|Measuring Only Marketing Activities Won't Reveal the Return on Investment.|
By Laura Patterson, VisionEdge Marketing, Inc.
Sunday, 8th November 2009
Today's marketers are being asked to be more accountable for the money they invest on behalf of the company and to demonstrate the contribution and value they are making.
At the same time, they are struggling to secure a more strategic place at the table and to have a role beyond sales support. This was the case for one of our clients, a leading global provider of rugged and reliable specialty printing solutions.
At this company, management was asking the marketing team to focus its resources on high-value and high-ROI strategies. While senior executives had allocated what they felt was a considerable budget for marketing, the marketing team struggled to satisfy all the requirements within the budget parameters. The myriad and frequent tactical requests regularly stretched the limit of the team's internal resources. In addition, the marketing organization was being asked to quantify how it was supporting key business objectives, particularly in terms of revenue generation and channel support.
It wasn't that the organization wasn't measuring anything; the problem was with what it was measuring. When we stepped in and reviewed marketing's metrics, we found that this organization was primarily measuring marketing activities, such as response rates to campaigns, web site traffic and numbers of new suspects. While these are useful, they weren't giving the team the ability to truly determine the return for the investments it was making, and many of the metrics were too internally focused. The assessment also revealed that the organization didn't have any metrics that looked at market or customer indicators or that directly linked the marketing efforts to specific business outcomes.
'The interviews revealed that the activity progress reports were of little interest to these executives.’
As a result, the marketing leadership didn't have a way to measure and communicate its value within, across and up—a set of relevant metrics that would enable marketers to sift through and prioritize the many requests for marketing assistance. In addition, marketing lacked a process to help identify activities that had the most positive impact on sales and business goals. We set about changing this situation.
It became clear early on that the project wasn't going to be about just data. It was going tobe about culture and focus, too.
We tackled the effort in several phases. The first phase comprised a marketing metrics audit. The audit included performing an analysis of the current marketing plan, collecting marketing metrics and internal marketing processes. A key purpose of such an audit is to learn what is and is not being measured—and why—as well as what data is available and where. The audit revealed that marketing primarily provided a progress report on activities along with clippings from press coverage.
As part of the initial assessment, we interviewed key members of the leadership team to learn the value of the current report, what business outcomes were critical for the company and which of these they expected marketing to support and how. The interviews revealed that the activity progress reports were of little interest to these executives unless the results of the activities could be demonstrated and tied to business goals.
Specifically, the leadership team wanted marketing to drive a corporate positioning effort that had consensus within the organization; expand partners and channels in new markets and applications; implement a process whereby a pipeline of new market opportunities would being analyzed and presented to management; reduce time to revenue for new products; and be able to attribute two points of incremental revenue growth to marketing efforts.
The company formed a cross-functional team comprising members from marketing, sales, channel managers and customer service, as well as business analysts and product managers, to serve as the primary team to define the metrics and develop the dashboard.
This became the core team that worked collaboratively to create a marketing metrics framework and dashboard blueprint
In the initial working session, the team applied our mapping process to align marketing initiatives around the business outcomes and to create an initial set of metrics. Because the company relies heavily on the channel and partners, and attach rates are a critical to the revenue stream, it was important that the dashboard connected marketing to these business drivers—which was not something that had been done before. Once these phases were completed, we developed an "as if" model, using historical data as the starting-off point to project a future state.
Then we finalized the metrics and creating the dashboard. During these phases, we worked on establishing metrics targets and metrics calculations; defining and evaluating data sources; and creating the visual representation of the dashboard.
In this phase, thedialogue between marketing and sales and marketing and finance began to change from primarily conversations related to tactics to more business outcome-oriented discussions. Once the team had completed the model, team members captured current data and integrated it into the process iteratively, ultimately bringing the dashboard and metrics into a pilot stage.
Earlier, the company shared the dashboard and metrics on a limited basis. Once the dashboard and metrics were in pilot stage, though, they were shared across and throughout the company. The marketing team now had a completely different report to share with the leadership regarding marketing's contribution. The new dashboard provided insight into such elements as channel marketing investment versus revenue; revenue by segment partners; and marketing's contribution to pipeline opportunities.
These were real data points that the marketing team could use to make strategic decisions regarding changes in the marketing mix to affect channel and cross-sales. During the pilot and afterward, the work focused on socializing the process and metrics across the organization, as well as moving the dashboard into production.
The transformation was remarkable. In just four and half months, the company went from having no dashboard to having a working model. And more importantly, the marketing organization changed from being activity- and operations-based to being more market-, customer- and outcome-based.
Traditional metrics relating to near-term demand generation remained a part of the mix, but the new metrics enabled the marketing organization to refocus resources and efforts on key strategic business outcomes related to new markets and customers, channel and segment partners, pricing and new products.
The project served as a way for the organization to better allocate its resources and play a more strategic role.
Laura Patterson is president and founder of VisionEdge Marketing, Inc, a leading consulting group for metrics-based strategic marketing in Austin, Texas. Prior to that, she spent more than twenty years in business-to-business marketing, focusing on branding, customer loyalty, and product rollouts for Motorola, Evolutionary Technologies International, and State Farm Insurance. For more information, go to www.visionedgemarketing.com