Marketing Metrics dal... · The Power of Marketing Metrics: Proving Marketing’s Value to the ... and metrics-focused marketing firm ... Shifts in marketing strategy to new

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The Power of Marketing Metrics: Proving Marketing’s Value to the

Organization

Laura Patterson

President & [email protected]

Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 2

Founded in 1999 and headquartered in Austin, TX, VisionEdge Marketing, Inc. serves more than 100 customers, and counting.

VisionEdge Marketing, Inc. is a data-drivenand metrics-focused marketing firm that specializes in improving marketing performance and creating competitive advantage designed to attract, secure and retain profitable customers.

Services Include:

Marketing performance management

Marketing and sales alignment

Product and strategic marketing

Pipeline re-engineering

Professional development

About VisionEdge Marketing – Experienced Practitioners

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Session Objectives

1. Clarify the value of

measuring marketing

2. Identify best practices in

marketing measurement,

accountability and analytics

3. Create measurable

marketing objectives

4. Establish performance

targets

5. Formulate a set of marketing

measures that will serve as

the foundation for your

dashboard

“Need the math behind the

creativity.”

John Seifert, Chairman-

CEO of Ogilvy & Mather North America


The State of Marketing Budgets

According to Forrester, Forbes Insights and other more marketers expect

budgets to stay the same or improve in 2011 with ONE CAVEAT

justify the spending, prove the effects of marketing campaigns, and demonstrate

program success…or risk losing budgets. (Forbes Insights)

focus on measurable program elements that are designed around business

objectives (Forrester)

CMO Survey and Forbes Insights indicate increased emphasis on

accountability will persist

-5% 0% 5% 10% 15%

Traditional Advertising

Internet Marketing Spend

New Product Introductions

New Service Introductions

Customer Relationship Mngt

Brand Buildng

Change in marketing spend in 2011: CMO Survey.org

2%

37%

21%

15%

11%

14%

Evaluate Impact

of Marketing

Stock Market

Performance

Revenues

Costs

Customer

Retention

Brand Value

Measuring Marketing’s Value : CMO Survey.org

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Break the Never Ending Cycle

Perhaps the greatest risk is that without a perception of accountability and value, CEOs

and CFOs will make sweeping, arbitrary decisions about cutting expenditures which ignores the relationship between marketing spending to effectiveness and produces a short-term focus leading to limited success.

Need focus to go from outputs-focused to outcome-focused


What’s Driving Accountability

0% 20% 40% 60% 80%

Desire to remain competitive

Current economic climate

Internal financial pressures

Changing client/consumer behavior

Addition of new tactics to our

marketing program

Shifts in marketing strategy to new

media

Launch of new products or services

Shifts in our marketing strategy toward

more easily measurable approaches

Deeper scrutiny by executives

Don't know

Not at all

To a small extent

To a large extent

Forbes Insights July 2010

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Struggling to Demonstrate Marketnig’s Value

VEM MPM Study


Despite Numerous Tools

Pre-1990

BI ToolsCognos

Hyperion

CRMGoldmineSage Software/ACT

Banking SWJack HenryMarquis

1990

1992

1993

1998

1999

2001

Business Objects

Campaign ManagementUnica

PR MetricsVocus

Siebel

Web Analytics

Webtrends

AprimoNetSuite

SalesforceEloquaGoogle Analytics

Marketing AnalyticsImmediateFX

ManticoreMarketingPilot

Raddon IntegratorMarketoSM2

2006

2002

LeadGenesysVtrenz

1980

First MarketingMeasurement ConferenceORSA/TIMS Special

Interest Conference on Market Measurement and Analysis

2004

Telligent

1996

Cymfony

1996

Alterian

2000

Harland

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CMO Challenges - Measurement


Demand for Accountability Remains High

Unica Survey 2010

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Marketing ROI Top Climbs to #1

Anderson Analytics


A Decade Plus of Talk

CEOs reveal that "enhanced return on Marketing investment“ is a top priority for Marketing. (ARF)

Top Priority•66% rank Accountability as Chief Concern (ANA)•Measuring effectiveness is second most important priority (ANA)•66% of business executives say marketing analytics

and metrics are marketing’s greatest need (Booz Allen)Lack of Satisfaction:•Only 21% of 319 respondents rate themselves "satisfied" or "very satisfied" with Metrics capabilities

(CMO Council)Measurement Challenged:•Over half (51%) say that difficulty in measuring performance a key reason for pressure on Marketing department (ANA and Booz Allen Hamilton)

Don’t make the grade:•Only 17% of CEOs would give Marketing a “A.” (VEM)• 34.9% of CEOs give marketing a C grade, only 9.6% of CEOs give

marketing an A grade, 8.4% give marketing a D grade. (CMO Council)Still a Priority:•59% consider measuring Marketing performance to be a top-three priority for their company.•Accountability top priority for 66% of senior Marketing executives (ANA)

Can’t Get No Satisfaction:•Only 9% somewhat satisfied with their company’s ability to set and monitor Marketing Metrics (VEM)•48% felt that CEOs believe that their organization’s ability to measure marketing performance was only marginally effective. (VEM MPM)

Measurement Challenged:•Marketing is onlymarginally or somewhateffective at measuringEffectiveness (Deloittestudy of over 460 executives)

Still a Priority:•54% of survey participants say measuring marketing performance is one of their top 3 priorities

Measurement Challenged:Marketers remain challenged to measure value and ROI, <50% use marketing analytics (Alterian, n=1545 )

Dissatisfaction With Metrics Continues:•96% of marketers tracking 1-20 metrics and• 76% say metrics are not useful in decision making(Mktg Leadership Roundtable)Top Priority Still:•CMOs under pressure to demonstrate value; ROI major issue in 2008 (B-B Mag)

Still Don’t Make the Grade:• only22% of CEOs give Marketing an “A” (VEM MPM)•Fewer than 1 in 10 say their organization is completely effective at MPM (Lenskold)

•Measurement Challenged:•30% of 200 CMOs rank MPM most significant challenge (Aberdeen)Top Priority Still:•Connect Marketing to Financial Consequences (Aberdeen)•Proving ROI critical (Red Herring CMO Summit)•Need to show impact on purchasing (B-B Outlook 2009)

20002004

2005 2006 20092007 2008

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Two Impediments

VEM MPM 2010


Need Performance Management

…the process

of measuring progress

toward

achieving key outcomes and

objectives in order to

optimize

individual, group or

organizational performance.

CMO Council's 2008 Marketing Outlook

“The top challenge for marketers remains to better quantify and measurethe value of marketing programs," in spite of improvements in accountability over previous years.

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Best Practices Marketing Organizations

Have a set of measurable

performance standards, a

pointed focus on outcomes,

and clear lines of

accountability.

They are performance-driven

outcome-based .


Transforming into a Performance-Driven Marketing Organization

1. Align and link marketing to

business outcomes

2. Embrace a culture of

accountability

3. Adopt a measurement framework

that establishes clear standards of

performance and metrics

4. Create a performance

measurement system based on

data and analytics

5. Use data and performance targets

to drive continuous improvement

and to hold the entire system

accountable for performance.

6. Apply analytics to facilitate fact-

based decision making

7. Align resources, policies, and

practices

8. Add the right skills, systems and

tools

9. Track and report results against performance standards

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Six Action Steps The Best-in-Class Employ

Align and Link to the Business

Set Measurable Marketing Objectives

Adopt a Metrics Framework

Select Outcome—based Performance Targets

Measure

Report


Action Step 1: Align to Business Outcomes

1. The Starting Point - serve as the foundation for everything that follows

A consequence, result, effect

How the organization will measure

success

2. Start with the business decisions that need to be made

3. Identify all key business outcomes

Indicate what constitutes success for the organization in the CEO‟s words

4. Select those that marketing can

impact

Understand to what degree Marketing is expected to move the needle

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Why Companies Invest in Marketing

Understand the market and

customers

Develop and execute a strategy

to create preference and

consideration that enables the

organization to

Acquire more of something

Acquire it faster

Acquire it cheaper

Otherwise, might as well just put

more feet on the street

Need to demonstrate we are

“getting the job done”

“The purpose of a

business is to

create a

customer.”- Peter Drucker


Three Marketing Roles Point the Way

1. Find Profitable Customers/Consumers

The process of acquisition

New customer acquisition – net new business

2. Keep Profitable Customers/Consumers

The process of retention/renewals

3. Grow Profitable Customers/Consumer

The process of increasing the value of your customer franchise and brand -Cross-selling

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Our 3 Roles Enable Us to Move 3 Business Needles

Find/SecureProfitableCustomers

Acquisition

KeepCustomers

Penetration

GrowCustomer

Value

Monetization

Market Share Lifetime ValueBrand/

Customer Equity


Direct Line of Sight: Outcome to Tactics LadderUse Outcome-based Mapping™

A process that ensures marketing is aligned to

business outcomes

A technique for creating a common vision and

shared language for improving business results

A Map is a step-by-step description of the actions

taken by marketing personnel –

Direct line of site between a specific

set of activities to produce a defined

set of outcomes presented in a visual format.

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Improve customer advocacy score by 10% by YE2011

Action Step 2: Performance Based Marketing Objectives

Realistic

Measurable

Time specific

Aligned and consistent with the organization’s priorities

4 Criteria:

Increase referral rate of existing customers by 40% by YE2011

25% of existing customers will adopt new XYZ product within 6 months of launch

Contribute 25% of the qualified new opportunities quarterly with a 70% or greater conversion rate

confidence


Output-Based vs. Outcome-Based Budgets

Hypothetical but all too common marketing budget –cannot link investments to results

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Action Step 3: Metrics

Metric:

A metric is a standard unit of measure

Business -Standards of measurement by which efficiency, performance, progress, or qualityof a plan, process, or product can be assessed


Accountability requires Metrics-Which Example Best Represents What You Track?

Tracked Trial Rates

Measured Adoptions Rates

Focused on Category Growth rate

Tracked Pipeline Contribution

Tracked everything Web

Press Hits

Measured Awareness

Focused on Lead ROI

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Illustrating the Importance of Selecting the Right Metrics – Measuring Activity vs. Outcomes

My friend Joe

runs 5X/week


Adopt a Metrics FrameworkOutputs Outcomes

Activity-

Based

Operational

Outcome-

Based

Leading-

Indicators

Predictive

CountingMedia Mentions

Ctm visitsClick Through Rates

Site Visitors

Demo Downloads

EfficiencyApps/branch

Campaign ROIProgram: People Ratio

Cost/Billing Dollar

Program spend/headcountProgram/Total Spend

Awareness: Demand RatioMarketing Spend:Revenue

Business OutcomesMarket Share

Category OwnershipLifetime Value

Adoption Rates

Likelihood

of OutcomeShare of Wallet

Rate of Growth:

MarketShare of Preference

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Strategic Metrics Tie Marketing to the Business

Our Job Points the Way to the Metrics

5 Customer/Brand

Equity Indicators

• Price Premium

• Net Advocate Score

• Customer Franchise

Value

• New Product

Acceptance/

Adoption Rates

• Product Margins

4 Lifetime Value

Indicators

• Purchase Frequency

• Share of Wallet

• Advocacy/Loyalty

• Tenure

5 Market Share

Indicators

• Share of Preference

• Share of Voice

• Share of Distribution

• Rate of Customer

Acquisition

• Rate of Growth:Market


Action Step 4: Setting Performance Targets

Difficulty in setting targets are one of the most common problems for marketers

Need to make sure the measures and the targets selected are relevant to the objectives and outcomes

Targets are a tool to help improvement, not an inflexible mechanism that guarantees change or results

Performance TargetsTurn the Wheel

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The Merits of Setting Performance Targets

Targets help to drive

performance improvement

Initiate a discussion about

priorities

Help to define an agreed

direction

Bring focus

Assess effectiveness better

Facilitate faster

adjustments

Improve alignment


10 Attributes of a Good Performance Target

1. Indicate a Range of Performance

2. Assigned Time Frames

3. Measure the Result Intended

4. Non-biased

5. Numerical

6. Based on quality reliable and consistent data

7. Measured against a baseline

8. Unambiguous

9. Verifiable

10. Attributable

Activity/Output Vs. Outcome-Based Performance Targets

Produce 1 webinar/month (run 5X/week)

Secure 100-200 participants/webinar (run 30 mins 5X/week)

Acquire 15-20 qualified leads/webinar

(achieve 8 min/mile pace for 5K)

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Action Step 5: Marketing Measurement

Marketing Measurement:

The act of measuring or the process of being measured.

Measure:Dimensions, quantity, or capacity as ascertained by comparison with a standard.

Measurement, to be

accepted and

actively supported,

should be viewed as

an integral part of

everyone's job.

It must become an

accepted part of the

organizational culture.

It should be clearly

understood and

accepted that

everyone is expected

to take an active role.


Leverage Analytics

The ability to drive actionable insight from data

Analytics are critical to:

Facilitating better and faster

fact-based decisions

Linking the results of marketing programs to customer consideration, preference,

loyalty, share of wallet and the financial results these outcomes

produce.

Establishing some degree of

accuracy the outcomes that can be achieved from the

relationships, products, services, and processes

Need to:

Add more analytic staff in marketing

Initiate modeling

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Data and the Performance-Driven Marketing Organization

Performance Driven-Marketing Organizations Embrace data - See Data as

the foundation for success Get the best data possible

and use it in a pre-defined, unbiased way

Install and use a data management system

Create and maintain a data inventory

“Data is the new creative.”- Stephan Chase, Marriott Rewards


Action Step 6: Report

Accountability by its very

nature means Reporting

Monitoring and reporting

results enables fact-based

decisions

Metrics and KPIs (key

performance indictors) are

the building blocks for

creating a dashboard

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What is a Dashboard? A „multidimensional‟ view of

data and their interrelationships

Executive dashboards provide summary views of data and alert users to values that are significantly above or below expectations

Only work if they are tied to a structured action process

It must do more than just measure, needs to be used to foster decision making

“A dashboard is a visual display of the most important information needed to achieve one or more objectives; consolidated and arranged on a single screen so the information can be monitored at a glance.”

Stephen Few, Information

Dashboard Design (2006)


A Marketing DashboardHas all the necessary dials and gauges to tell

you where you are, where you‟re going and

at what speed – along with indicator lights

that illuminate at the first sign of a problem

Enables organizations to measure, monitor

and manage business activity using both

financial and non-financial measures

Provides an overview marketing objectives,

and real-time insight on progress toward

each objective

Shows how marketing is moving the

needle

Assesses what is and isn‟t working

Fosters decision making –

is actionable

Provide sa unified view into marketing‟s

value

Enables better alignment between

marketing and the business

Categories for the Marketing

Executive Dashboard

1. Customer Acquisition and

Retention

2. Customer Advocacy and

Value (LTV, Margin, Loyalty,

Share of Wallet)

3. Customer Equity

4. Product Innovation and

Adoption

5. Competitive

Positioning/Market Value

Index (share of preference,

rate of growth)

6. Show me the Money

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Three layers to the marketing dashboard:

Executive level Strategic level – monitorsand measures performance against business outcomes and marketing objectives

Operational levelMarketing management – tracks performance of core marketing strategies and processes

Tactical levelFunctions and individuals – analyzes performance at project or activity level as they relate to the first two

Metrics Correlate to Dashboard Levels


Crossing the Finish Line

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Success Factors: Skills, Processes & Tools, Culture

Processes,

Systems, Tools

Skills & Training

Solutions to the problems of marketing accountability and creating a ROMI culture begin with training

(ISBM)

Culture

Create, reward and livea measurement culture


Take the Next Step on Your Journey

1. Conduct an audit to identify alignment, data and process gaps

2. Assess the crucial skills marketers need and provide training

3. Identify and add the right talent, systems, and tools to help automate marketing processes and improve marketing performance

4. Leverage best practices and company insights for continuous improvement opportunities

5. Create and adopt a performance measurement and management strategy, system and framework that aligns marketing with the business outcomes

6. Engage the leadership team and form strategic partnerships with an extended team of finance, IT, sales, service, etc.

7. Create and align processes, policies and practices that insure the linkage between marketing programs and business results

8. Design and select metrics and clear standards of performance that enables marketing to measure its impact, effectiveness, efficiency and value

9. Create a multi-level dashboard to report performance and results in real-time to facilitate course adjustments and foster decision making - make it an iterative and collaborative effort

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Thank You and Questions

Metrics in Action: Creating a

Performance Driven Marketing

Organization

Workbook: It's More than Money on the

Line: Creating Metrics to Measure

Marketing‟s Effectiveness, Impact and

Value

Both are available at

www.visionedgemarketing.com

http://www.visionedgemarketing.com/

Documents

Marketing Metrics dal... · The Power of Marketing Metrics: Proving Marketing’s Value to the ... and metrics-focused marketing firm ... Shifts in marketing strategy to new