The power of marketing metrics proving marketing's value to the organization vem aims 2011 event...

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. Review the value and

current state of measuring

marketing

2. Identify best practices in

marketing measurement,

accountability and

analytics

3. Offer practical steps to

support the next steps of

your journey

“Need the math behind the

creativity.”

John Seifert, Chairman-

CEO of Ogilvy & Mather North America


Introduction –The Economy Takes its Toll on Marketing $

More emphasis being places on where companies invest and

allocate marketing resources

According to B-to-B Magazine’s 2010 Outlook: Marketing

Priorities and Plans survey, “…in 2009 nearly 60% of marketers cut their marketing budgets in

response to the recession.”

Forrester reported that less than 20% of companies expected marketing budget increases

while over 40% experienced further reductions in 2010.

What’s ahead in 2011 for marketing budgets?


Our Current State

Improvements Made + Better at linking activities

to business results, specifically revenue.

Making progress on some metrics – mostly activity and efficiency type of metrics

We’re taking measurement seriously

Next Steps

Lack of proper infrastructure –systems, tools, processes, skills to

support measurement hampering progress

Need move from metrics

management to performance management

Challenged to develop and execute a systematic approach

to marketing performance management (MPM)

Learn how to leverage insights from metrics and dashboards to

steer their ship.


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.


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 .


Five Key MPM Best Practices

Audit – Benchmark, assess, and close

gaps

Alignment – Direct Line of Sight

Accountability – Metrics Framework and

Metrics

Analytics – Data, Insights and Model

Automation – Infrastructure (Process,

Systems, and Tools

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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

Understand to what degree Marketing is

expected to move the needle

3. Employ an alignment technique- such as Outcome-

Based Mapping™


Our 3 Roles Enable Us to Move 3 Business Outcomes

Find/SecureProfitableCustomers

Acquisition

KeepCustomers

Penetration

GrowCustomer

Value

Monetization

Market Share Lifetime ValueBrand/

Customer Equity


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


Need Outcome-based Performance-Driven Metrics that 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


Analytics and Data

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

Take DATA“Data is the new creative.”

- Stephan Chase, Marriott Rewards Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 14

Actionable Dashboards

Performance

Management takes

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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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


Automation: Systems, Tools and Processes

Start

Event

Occurs

Decision

Event

Occurs

End

YES

NOEvent

Occurs

Outcome

Start

Event

Occurs

Decision

Event

Occurs

End

YES

NOEvent

Occurs

Outcome

Start

Event

Occurs

Decision

Event

Occurs

End

YES

NOEvent

Occurs

Outcome

Start

Event

Occurs

Decision

Event

Occurs

End

YES

NOEvent

Occurs

Outcome

Alignment Data Collection Performance Monitoring Metrics Analysis Target Setting Measurement

Reporting -Dashboards


A New Kind of Audit

A focus on identify areas where an organization is weak or lacking and where they may be performing well in order to create a highly functional marketing organization.

An assessment that examines an organization’s alignment, processes, systems, tools, and skills related to marketing performance and the primary areas of the marketing workflow.

A regular auditing process manages the lifecycle of performance management reducing the risk of Marketing become disconnected from the business and focusing on

things that don’t contribute to results or conflict with outcomes and ensure organizations optimize performance processes and systems changes that occur over the course of the year.

REQUIRES PERFORMANCE MANAGEMENT STANDARDS


Crossing the Finish Line


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


Need to Move from Talk to Walk

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


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


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

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The Rewards of a Performance-Driven Marketing Organization

Better insight into customers – what they want and what messages will resonate

Greater message continuity

More effective allocation of resources

Fewer underperformers on the sales team

Higher win rates

Improved customer acquisition and retention

Stronger customer loyalty and equity

Greater customer share of wallet


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/

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