DATE: June 13, 2012

AUTHOR: Tim Moran, Editor In Chief, CMO.com

Tim Moran, editor in chief of CMO.com, recently sat down with Jan-Patrick Schmitz, president and CEO of Montblanc North America, at the company’s offices overlooking St. Patrick’s Cathedral, in midtown Manhattan—a prime NYC address for one of the world’s iconic luxury brands. Schmitz oversees Montblanc’s entire North American business, including sales and marketing, a retail network of 34 boutiques, and a wholesale distribution of 500 points of sale.
Schmitz—who joined Montblanc in 1994 and was named CEO in 2003—is not your typical chief executive in an equally not-so-typical company. He is clearly at home in the luxury retail market and seems to have a sixth sense for innovation. And as this interview shows, this CEO is as savvy a marketer as any CMO, for he has been instrumental in positioning and shepherding Montblanc into the 21st century and elevating it from a household name—known for its dominance in the world of fine writing instruments—to a true luxury brand. The company has expanded into fine timepieces and jewelry and has built a strong female clientele who recognizes the cachet of Montblanc.

Beyond business, Schmitz and his company have a real interest in supporting the arts, as evidenced by its sponsorship of projects such as “The 24 Hour Plays” on Broadway, as well as partnering with The Juilliard School for numerous events and programs. He has further expanded Montblanc’s commitment to culture through the “Foundation d’Enterprise Montblanc de la Culture,” which supports and recognizes modern-day art patrons who give their time, energy, and resources to support cultural programs. Schmitz is also dedicated to supporting Montblanc’s ongoing efforts against global illiteracy through “The Signature for Good” initiative with UNICEF.

Q: Patrick, readers of CMO.com might be curious about why I am interviewing the CEO of a company such as Montblanc and not the CMO. Perhaps you can explain how you fit into the marketing world within the company and how you see marketing as a part of your business.
A: Well, if you look at the brand business, marketing is one of the most essential parts necessary to achieve success. You can have the greatest innovations and the greatest products, but you must at all times be building a relationship with your customer. That is really what marketing is, in my eyes.

The relationship between the brand and the consumer is expressed many different ways. It might be the product itself. It might be the advertising. It might be an in-store experience. These days, of course, you have to include the shift to the digital world with social media and such. So the relationship is even more direct and more powerful than it ever was because, prior to digital, you were operating as a brand in a pretty controlled environment. The messages a consumer got, by and large, came from the mass media, say, television or print media, so your message was controlled. Today, the power is shifting from these media outlets over to consumers—they have the ways and means to communicate about your brand. If you are a smart CEO or CMO, you make sure that you and your company are engaged with this experience and this interaction with the consumer. There’s no doubt that, today, if you are in the brand business, you are more engaged than ever in this relationship with the consumer.

Q: So do you think that some CEOs are slowly and steadily taking over the role of CMO?
A: That’s an interesting question. I believe that the leader of a successful company must build a team in which you have certain specific functions, but any kind of siloed thinking in the dynamic world we work in today is dangerous. The market and the consumer react much faster than ever before, and it is very dangerous to worry about such distinctions. To my mind, that is a little bit old-school.

I also believe that the CEO role has changed, in particular, in the branded world. You know, the old boardrooms, the old way when power makers were talking to the power makers and the marketers were actually taking care of the business—I think that’s long gone. Today, you are only as good as the product, as the experience, and as the services that you provide to your consumers.

Q: Could you give us a little background on the company—where it has come from and where you see it going?
A: The Montblanc brand is world-renowned for its writing instruments. It was established in 1906, in Hamburg, Germany. Most people do not know that we are a German company, by the way, and that we are still based in Germany, still producing all of our writing instruments in Germany. We have, in fact, never moved from our roots, which is part of the brand strategy. The brand has flourished wonderfully because, from the beginning in 1906 to sometime in the 1980s, it was associated with a needed product, a functional product. In the business world, actually in your life, you needed a writing instrument to write—a pen. We were a functional product brand at an appropriate price point. We were not premium, as we are today.

Then our environment changed radically and a couple of things happened. First of all, distribution changed dramatically. Prior to the ’80s, throughout the world there were pen specialists—mom-and-pop stores, independently owned. They were like record stores. Remember them? In any case, all of a sudden our entire distribution broke away with the advent of the computer. The consumer didn’t need a fine writing instrument anymore as a day-to-day tool the way they used to. There was also a behavioral change. Letters used to be handwritten, too, and all of that changed. Hence, our whole business was under siege, and we had to decide what to do about it. We needed to figure out how we could develop our future. Our slogan at the time was, “The art of writing.”We had a long history with literature, writing, and education, so we began to focus less on the function of our product and much more on the meaning of our product and how it relates to you as a person. Also, in the bigger picture, we began reaching into the arts, reaching into culture.

Q: And that’s a marketing decision, right?
A: Clearly it’s a marketing decision. It’s based on lifestyle. A pen in the 1980s was a tool that people needed every day; it was functional, and we made a decision to move away from functional writing instruments. At that time, our average price points were maybe in the range of $30 to $70. When I joined the company in 1994, I vividly remember our products were sold at Staples for $89, and that obviously was anything but premium or luxury.

So we decided to build on our history. We were, in a way, lucky that we had our company roots and craftsmanship in Hamburg—I believe this was a very smart thing. As I said, we were established in 1906, and we never moved away that city. We have since maintained the art of crafting and hand-making pens.

Q: You built on the history.
A: Exactly. Then we started to create limited-edition writing instruments, moving away from pure function. We started to work more with precious materials—silver, gold, stone settings. We eventually became, over the following 10years, a kind of jeweler—one that makes beautiful jewelry that happens to write. Rather than being a maker of functional pens that you buy at the stationer—the way you buy butter and milk at your grocery store—we looked at our price points, and they very rapidly increased because of the value and the craftsmanship going into the product. When this changed, so, too, did our distribution need to change.

That was fundamental. On one side, with the traditional specialist, retailers who had old “Main Street” retailing experience knew their customer—they actually consult with you rather than clerk you. And that is one of the issues that we see today in the retail world. People are clerking their customers rather than actually consulting. But when they went away, they were replaced by discounters and bigger stores and superstores where you buy stuff in bulk at a discount.

Q: So, in essence, you see the distribution channels as part of the marketing function.
A: Absolutely. And it’s even more than just customer service. I think it is critical because customer engagement at that level is the ultimate experience a consumer has with your brand. And the higher you get in the value chain, the more important it becomes to control and to manage the experience a consumer has. The experience is not only the product; the experience is where you buy it, how you buy it, after-sales service—so it is a huge experience, a factor in building brand loyalty and in actually creating brand value to begin with.

We saw this during the time of the recession of 2008 to 2010, when consumers remained loyal to us because they realized that if they spend money, they want to have something that is worthwhile to repair, something they can trust. That is what I believe luxury is. Some people say, oh, luxury is when something is really, really expensive. To me, luxury is something that is worthwhile to repair. It’s something that’s worth more than the money it cost. It is luxury because I have a relationship with it—I don’t want to give it away. I don’t want to replace it with something new. And it is not necessarily something that costs thousands or tens of thousands of dollars.

Q: In other words, everything around the brand is marketing
A: Right. If you think about the Montblanc brand, we are probably among the brands that have the least relevance to your day-to-day life and survival. We are very analog, and staying so is actually yet another marketing decision. We were asked recently if we would be interested in working on a new grade of pen for tablet devices, to create something that had, you know, 15 high-tech functions. We said no, we are not interested in that. I mean, it is wonderful, I love technology, but it was not for us. Brand marketing and brand management is one of the most difficult things to do, and where so many companies fail is sometimes marketers can be very opportunistic. Sometimes I see great ideas that are fabulous from a creativity level, but brand management requires a lot of discipline and requires a crystal-clear focus on what your brand stands for. This is particularly important if you want your brand to be sustainable. You have to be very careful about how you craft the brand experience.

Q: Has the digital revolution had any effect on that?
A: Absolutely. It’s because, today, consumers are taking over many brands. They can actually motivate the masses, they can create hype, and it’s all viral. It’s all coming from the base. Brand management and brand marketing, traditionally, were all marketing-controlled. Madison Avenue and powerful PR agencies crafted the vision and message of your brand, and they had a good grip on it, on consumer perception. Forget that. It’s all gone now. As a CEO, you are as much a blogger and a social media person as your PR department is, and every word you say, every statement you make, is out there in no time.

Q: So being opportunistic with your brand can be a tricky thing—especially for the more iconic brands.
A: Yes, but the point is that brand management needs to be very carefully curated, and being opportunistic is very, very difficult. But you do have to change with the times and change your business when necessary. As an example, when I joined the company 17 years ago, we might have had 20,000 to 25,000 points of sale in the world. Today, we might have 3,500 points of sale. We needed to better control those points of sale so we could be sure about how our brand is being presented.

Nevertheless, we also saw that it was necessary to extend our brand. We began by loading our “white star” symbol with messages. Today, the white star means, “I am successful, I am educated.” What that means to me, of course, is that you are successful if you are very genuine and honest and you link what you do with what your brand. As an example, the majority of our work goes into education, into the arts, music, performing arts, etc. So it leads all back to the roots of Montblanc writing, literacy, and culture.

Q: With all the talk about content marketing these days, that’s all content for you, isn’t it?
A: Yes. In my eyes, a successful brand lives and tells stories—stories about a brand history, stories about the product. If you look at most of our products, they are not just beautiful objects that also have a function; many of them are the result of some kind of inspiration or a story. So, yes, the brand becomes content, and you place the brand within the context of the audience and the consumers, which is probably more important today than ever before.

Q: What do you think nonluxury brands can learn from the kind of marketing thinking you do at Montblanc?
A: First, I believe it is true for many industries that product is not everything. Product is an important part, so I think the product has to be stellar. I think a lot of companies today think product is everything and the rest will all come together. They believe that how the product is presented is not so important as long as the product is great. I believe that is wrong.

Second, I believe you can learn from the luxury brands that telling stories around the product is important. If you want people to build a relationship with the brand, you’ve got to build it on something. So I believe stories about the product and the brand are important.

The third thing is, in my view, that too many many brands don’t think that controlled distribution is important. They think more doors are better—put it in front of as many consumers as possible. I think there is too much me-too kind of thinking: Let’s see what the competition does. The luxury industry is probably at the forefront of thinking every single day: How do I differentiate myself? What makes me unique, and why do you want to have me? What do you get from my brand that you don’t get from others? And I believe a lot of the brands would do well to think that, too. Invest time into thinking of how you can differentiate your brand. It could be the product, it could be services. In most cases, it is a combination of everything, as well as control of distribution, which is a key point.

Q: Can you talk a little bit about how you see marketing from the CEO vantage point?
A: Sure. I believe strong marketing is a group of highly creative, highly energetic people who act like a think-tank. They come up with a lot of ideas, and in a well-functioning company you actually have to hold back your marketing team. The greatness of a marketing organization is that creativity, but it can also be a big risk to an organization if it is not challenged. They must be in synergy with all the other disciplines within the organization. You have to think about marketing way beyond advertising—it’s the entire brand experience, from creating a product to selling it, to communicating to interacting with customers. In that sense, control and orchestration is key, and that’s what I do.

Q: Let’s talk a little about measurement in the digital marketing world, which is something many CMOs are dealing with. How does that work within your organization? Do you try to put ROI on everything you do from a marketing point of view?
A: No. I mean, you try, but, at the end of a day, the world has become so complex in terms of the communication-experience landscape that it is very difficult to accurately determine what initiatives the consumer is really responding to. We are living in an attention world where so many stimuli come at you. There are so many touchpoints that to actually say, “Because of this that happened” is very, very difficult.

On one side, you have to be very alert and manage all of these communication touchpoints; you want to, in a way, control as much as you can because there can be havoc in days—even hours—if you are not on top of it. But you don’t want to control it to the extent that your audience feels that they are being controlled by an organization that is not genuine. The biggest challenge is to keep a balance on crafting the experience, but also letting it be viral, natural, because the brand lives and breathes. There are a lot of people involved, and there is a lot of history and stories to be told.

Q: Could you speak specifically about how you use social networking?
A: Yes. I believe today, as I said, brands are not purchased—and certainly not premium brands—only because the product is beautiful or expensive. People want to know the brand and have a relationship. You actually want to have your consumer develop a loyalty and come back over and over again. It does not matter whether you are selling T-shirts or expensive pens. This requires the company to get involved as a corporate entity within the environment in which it’s operating, within the market, within the cities it is in. It is very crucial because people want to do business with good corporate citizens. I believe that concept always existed, but for us it came naturally. It was never really a concept—what we do is who we are. That’s why we take so seriously—and personally—our commitment to culture and the arts. For example, I am about to go to a high school in Queens, New York, to give a class in photography. So we actually are kind of living our brand.

Pre-social media, companies had PR departments and agencies to craft their messages for them. You threw money at them, and they did their thing. Today, that doesn’t work. Today, you have to live it. For instance, I share my passion. I have been a photographer since age six, so I go into schools—though not as a CEO, although they know that I am, but as Patrick, and I will share two or three hours with high-school students some of my passion. Giving money is important; a lot of organizations desperately need the funds. But that’s the easier part. To believe in the values and live the values is a much bigger commitment, and giving your time is the biggest one of all.

Q: So being a good corporate citizen is, for Montblanc, a huge part of the brand structure?
A: It’s the foundation. People today want to know more about the brand and company they deal with. The world has become much more transparent, so customers can judge you much better. That’s why it is important to be engaged, and it’s important to have a value set. That, for us, has been handed down for over 100 years.

Q: When I heard you speak recently, you mentioned a social program you did that went viral. Could you describe that?
A: Being in the digital and social media world means that, all of a sudden, you can build up a dialogue with a consumer that changes a lot of things. We had an idea for expanding out timepiece world, our watch business, where, comparatively, we are a newcomer. We started that in 1997. So we set up a Web site and asked a very simple question: Can you record one second of your life? We called it the “Beauty of a Second.” It could be the sunrise in Rio de Janeiro. It could be bringing your child to school in Moscow. It could be whatever you think is beautiful about your life. We asked people to record something and upload to us. Then we got WimWenders, the famous German movie producer and director, to curate out these clips and turn them into a piece that shows what hundreds of people around the world believe to be the beauty of a second. This created a great dynamic and, in no time, connected people around the world. It was very successful and wonderful.

In the end, it was about building a relationship. I believe business is changing today, and there is less and less hard sell.

Q: Speaking of sales, how does all of this relate to actually selling products?
A: It all links back to the point of sale, which is also a marketing function. Many companies, I believe, can learn about retail from luxury brands. Many of the big-box retailers, for instance, hire people at an hourly rate. Their attrition rates are high because people just leave for $2 more. Most retailers today provide operational training only. You could go in any mall in the country and ask some of these sales associates about brands, about the products—you often get nothing. Now, I understand that luxury can afford to train people, but what we are doing is actually old-fashioned retail. It dates back to the mom-and-pop” stores on Main Street, where they greeted by name and knew what you liked because you went in that store 25 times. I think selling any other way is very short-sighted. You can either “clerk” your customers or really consult with them, actually have a relationship.

Q: Don’t systems such as customer-relationship management take some of that into consideration?
A: Every retailer and brand claims they have a CRM system. I am prepared to say that most actually don’t. They have a database, they have analytics, and they shoot a million messages out, but they don’t really have customer relationships—that idea of building a relationship which starts with your interaction, when you are greeted in the store, the way any collateral arrives in your home, etc.

The database system we use it very different. It analyzes and lets me know where there is a customer who fits into a certain consumer profile in terms of number of transactions or what they are buying and when they’re buying. When certain criteria are hit, the system alerts a human being, i.e., the store manager or me, and that triggers a behavior in the organization. It could be a phone call, it could be a letter from a store or from a vice president, or it could be a personalized letter from me. It could also be some kind of small gift, a magazine or something.

And, by the way, when I came up with this program, some of our marketing executives said, “Why would we want to do that? What’s our ROI?” I told them I didn’t want an ROI measurement for this kind of thing.

Q: You realize, of course, that that’s turned on its head. It’s normally the CEO who is asking the CMO where the ROI is rather than the other way around.
A: That’s exactly right. They looked at me and thought I was crazy. To me it was all about brand values, and creating a value and again.

Q: Many other brands would say that this kind of thing is fine for a luxury brand, but that it would never work for them.
A: Yes, I know, but you could tailor it down. Take a big-box retailer, for instance. What would stop a store manager, for instance, having a real relationship with customers, actually trying to understand them?

Q: Let’s take a look at analytics. Do you have any kind of marketing dashboard or reports that you get on a regular basis to monitor your marketing?
A: Yes, I do. Obviously we do research—we do a lot of market research, looking at what competitive brands do, looking at what noncompetitive brands do, what other industries are doing that might talk to the same customers we do. But I take all that with a grain of salt. And I personally do not believe in focus groups at all. I think that is very much old-school—it’s like rowing and looking backward. We also get a lot of statistical public relation work, where we look at the media value of our PR activities.

As for advertising, I believe that it creates a desire for a brand, but it doesn’t necessarily sell the product. So I think it is difficult in the luxury world to correlate advertising with sales.

Q: So I would imagine you are not doing QR codes or Groupon 10 percent off deals.
A: Well, the essence of our consumer base is probably between 40 and 55 years old, and, with this more mature segment, you have to carefully think how you want to approach them. And then there’s the issue of trying to bring in the next generation without disengaging your existing consumer. In the end, though, all of this is less important for us than it is for many others because we really aim at a small percentage of the population.

Q: So analysis and metrics and such is not really what your marketing is based on?
A: Quite so. And I think this is probably more unique to the premium world. I think there is much more gut feeling to our world than if you are a mass merchant.

Q: Since you are a global company, could you talk a little bit about global marketing, on one hand, and the difficulties with localized marketing on the other?
A: In one sense, what is very important to me is that we are crafting a global brand that has brand value and brand equity all over. You cannot be different to different groups. But, obviously, when it comes down to execution, I tend to believe that global marketing campaigns or global images or global PR programs are sometimes difficult. Now, when it comes to things like social media, now you’re talking to the global consumer. There are no barriers, which is probably what makes social networks the strongest communication platforms today.

Then there’s the consumer’s “i-store experience.” It might be with retailers, it might it be in your own network, and here it depends to a great extent on demographics and who is your target audience. In our case, we have the affluent consumer who travels. So when that person goes into a store in Hong Kong, Paris, or New York, he or she cannot have a different experience. The experience on the ground has to be carefully curated and orchestrated.

Q: The last question I want to ask you is, does anything keep you up at night about marketing, about your business, or about how things are going with your brand?
A: Not really. I tend to think about the bigger picture, for our brand is all about longevity. And it’s tough to keep this big ship moving and changing. But the world moves much faster every day, so I sometimes wonderwhat will it be like in six months, and how I maintain longevity as a brand concept during this kind of change. I think our success, in the end, is the steadfast longevity of the brand. As the times move faster and faster, people need these things that preserve a moment. Our success is based on people who love that idea. It’s more on these bigger picture levels where I’m trying always to maintain balance. On one hand, you want to control the experience, but on the other you can’t become a static organization. We want to be iconic, not archaic.