Escape the shackles of ROI: Measure Channel Effectiveness

Prepared by:

Tony White, Bill Kelly and Dave Griffiths

7/8/11

Increasing the effectiveness and efficiency of your channel investments

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The other side of possible

What if.........

You had to double the benefit generated from your MDF / Coop

or rebate programs and your budget was reduced by 20%....AND

You had to prove it with evidence...AND

Make this a positive message to my partners?

This was the challenge we were given by a client in 2009

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Your Program Framework

Your Program Structure

Partner Business Models

Corporate Strategies

Purchasing Behaviours






Common concerns

We have to work with:• Shrinking budgets

• Partners with little marketing resource

• Multiple stakeholders with differing objectives

• Quarterly focus driving priorities

• ROI measurement

• Time available

• Ease of doing business concerns

• Entitlement vs. discretionary fund structures

• Poor fund churn rate

• Fund expiry






Introducing the Zee© Principle

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If we choose the right behaviours....... Making it is easy to adopt

Executing them to the right level of quality...... To get the right results

With the right partners...... We generate our desired outcomes

With the correct measures ...... We can show business improvement





Terminology


Behaviour What marketing activities and how are they conducted

Effectiveness The alignment of activities to desired outcomes

Efficiency The methods used to produce activities

Return on Investment

The tangible and intangible proof of returns on investments





3 Themes


Accept20%

Undecided60%

Reject20%

Managing channel investments is a continual process. Budgets may

vary but the results of investment can be continually improved

through feedback, reflections and iterations of the cycle.

20% of Partners will adopt required behaviours with little or

no effort, 20% will not adopt required behaviours.

Successful brands convert as much of the 60% as possible

The return on an investment is the result of three factors working together. Choosing the right behaviour, the most effective

activities and an efficient process of production

Behaviour + Effectiveness + Efficiency = Maximised Return on Investment

• Validating the outcomes

• Learning from results

• Implementing the plan

• Planning activities and funding

Plan Do

Check Act















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Supporting evidence

9

Sample Size (Partners ) Partners with expired transactions

Percentage

521 102 19.6

669 146 21.8

547 138 25.2

992 152 15.3

606 93 15.3

And the total is...........

3335 1138 18.9

Accept20%

Undecided60%

Reject20%

20% of Partners will adopt required behaviours with little or

no effort, 20% will not adopt required behaviours.

Successful brands convert as much of the 60% as possible





What if?


Red18 Partners160m Revenue9m Benefits

Green90+ Partners160m Revenue2m Benefits

Blue900 Partners80m Revenue0m Benefits

Would diversion of funding generate more revenue?

Reseller Type

Re

ven

ue

Current Channel Model

Channel shape and delivery performance through channel engagement aligned to control

If $2m benefits to green partners were doubled would revenue follow (i.e.: double)?





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4 Available Funding Models

Funding Model Entitlement Pooled / Discretionary Pooled / Planned Pooled /Auctioned

Basis of funding Partners are credited with funds calculated as a direct percentage of revenue

Partners are credited with funds on a discretionary basis from a central pool of funding

Partners are credited with funds based upon a marketing plan valuation

Partners are funded on the basis of “best value” on an individual activity basis

Fund Ownership within systems

Partner Partner Partner Vendor

Method of fund management

Funds loaded direct into Partner accounts

Funds managed by budget holder

Funds managed by budget holder

Funds remain in Vendor view

Method of unused fund reclaim

None Funds managed by transfer back to Vendor budgets

Funds managed by transfer back to Vendor budgets

Not required

Outcomes Marketing activities tend to be Partner brand driven

Marketing activities tend to be Partner brand driven

Marketing activities tend to be more shared brand

Bias towards Vendor brand

11





The Partner Marketing Matrix


Pre-defined Marketing Packages & Resources

Partner self provision & Pre-

defined Marketing Packages

Public resources Partner defined

Brand Adoption

Marketing Capability















Activities need definition

• Differentiating activities by probable outcome

• Increasing funding for reduced risk by provision of content and

resources

• Improved returns by negotiating rate cards and accredited agencies

• Identifying and controlling reusable elements

• Simplification and increased ease of use (reduced POP etc)

• Improved returns on investment

• Improved accountability

• Improved rate of execution

• Ability to provide partners with higher funding






Cost drivers in marketing activity

Where do opportunities for efficiency exist?

What are the cost drivers in your marketing activity?

Economies of scale enable reduction of production

costs (approved suppliers)

Economies of scope enable consistency and brand

alignment (multiple capabilities)

Dedicated costs (costs that only occur for one

activity) can be subject to rate carding

Reusable costs (i.e. brand creative) can be

centralised and reused

15





Consider Accredited Agencies


Available Activities

• Conference and road shows• Training meetings• Teambuilding• Association meetings• Sales incentives• Customer loyalty• Training incentives• “Campaigns in a Box"• Product launches• Customer satisfaction

marketing• Email campaigns• Webinars

Reusable Costs

• Venue negotiations• Theme design• Invitations to drive attendance• Registration services• Confirmations and reminders• Payment processing• Meeting room rental and setup• On-site operations • Transportation management• Meeting kits and fulfillment

• Less time with greater impact• Measurement and reporting• Diagnose key performance

drivers • Provide web-based

participant tracking• Best-practice insights• Budget forecasting

Benefits















ROI

ROI indicators are excellent however

ROI takes time to mature on most activities

ROI indicators give feel not measurement

Collection of ROI can be difficult

The ultimate ROI (Revenue) comes from many activities

“Cost of Brand” is a real investment and should be recognised

How real is the evidence we currently use

There are other measurements that give insight into effectiveness.......






Coverage Plans


Audiences

Products

Geography

Markets

Time

• Decision Makers• Influencers

• Fund Source• Spend

• Organisational• Traditional

• Sectors• Targets

• Execution • Planning cycle





Coverage Plans


Vendor Driven

Partner Driven

Audiences

Geography

Markets

Products

Time

Audiences

Products

Geography

Markets

Time

• Decision Makers• Influencers

• Fund Source• Spend

• Organisational• Traditional

• Sectors• Targets

• Execution • Planning cycle





Coverage Plans – an illustration

0

2

4

6

8

10

12

14

16

18

20

Quarterly Spend and Investement by Segment

Spend % Revenue %






Selecting the right investments

Criteria for investments change over time

Alignment criteria include product, corporate goals and activity mix

Return on Investment honesty should be rewarded

Coverage to your market needs should be integrated into the funding

process

Maximize returns through lower risk and pre-formatted activities

Remember that partners change, find today's seedling, spreading funding

Mop up low level funding and cash flow limits






Feedback Loop

Provision of feedback to both account management and partners drives

continual growth of returns

ROI statements provide partners with a view of the benefits of conducting

activities

The same data should be used as an account management tool and at

authorization of funding

Funding should track return value and performance

Partner feedback on ease of doing business is invaluable






The outcome

We pooled the clients funds to increase availability to partners

We introduced a quarterly planning cycle aligned to an auction

of funding

We negotiated rate cards with a few accredited suppliers

We simplified the process paying agencies directly

We reduced the need for POP

Increased funding percentage for using accredited suppliers






The benefits

More evenly spread activity profile

Increased partner uptake (35%)

Reduction in expired funds (72%)

Direct agency payment eliminated cash flow issues for partners

Activity unit costs reduced

Number of activities increased (17%)

Positive partner feedback

Allowed our client to align activity to corporate objectives






Key Takeaways

1. Gather evidence supporting investment quality (churn rate, expired

activities, activity profile, participation)

2. Examine your funding model, use the right model for each segment of

your business

3. Review the cost drivers in your activity portfolio

4. Review the effectiveness of your joint marketing plans with partners

5. Identify methods to redistribute your funds to avoid expiry

6. Implement a feedback loop to partners and account management to

recycle good ideas and best practice

7. Measure the intangibles (coverage by geo, time, product)

8. Focus on making it easy for partners to deliver activities







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Escape the shackles of ROI: Measure Channel Effectiveness

Documents

right partners

right behaviours

right resultsif

required behaviours

right level of quality

fund expiry page

green partners

program framework page