1 How Fast Can You Move - Marketing Performance Metrics ... · brand-loyal, less trusting, ... becoming a $10 billion market. ... data-driven metrics and intuition M e t r i c s Intuition

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Improving Your Probability for Success ™

How Fast Can You Move

January 25, 2007 Webinar

Brought to you by SAS and VisionEdge Marketing


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Agenda

Welcome and Introductions The Quick and The Dead – the role marketing

plays in innovation and speed – VisionEdge Marketing

Smart Speed – Keynote by Skip Maner, Principal Inverness Capital

Intelligence and Speed – a winning combination – Larry Mosiman, SAS

Q&A and Wrap


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The Quick and The Dead

“There are two kinds of businesses: the quick and the dead.”

Bruce Richardson, AMR

The dynamics of the 21st Century are forcing businesses of all sizes and types to speed up

Marketing plays a critical role in innovation and speed


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Six Major 21st Century Dynamics

1. Fast changing customer demands2. Global Outsourcing3. The Rise of Asia4. The Spread of Disruptive Technologies5. Innovative New Business Models6. Open Source SoftwareLet’s take a quick look at each


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Fast Changing Customer Demands

Customers are more empowered than ever and are taking control of how, when and where they consume

Today’s customers and consumers are less brand-loyal, less trusting, and prefer to get information from personal research, friends and product specialists

Implications to businesses and marketing:changes in media mix, messaging and general approach to customer interaction


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Global Outsourcing

Outsourcing and offshoring is here to stay Gartner expects offshore IT services spending to

reach $50 billion by 2007 IDC anticipates WW IT outsourcing to grow to $18

billion by 2008 The Global Insight Report concludes that by 2008,

IT offshoring will account for roughly $125 billion in additional US GDP and by 2015 the amount will be increased to $250 billion.

The Meta Group predicts that around the world, offshore outsourcing will grow at a rate of more than 20% annually, becoming a $10 billion market


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The Rise of Asia

China has already trebled its share of world GDP over the past two decades and India has doubled it.

A dynamic Asia can power global growth and provide new opportunities for growth for Europe as well as for North America. Prime Minister Dr. Manmohan Singh December 7,

2006, Conference of the London School of Economics (LSE) Asia Forum


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The Spread of Disruptive Technologies

Market changes will be driven by the rapid proliferation of several disruptive technologies:

Mobile and wireless devices are expected to outnumber wired PCs as early as 2010

Biometrics on the rise. Nanotechnology: Growing from $1.4 billion

in 2007 to $19.7 billion by 2012 and then go on to reach $34.4 billion in revenues by 2014. (NanoMarkets, LLC)

RFID: The global market for RFID software, hardware and services has increased three times the market value in 2004 making it $6.14 billion by 2010. (RCNOS)

TV-Over-Internet Protocol (IPTV): Worldwide IPTV Service Revenue will reach U.S $38 billion in the year 2009 and that the worldwide IPTV subscribers will reach 53 million in the year 2009. (RCNOS)


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New Business Models Businesses have reached the old model's limits

with respect to complexity and speed. The successful companies in the future will be

the firms that are responsive to challenges and adroit in both creating and capturing opportunities.

To match a business environment that is more networked within and among companies, companies will become extended enterprises. Extended Enterprise -a company made up

of its employees, its board members, executives, business partners, suppliers, and customers.

The notion of extended enterprise includes many different arrangements such as virtual integration, outsourcing, distribution agreements, collaborative marketing, R&D program partnerships, alliances, joint ventures, preferred suppliers, and customer partnerships.

Today's most successful executives, while still greatly concerned with cost structure, maximizing operational effectiveness, and business process reengineering, need to shift their focus to issues of

1. How to build capabilities for faster growth

2. How to attract and retain the best people

3. How to develop leaders at all levels in the company

4. How to manage knowledge effectively5. How to become a true learning

organization and6. How to be more effective global

corporations


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Open Source Software

Open Source had already created a technically successful operating system and the first practical web servers and clients

The Linux sub-sector alone is showing an annual growth rate of 37 to 45 percent and predicted to be a $35 Billion dollar market by 2008.

IDC Software Consulting: The Linux Marketplace - Moving from Niche to Mainstream. Prepared for OSDL. http://www.osdl.org/docs/linux_market_overview.pdf


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Speed of Innovation

Long-term corporate success is linked to the ability to innovate.

Although corporate investment in incremental improvements and innovation to existing products and processes does bring growth, it is new game changing breakthroughs that will launch company into new markets, enable rapid growth, provide a platform for long-term growth, and create high return on investment.

Radical innovation helps your company reinvent itself and maintain its leadership.


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Marketing is Critical to Speed and Innovation

We own market and customer insight needed to facilitate strategic decisions and innovation

To facilitate speed and innovation we need A Culture of Accountability Processes Performance Metrics


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Culture of Accountability

Cultures that encourage teamwork (collaboration), employee development and empowerment achieve higher quality outcomes, that is, higher quality results.

Klein, Masi and Weidner, 1995 Three Core Attributes:

1. Shared knowledge. Everyone in the marketing organization needs to have clear visibility into the organization’s purpose, the performance targets, timelines, measurement and consequences.

2. Tight and solid alignment between marketing objectives and business outcomes. Every marketing objective should link directly to a business outcome.

3. Unwavering belief in the inextricable link between performance and accountability. The people within marketing must believe in the essential value of measuring, evaluating, and improving their work based upon objective criteria.


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Can Your Marketing Organization Pass this Test?

1. Marketing has a specific goals with measurable criteria designed to achieve clear results that will impact the business.

2. Each person in marketing knows which business outcomes their work personally addresses. There is a focus on achieving results beyond the boundaries

of each individual’s job3. Each person within the marketing organization knows

how their job advances the corporate and marketing goals. The focus is outcome-centric not task-centric (e.g. updating

the website, creating and implementing a campaign, revising the pricing model, etc)


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Process

Process is the foundation for alignment and one of critical complaints with marketing is that is lacks alignment with sales, finance, and R&D.

The right processes need to be in place to support performance management and measurement

Three steps to improve process and foster alignment: Analyze the existing processes and identify overlaps, gaps,

bottlenecks and redundancies. Define, document and standardize core marketing processes

to facilitate collaboration with finance, sales, and R&D. Develop and manage an integrated process that includes

setting performance goals, modeling, planning and reporting.


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What have been your biggest challenges in improving marketing effectiveness?

Lack of well-dfined perfomrance

measurement capabilities

35.0%

Insufficient knowledge on how

to do it7.1%

Have not focused on it thus far

18.0%

Lack of customer data

12.8%

Lack of internal coordination and clearly defined accountabilities

27.0%

Performance Metrics Needed Demand for increased

accountability in marketing requires marketing to measure its effectiveness and contribution

Fewer than 20% of 460 CEOS believe their company is adequately measuring marketing –

Deloitte study 2006

Being able to move fast means you need marketing metrics tied to speed and innovation


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Six Marketing Metrics tied to Speed and Innovation

1. Rate of customer acquistion

2. Rate of profitable customer growth

3. Rate of Growth compared to industry peers

4. Rate of product adoption

5. Rate of new product success

6. Time to market and revenue


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Four Key Steps To Cracking the Metrics Code

1. Align your marketing metrics with overall strategic objectives and business outcomes

2. Use the metrics continuum to focus on outcome-based metrics

3. Establish a baseline that reflects your company’s current marketing effectiveness and contribution

4. Define a set of performance measurement objectives


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If You Want to be Fast Address These Five Tasks

1. Attracting qualified people for key positions.

2. Retaining key employees.3. Developing financial and performance

monitoring systems. 4. Providing product support and customer

service. 5. Developing internal control systems.

The Ivey Institute for Entrepreneurship, Canada


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Skip Maner – Smart Speed

Skip has spent eleven years in private equity. He is currently a Managing Principal with Inverness Capital Partners in Newtown Square, PA. Inverness provides growth equity (both control and non-control) to industrial technology-oriented companies and high growth manufacturers in the United States. Skip works with Inverness portfolio companies such as SkyBitz, NCSRT, Nexiant and Pelion. Prior investments, among others, include WebLogic (sold to BEA Systems), Conduit Software (now ADP) and ICG Commerce.

Prior to starting Inverness, Skip was a Managing Director with Internet Capital Group and a Principal with TL Ventures and Safeguard Scientifics.

Prior to becoming an investor, Skip was an entrepreneur and served as president and founder of two companies including a recycled products manufacturer.

He serves on the University of Richmond's President's Council. He also is on the Board of two Philadelphia-based non-profit youth organizations.

Skip holds a BA from the University of Richmond and an MBA from Wharton.


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What is Smart Speed?

Moving your company at a rate of growth faster than your industry sector

Soliciting input from employees and customers to quickly develop market worthy products and react to market needs and dynamics

Making timely decision using a combination of fact-based data-driven metrics and intuition

Met

rics

Intuition

The Goal

LargeIndustryLeaders

Small/EntrepreneurialCompanies


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Size Doesn’t Matter

Size doesn’t matter, smart speed is about how a company is organized and operates so they can make crucial business decisions fast

Small companies can win (David vs. Goliath

Large companies can win (Allow for entrepreneurial decision making as long as supported by strong data)


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Smart Speed Companies Are Organized for Success

Be willing to review your business model, and the way you go to market

Be willing to accept failure as a part of business

Have a process for idea flow


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No Silos or Stove Pipes

Organize for speed and success Democratically managed Input not defined by the

organizational chart Create collaborative culture Reward collaboration and

performance Don’t confuse motion with progress Make data-driven decisions Must not only accept but encourage

cross-functional input and interaction


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Smart Speed Companies Like Data

The days of intuitive product development are over

The Internet has broken down so many informational barriers

Sound customer and market research imperative – the Internet allows this to be done quickly

Don’t need vast amounts of analysis, need enough data to gain directional insight to help with increasing confidence around making the right decisions


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Smart Speed Companies Keep a Pulse on the Market – SkyBitz Case Study

SkyBitz has a technology for tracking remote assets

Two entrenched large competitors Initially wandering in the fog

Company was not sure about target market or price

Did a quick blind research study with customers and prospects using a third party (to avoid creating a bias)

Revised the product roadmap and pricing strategy

Growing 100%/year ever since


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Smart Speed Companies Listen to Their Customers

BEA WebLogic Server® 10


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Smart Speed Companies Keep an Eye on the Numbers

Track performance monthly and share results at all levels of the organization

What do they track? Pipeline development, cost to generate a qualified lead, cost

of customer acquisition, customer referral rate, customer renewals and share of wallet, customer usage, rate of new product adoption

Many of these are related to marketing


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A Company that has Smart Speed

Has a growth rate faster than industry peers and is gaining market share at the expense of the competition

Delivers higher margins Achieves higher market premium in

relation to industry peers Has customers who are wild about their

relationship with the company


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Four Things You Can Do Today to Create a Smart Speed Company

Ask and listen. Ask customers and prospects about their needs and how your product is or isn’t serving their needs – be willing to use a third party

Remove structural barriers so your people can talk across the organization Reward collaboration

Link employee performance to shareholder value Each employee should understand how they add value to

the customer and company Create an environment that encourages

experimentation – experimentation leads to innovation, we can all learn something from 3M


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Larry Mosiman – Worldwide Product Marketing

Manager Customer Intelligence Solutions

Larry Mosiman has over 20 years of experience leading marketing teams for high tech companies.

Before joining SAS, Mosiman led the marketing organization for the Material Testing Division of MTS Systems Corporation in Eden Prairie, MN, where he developed a successful marketing organization in a business that had been engineering focused.

Mosiman has a Masters in Business from St. Thomas University and a Bachelors in Electrical Engineering from South Dakota State University.


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The Value of Analytics

Customer Knowledge and Insight Customer Touchpoints Marketing Performance


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Customer Knowledge and Insight Behavioral modeling Customer profitability / lifetime value


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Customer Knowledge and Insight Example

1-800-FLOWERS.COM Challenge

Needed better insight into their customers

Solution Collect customer data at every touchpoint (retail stores,

phone, online) Use analytics to anticipate customer behavior

Results More targeted offers and promotions to the most valued

customers >15% improvement in customer retention rate


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Customer Touchpoints Optimization (campaign, channel, offer) Behavior monitoring and event triggers


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Campaign Optimization Example

Camp1

Camp3

Camp2

All Customers

Customer Camp A Camp B Camp C

1 100 120 90

2 50 70 75

3 60 75 65

4 55 80 75

5 75 60 50

6 75 65 60

7 80 70 75

8 65 60 70

9 80 110 75


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Prioritization Approach


1 100 120 90

2 50 70 75

3 60 75 65

4 55 80 75

5 75 60 50

6 75 65 60

7 80 70 75

8 65 60 60

9 80 110 75

Constraints:

1. Each customer must get only one campaign

2. Each campaign must get three customers

Objective Value = 655


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Rules Approach


1 100 120 90

2 50 70 75

3 60 75 65

4 55 80 75

5 75 60 50

6 75 65 60

7 80 70 75

8 65 60 60

9 80 110 75

Constraints:





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Math-based Approach


1 100 120 90

2 50 70 75

3 60 75 65

4 55 80 75

5 75 60 50

6 75 65 60

7 80 70 75

8 65 60 60

9 80 110 75

Constraints:





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Not Here!

Behavior monitoring and event triggers

Catch Them Here!


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Marketing Performance Forecasting Marketing Mix Analysis Correlation Analysis


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The Value of Analytics – Correlation Example

Large retail company 5 people assigned to manage brand usage Metrics were established to measure

compliance Correlation analysis showed no correlation

between brand usage metrics and sales.


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Summary

Analytics can play a key role in making smarter decisions – across all aspects of marketing.


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Wrap Up

Today’s takeaways Lack of speed kills Lack of speed without intelligence can be worse Decisions need good data and analytics Marketing plays a key role in speed, especially in

terms of providing customer insight and guidance for innovation

Performance for business and marketing needs to be measured from the perspective of innovation and speed

Thank You and now Q&A


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About the Company’s

Inverness Capital Partners, L.P., part of the of the Philadelphia based Graham Group of private equity funds and industrial businesses, is a $125 million private equity fund, with offices in Philadelphia and Boston. Inverness acquires or provides expansion capital to innovative industrial businesses and industrial technology providers. For more information go to www.invernesscap.com.

SAS is the leader in business intelligence software and services. Customers at 40,000 sites use SAS software to improve performance through insight into vast amounts of data, resulting in faster, more accurate business decisions; more profitable relationships with customers and suppliers; compliance with governmental regulations; research breakthroughs; and better products. Only SAS offers leading data integration, intelligence storage, advanced analytics and business intelligence applications within a comprehensive enterprise intelligence platform. Since 1976, SAS has been giving customers around the world THE POWER TO KNOW® . For more information go to www.sas.com

VisionEdge Marketing is a data-driven and metrics-focused marketing firm that specializes in improving marketing performance and helping organizations create a competitive advantage designed to attract, secure and retain profitable customers. Our services include marketing performance management, business intelligence, product and strategic marketing, pipeline re-engineering and revenue creation, and professional development. For more information go to www.visionedgemarketing.com.

Documents

1 How Fast Can You Move - Marketing Performance Metrics ... · brand-loyal, less trusting, ... becoming a $10 billion market. ... data-driven metrics and intuition M e t r i c s Intuition