Marketing Metrics new... · Maximize the Marketing Budget Laura Patterson President & Author ... Marketing performance management Marketing and sales alignment Product and strategic

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Using an Outcome-Based Approach to Maximize the Marketing Budget

Laura Patterson

President & [email protected]

Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2010 VisionEdge Marketing. All rights reserved. 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

mailto:[email protected]

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Session Topics

The State of Marketing Budgets and

Accountability

Which Metrics Matter

Aligning Campaigns and Programs with

Measurable Business Success

Using Marketing Metrics as the Basis of Your

Marketing Plan

Data Requirements

Other Success Factors


The State of Marketing Budgets

According to Forrester, Forbes Insights and other more marketers expect

budgets to stay the same or improve in 2011

The most important theme for 2011 is "multichannel planning." In order to spend

budgets wisely, marketers must find synergies between channels

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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CMO Challenges - Measurement


Demand for Accountability Still High

Unica Survey 20101

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Marketing ROI Top Climbs to #1

Anderson Analytics


What 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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Show Me the Money

VEM MPM Study 2009

-Where’s the $?-What’s the biz impact?


Never Ending Cycle

The problem faced by many marketing professionals is that,

traditionally,

marketing budgets are based on a percentage of last year's

revenues or budget,

which ignores the relationship

between marketing spending to effectiveness and

has a short-term focus leading to

limited success.

Optimizing the marketing budget is a

valuable strategic tool

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Perpetuates Budget Risk

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 spending to go from outputs-focused to outcome-focused


Output-Based vs. Outcome-Based Budgets

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

Align budget and

measure our impact, value, and ROI on

what matters to the C-Suite

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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”


Customers Connect Marketing to the Business of Business

“The purpose of a business is to

create a customer.”- Peter Drucker

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Marketing’s Three Primary Roles

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


Our 3 Roles Enable Us to Move 3 Business Needles

Find/SecureProfitableCustomers

Acquisition

KeepCustomers

Penetration

GrowCustomer

Value

Monetization

Market Share Lifetime ValueBrand/

Customer Equity

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Two Impediments

VEM MPM 2010


As A Result Have Trouble Demonstrating Our Value

VEM MPM Study

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What’s Slowing Our Progress

VEM MPM 2010


Don’t Just Take Our Word – Accenture Sr. Mktrs

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Marketing Metrics Focus: Output vs. Outcomes

Metric Areas

40%

29%32%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Activity Performance Indicator Outcome

VEM MPM 2010


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

My friend Joe

runs 5X/week

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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.


Requires Performance-Based Marketing

Have a set of measurable

performance standards, a

pointed focus on outcomes,

and clear lines of

accountability - all of which are

important if a marketing

organization wants to prove its

value.

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Performance Management Drivers

Source: Forbes Insights, July 2010

0% 20% 40% 60% 80%

Make marketing more strategic and

impactful within the organization

Senior executives demand some

justification for the money we're

spending

Improve marketing team

accountability

Increased competitive pressures

Financial pressures

Changes in consumer behavior

Need to improve business planning

Need to guide product

development

Need to improve advertising agency

relationship and effectiveness

Total

Budget less than $1

million

Budget $1 million +


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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Characteristics of 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


Performance Management Takes Two A’s

Clarifying the strategic

intent of all the marketing

investments an

organization makes

Aligning the organization

to deliver, and

Measuring the degree to

which those objectives

are met.

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You Know You Have Alignment When

Employees have a real appreciation of the

project’s importance in the greater scheme of

things.

There is an explicit link from individual projects or

initiatives to the broader company goals; AND

there is clear accountability or an audit trail.

Everyone truly knows the key business outcomes

and understands the impact of daily activities on

the outcomes.

People prioritize projects based on value and

impact, NOT on what has the most political

capital, is easiest to do, are most familiar with, or

are furthest behind schedule.


Outcome-Based Mapping™

Mapping is a

process that ensures marketing is aligned to business outcomes

technique for creating a common

vision and shared language for improving business results

Mapping allows marketing the opportunity to define its own objectives

by drilling into more detailed analyses and metrics to improve performance

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

personnel as they use a specific set of activities to produce a defined set of

outcomes presented in a visual format.

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Top Down Process

Vision

Outcomes

Objectives

Activities

Strategies

Tactics

Results

Programs


Map Elements

This level identifies the marketingstrategy or program thatwill need to be implementedto achieve the objective.

Business Outcome

Marketing Strategy/Program

Tactic/Activity

MeasurableMarketing Objective

MeasurableMarketing Objective

Tactic/Activity

Marketing Strategy/Program

Tactic/Activity

Tactic/Activity

The first level on the map identifies the business outcomethat marketing is going to impact

The second level is a Measurable Marketing objectivethat will directly affect the business outcome. Achievingthe objective will result in moving the needle of the outcome.

This level identifiesall the tactics/steps required to executethe strategy

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Direct Line of Sight: Outcome to Tactics Ladder


It All Starts With 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

Frame in terms relevant to marketing

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It all Starts with Business Outcomes

Name Description/Definition Examples

Outcome A consequence, result, effect

How the organization will measure

success

Ranked #1 in the Region for my

Age

Achieve #1 Market Share in XYZ

Market

Measurable

Objective

States what is to be achieved and when

results are to be accomplished

What you will do to move the needle

Accumulate the most points per race in my

age group

Increase preference for AB product among

top share determiners in XYZ markets

Key

Performance

Indicator (KPI)

The only difference between a metric and a

KPI is that a KPI embodies a strategic

objective and measures performance

against that objective and/or outcome.

Race Wins

Share of Preference

Product Adoption Rate

Performance

Target

A commitment to achieve a specific and

better quality or level of performance over a

specified time frame.

– used to evaluate performance achieved

compared to performance expected

Pace (miles/hour, mins/mile)

# Share Determiner Qualified

Leads

# Share Determiner RFPs


Improve customer advocacy score by 10% by YE2010

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 YE2010

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

Contribute 25% of the qualified new opportunities to branches quarterly

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Setting Performance Targets- Tool for Improvement

Difficulty in setting targets -common challenge for marketers

Make sure the measures and the targets are relevant to the

objectives and outcomes

Initiates discussion about:

Priorities

Focus

Alignment

Effectiveness

Enables faster course adjustments

Performance TargetsTurn the Wheel


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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Marketing Accountability

Accountability by its very

nature means Reporting

A monitoring and reporting

results enables fact-based

decisions

Metrics and KPIs (key

performance indictors) are

the building blocks for

creating a dashboard


AMA Defines Marketing Accountability

Truly accountable marketing requires that marketers demonstrate alignment between marketing expenditures and anticipated results, and that this alignment is being audited and optimized.

“The responsibility for the

systematic management of marketing resources and processes to achieve measurable gains in return on marketing investment and increased marketing efficiency, while maintaining quality and increasing the value of the corporation.”

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Adopt a Metrics FrameworkTactical Strategic

Activity-

Based

Operational

Outcome-

Based

Leading-

Indicators

Predictive

CountingMedia Mentions

Trade show leadsClick Through Rates

Site Registrations

Demo Downloads

EfficiencyLead/Rep

Lead AgingCampaign ROI

Program: People Ratio

Business OutcomesMarket Share

Category OwnershipLifetime Value

Adoption Rates

Likelihood

of OutcomeShare of Wallet

Rate of Growth:

MarketBrand Preference

Cost/Billing Dollar

Program spend/headcountProgram/Total Spend

Awareness: Demand Ratio


Select Outcome-based Metrics Based on Marketing’s Job

Certain Facets of PerformanceMove Needles for Each Gauge

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

Business Outcomes and Marketing Objectives Provide Insight into Metric

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Outcome-Based Measurement

Characteristics of Effective

Metrics

Accurate and Precise

Reliable

Relevant

Aligned

Owned

Predictive

Actionable

Easy to understand

Transformative

Standardized

Connect Marketing investments and

Metrics to the Business

1. Begin with business

outcomes

2. Identify most important measures of success

3. Define performance

indicators connected with

these measures

4. Determine which data

provides necessary information

5. Focus on the most relevant,

essential, & valuable actions

6. Analyze & report


A Marketing Dashboard

Has 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 goals and objectives, and real-time insight on progress toward each objective

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Measurement is the Foundation to ROI But

It isn’t the only Factor

1. Design and select metrics that measure marketing’s impact on the business

2. Use metrics that measure efficiency,

effectiveness and payback

3. Create a measurement management system and consistently use it

4. Capture performance metrics as quickly as possible in order to instigate immediate change in execution

5. Report results and performance in real time


Analytics and the Performance-Driven Marketing Organization

Analytics

The Ability to Drive Actionable Insights from Data

Critical to facilitating better and faster fact-based decisions

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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


Three Additional Critical Success Factors

Processes,

Systems, ToolsSkills & Training

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

(ISBM)

Culture

Create, reward and livea measurement culture

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Four Processes We’ve Discussed to Improve Marketing Effectiveness

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


Tie the Budget Back to the Business

1. Engage - the leadership team to

understand the organization’s

emphasis in terms of resources on find, keep and grow to create an

allocation model

2. Establish - measurable marketing

objectives around customer acquisition, retention and value

growth.

3. Develop - programs to support

each objective and link every program to one of these

objectives.

4. Identify - every element in the

marketing mix and its associated dollars for each program.

5. Tally - the investment needed for

each program, objective and

outcome

6. Allocate - the dollars based on

the model

7. Monitor –

Monitor how well the programs performed against

your committed targets and

budget

Track and measure the impact of marketing

programs

Track and measure the

execution of a marketing program.

Track all the people both

internal and external, and all

the steps, including approvals, to understand the

total cost of program

execution

8. Report – Effectiveness, Impact,

Efficiency, Value for the Money

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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


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/

Marketing Metrics new... · Maximize the Marketing Budget Laura Patterson President & Author ... Marketing performance management Marketing and sales alignment Product and strategic

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