the power of marketing metrics proving marketing's value to the organization vem aims 2011...
DESCRIPTION
During dmaDetroit's 15th annual AIMS event, Laura Patterson, co-founder and President of VisionEdge Marketing Inc., presented on "The Power of Marketing Metrics: Proving Marketing’s Value to the Organization." This is her Presentation.TRANSCRIPT
Page 1
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
Page 2
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 3
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
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 4
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?
Page 3
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 5
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.
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 6
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.
Page 4
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 7
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 .
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 8
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
Page 5
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 9
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™
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 10
Our 3 Roles Enable Us to Move 3 Business Outcomes
Find/SecureProfitableCustomers
Acquisition
KeepCustomers
Penetration
GrowCustomer
Value
Monetization
Market Share Lifetime ValueBrand/
Customer Equity
Page 6
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 11
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
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 12
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
Page 7
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 13
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
Page 8
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 15
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
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 16
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
Page 9
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 17
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
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 18
Crossing the Finish Line
Page 10
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 19
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
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 20
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
Page 11
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 21
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
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 22
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
Page 12
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 23
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
Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2011 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 24
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