the Ogilvy group, the Ogilvy Red. We interviewed lots of people on site, startups and big companies. 

That mindset of going outside your company, talking to others who may have ideas that compliment your core skills is always powerful. Certainly, in this era of AI we should be amped up on that because we don’t have all the answers. There are lots of different companies doing interesting things with AI. We can talk about that in a minute. There are lots of companies who bring interesting capabilities with new platforms. 

So, the first step, and this is certainly a lesson in my book, the data showed us in my book that companies that had a mindset of building successful external partnerships were three times more likely to win versus their competition. Part of that, of course, is your whole mindset, that you collaborate. You’re looking for new ideas. You don’t get stuck in a silo. That you have expansive growth-oriented thinking. So, that one is evergreen. 

It’s funny the title was inspired, “Unleashing the Innovators,” by a quote from someone at Toyota who said, “We let the outsiders in and it unleashed our innovators inside.” To me that’s a timeless thought and I think a danger in many, many companies are that we do get too closed off, too siloed, too much internal thinking, too much internal politics. Those that keep their heads up and keep outside looking for who are the right partners they have a much higher likelihood of sharing and growing their business.

Friese: Finally, to close out, if I could ask you to look out a few years and think about the end of the decade, what will be different than today? Where do you see the state of marketing and consumer expectations in 2030?

Stengel: Yes, it’s a good one and a tough one. The way I like to think about the future, at least in this kind of horizon, like five years or so — and I used to practice this at P&G and I certainly have done this with other clients I work with, if you just look at things we know there’s going to be lapsed ones, all sorts of things happening. You just never know when something is going to fly in but if you just double down on things that maybe emerging, that are not theoretical but are actually happening, I think we have enough to work on. You think about number one here, we have a generational thing happening. We have Gen Z coming into the consumer space, to the workforce. We have Gen Alpha not far behind them. What are they like? What are they valuing? How are they behaving? That’s going to change a bit but the fundamentals probably won’t. 

Here’s one interesting stat, 53% of Gen Z self-identify as neurodiverse. Think about that. What does that mean in terms of retail, in terms of digital communication, in terms of product and service innovation? So, that’s what I mean. If you’re customer-centric and you’re looking at emerging customers you better understand them and that’s going to impact marketing and impact them. So, that’s the number one. That’s right on our doorsteps. So, I think the pivoting a bit more to the next generation of employees and customers is really, really powerful. 

AI is here. This isn’t theoretical. We’re all working with it. It’s changing our lives already. Are you within your organization taking your strategies and thinking about AI to help super charge those? I can tell you the ones I talk to are doing stuff — I don’t think they’re thinking deeply enough about it. AI in five years is going to be — we all know it, everyone says it — is here and it is revolutionary — even more revolutionary in five years and we’ll still be learning about it. So, strategy first and how AI can help you achieve that strategy faster, more creatively, more inexpensively. At this meeting I was at last week in Chicago, a Senior Executive from Coca-Cola talked about how AI is helping them totally reframe their global agency strategy, how they work together, their collaboration, how they do creative work, how they do media planning in a totally unprecedented way. That's an example of a company really thinking about deeply how can this technology, which is nascent but here, help us with our business goals. So, that’s the second one I would do. 

The other thing that’s here is more nationalism. We are looking at — I don’t think tariffs are going to — maybe some of them will go away, but we have already started a conversation about being less interdependent, more self-sufficient, what are the implications of that in marketing. Certainly, big ones on supply chain but also in how we think about brands, how we work together globally, how we build global brands. I think we’ll have a bit of different model for that in the next five years. This is maybe related to all of these things, I do feel the number of people that we will need to work on our businesses is going to be less because of AI, because of more focus, simplification. That’s another one we have to deal with with care, with planning, with strategy. There aren’t many people I talk to who feel like AI is going to help them increase staffing.

Friese: Right. [Laughter] Yes.

Stengel: It’s going to change a bit staffing but it’s going to be different, which we have to approach carefully because it has a lot to do with morale and creativity and productivity. The last one, I think, marketing will be even more measurable in five years. We’ve made a lot of progress but I think we are going to understand the brand and performance and interconnectedness between the two even better in five years, which will help us be sharper. 

The last one, which is fun, is I’m even thinking now versus five years ago — think of the role of sports in our lives, in our communication, and culture. That’s not slowing down. If you’re not — obviously, the larger point is how do I make my company and my brand be in the culture so that people care and we gain attention — sports is a big way to do that and will be a bigger way to do that.

I don’t have a crystal ball. I do know that there will be a brand in 2030 that we don’t know about now that is making a difference in our lives so just be ready for that. Agility, obviously, is important. Just looking at the stuff that’s here and doubling down on that because all these things that are here are going to change things in two, three, four, or five years. Some of them very profoundly. Just to be sure that you have strategies to deal with the stuff that is already rising. The stuff that we don’t know is there, we can’t do anything about that. Just be ready to think about it when it comes along the scene but think deeply about the stuff that’s here.

Friese: That’s great. Thank you so much, Jim, for all of your insights and taking the time with us today.

Stengel: Thank you, Jen.

Friese: Joe, I’ll go ahead and hand it back to you.

Kornik: Thanks, Jen, and thanks, Jim, for that great conversation. Thank you for watching the VISION by Protiviti interview. On behalf of Jen and Jim, I’m Joe Kornik. We’ll see you next time.